It's London vs the world as Habitat and Berkeley come home

London's the place to be, it seems, as the furniture retailer and the house-builder are demonstrating...

by Emma Haslett
Last Updated: 06 Nov 2012
The capital may not be swinging again, but it’s certainly doing better than the rest of the country. Habitat, the beleaguered furniture retailer, is being sold off to Argos owners Home Retail Group. But HRG is only buying the brand, plus three of its London stores – administrators are still seeking buyers for the other 30. And Berkeley, the South-East-based builder and land developer, has announced plans to return £1.7bn to its shareholders, reporting that housebuilding in London is recovering nicely. Groovy, baby, yeah…

It’s not exactly a match made in heaven for Habitat and HRG: one is a Scandinavian-inspired brand that sparked off a style revolution with its clean, urban designs; the other’s based on a catalogue system and flogs faux-leather sofas for under 200 quid. But the deal will reportedly make £24.5m for Hilco, the private equity group which owns it. And being a magnanimous sort, HRG has said it’ll probably be able to find work for the 150 staff affected – although whether they’ll be willing to don its distinctive turquoise cap/polo shirt combo is another question altogether. And it leaves the other 750 staff facing an uncertain future.

It’s no secret Habitat has had a tough few years: during the course of the recession, the furniture market shrank by £2bn as cash-strapped consumers avoided shelling out on expensive items. But Argos, the UK's biggest furniture retailer, weathered the storm reasonably well, and HRG is apparently looking for new places to invest its ‘substantial cash pile’. And while, with losses of £18.7m last year, Habitat isn’t the most financially attractive proposition, it’ll widen out HRG’s customer base to include the design-conscious middle classes. (Well – either that, or Habitat’s USPs will change dramatically. Pleather, coming soon to a Habitat store near you).

For Berkeley, on the other hand, things couldn’t be going better: shares rose 11.5% after it said it’s planning to pay a series of dividends that will amount to about £13 a share. For its founder and chairman, the brilliantly-named Tony Pidgley, who owns 5.1% of the company, that’ll mean a cool £87m windfall. Not bad.

All this is apparently because of the South-East’s booming construction trade: according to the company, the region is one of the few where demand for housing is still out-stripping supply. In fact, it’s beginning to look like that north-south divide is opening up again: as Steve McGuckin from construction consultants Turner & Townsend put it, ‘there are still two markets in the UK, namely London and the rest of the country’. Or, as we’d describe it, Habitat and Argos. Ahem.

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