British builder and developer Berkeley Group posted soaring first-half profit as strong overseas demand for houses in its key London market helped it defy the gloomy picture in other parts of the country.
You have got the macro uncertainty but there's a huge demand for property in London from international buyers and from UK buyers, Berkeley's Managing Director Rob Perrins said in an interview with Reuters on Friday.
The company, known for its savvy London land purchases, said it was confident of its ability to meet its targets, buoyed by a pipeline of forward sales that grew 15.2 percent in the six months to October 31.
We are buying more London-focused sites. The international demand in London, London being a world-city, it is a growth model. We foresee that continuing, he said, adding that the company was upping its exposure to London relative to the rest of its south eastern England portfolio.
Elsewhere in Britain, the housing market continues to tread water as public spending cuts and rising unemployment dent confidence.
House prices edged up in November, beating expectations despite a weak economy, but activity remains subdued and prices are likely to dip in the next 12 months, mortgage lender Nationwide said on Tuesday.
Berkeley said underlying profit leapt 30 percent to 76.4 million pounds in the first six months of its financial year, compared with the same period in 2010, after the number of homes it sold rose 21 percent. The average selling price was 254,000.
Shares in the company were up 4.8 percent to 1,328 pence at 1135 GMT having earlier hit their highest level for over four years.
The strong increase in operating profit combines with 7 percent further growth in the landbank gross margin to give confidence that the company will achieve its accelerated timetable and deliver a doubling of the full year 2010 earnings in the full year 2013, Evolution analyst Mike Bessell said.
Berkeley also said its first-half pretax profit soared 64 percent after it was boosted by a one-off disposal of a stake in a student accommodation project in Clapham Junction.
The company gave an upbeat view of its ability to deliver a new dividend strategy announced in June, under which it plans to return 1.7 billion pounds in cash to shareholders over the next 10 years.
It added, however, that the first pay-out was unlikely to come earlier than the 2015 target due to ongoing investment in new projects.
(Reporting by Sarah Young; Editing by Matt Scuffham and Erica Billingham)