Berkeley Group (BKGHL): Soft forward sales and demand uncertainty drive caution

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Berkeley Group (BKGHL): Soft forward sales and demand uncertainty drive caution

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25 Jun 2026 15:25:34 ET │ 12 pages

Berkeley Group (BKGH.L)

Soft forward sales and demand uncertainty drive caution

CITI’S TAKE

Berkeley’s FY26 results highlight resilient earnings in a challenging

Neutral operating backdrop, with subdued transaction volumes, rising regulatory

Price (25 Jun 26 16:30) £37.52 burdens, and ongoing project delays continuing to weigh on near-term

delivery. Underlying demand trends remain soft, with weak reservations Target price £36.50↓

and decline in private forward sales a key concern. The group has from £37.54

remained defensive, prioritizing balance sheet strength through net cash Expected share price return -2.7%

preservation, reduction in land creditors, and lower operating costs, while Expected dividend yield 1.7%

limiting new land investment and focusing on extracting value from its Expected total return -1.0%

existing high-quality land bank. Looking ahead, growth is likely to remain

Market Cap £3,461M constrained by planning delays, building safety approvals, and weak

US$4,581M London housing activity, although Berkeley’s strong balance sheet,

embedded land value, and disciplined capital allocation provide resilience.

The strategy reflects a clear shift towards capital discipline and long-term

value creation, but earnings recovery remains contingent on housing Ephrem RaviAC

demand and improvements in regulatory clarity. TP lowered to £36.50 +44-20-7986-2462

from £37.54; maintain Neutral . ephrem.ravi@citi.com

Model update — We lower our FY27–28e pre-tax profit forecasts by c.16–20%,

reflecting persistent demand weakness and lower forward sales. We reduce our target

price to £36.50 (from £37.54) on lower earnings estimates; maintain Neutral.