Berkeley Group Halts Land Purchases, Extends Profit Goals to 2030 Amid Economic Hurdles

Berkeley Group Holdings plc has announced it will pause all new land purchases and revise its medium-term strategy through April 2030. The move comes as the property developer wrestles with a tough economic backdrop, geopolitical tensions, and delays adding roughly a year to some construction projects.

The FTSE-listed builder now aims for a pre-tax profit north of £1.4 billion over the next four years, with the lion's share anticipated toward the end of that period. This is a significant change from prior forecasts that expected around £450 million in pre-tax earnings for both FY26 and FY27.

Berkeley blamed the current freeze on land buying on factors including increased taxes targeting residential development uniquely-taxes not levied on other land usages. This, despite a drop in residential sales, has kept land prices artificially high. For now, the company plans to focus solely on its existing pipeline of over 10,000 homes primarily situated in London and the South East.

Complicating matters further is the introduction of the Building Safety Regulator's new gateway process. This has extended the time gap between planning approval and breaking ground by around twelve months. Moreover, London's new home construction is currently crawling at less than 10% of government targets, highlighting significant supply-side constraints.

Though there were early signs of a mild market bounce in the opening two months of 2026, Berkeley is mindful of shifting winds. The company pointed to recent geopolitical dramas and the limited likelihood of further interest rate cuts, which dampened confidence in any near-term recovery-a risk it now deems realized.

Notably, Berkeley slashed its land creditors from £900 million to about £470 million and has driven down operating costs by approximately 25% in real terms. Targets remain ambitious yet grounded: operating margins within a historic 17%-21% and return on capital employed climbing back above 15% by 2030, while keeping net cash levels stable.

The company is following through on its shareholder returns program, having distributed £336 million so far towards a £2 billion commitment ending in 2030. It appears to favor share buybacks while its stock trades below net asset value, highlighting a cautious but shareholder-oriented mindset.

Berkeley also reports steady progress on its build-to-rent program, with its initial six buildings worth around £400 million at cost nearing completion. The target for 4,000 build-to-rent homes remains, though the timing of future phases is under review.

Summing up the strategic rethink, Berkeley stated that trying to hit short-term profit markers no longer aligns with what's best for shareholders. Instead, they're banking on a long game through the decade's end, given the current environment.