10% of all new homes in London are built by one company

Berkeley Group is the London residential sector's biggest success story - this year, its profits have risen 40%. Will it call the top of the market again?

by Emma Haslett
Last Updated: 18 Jun 2014

Berkeley Group is one of London’s greatest success stories: not only did it once win MT's Britain's Most Admired Companies, but its founder, Tony Pidgley, famously called the top of the residential market back in the dark days of the recession and began offloading land furiously - just before the sky fell in on house prices.

These days, according to figures posted this morning, the company builds 10% of all new homes in London - so it’s hardly surprising pre-tax profits rose 40% in the year to the end of April, from £271m last year to £380m, on revenues of £1.62bn (up 18% on last year). It completed 3,742 homes during the year, 30% more than during the peak of the market in 2007.

To be fair, at the moment you’d have to be an idiot not to make money in the London residential market - particularly if you go with Pidgley’s strategy of buying up vast tracts of land by the river and building enormous blocks of identikit homes there.

His modus operandi is to sack off British buyers and raise the funding needed for new homes by selling off-plan to Asian customers (who tend to be far more comfortable about buying off-plan than Brits). Hence the rash of massive towers along the banks of the Thames: they’re all aimed at a very certain type of buyer.

Having been very positive about Help to Buy when it first started, Pidgley is less enamoured of it now. ‘While [it] has been helpful in bringing home ownership to within the reach of many more people, it has had limited benefit to Berkeley as a whole,’ he said. Of the 17 developments where Berkeley has offered Help to Buy, a third of homes have been sold under the scheme. But to be fair, most of the homes Berkeley builds are outside of the Help to Buy price bracket - so you can see why he’s cooled on the subject.

The value of Berkeley Group’s assets rose by just under £500m, so there’s no sign Pidgley has slowed down on the land-buying front. Clearly, house prices are still under control enough for Pidgley not to worry. But chances are that rivals will spend the next few months scrutinising his every move, just in case he quietly calls the top of the market again.

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