Berkeley Group (LON:BKG) shares plunged on Wednesday morning after the property developer warned on the cooling London housing market.
Despite an evident slowdown across the capital, the group said they remained cautiously optimistic over future outlook.
“While the underlying demand for new homes remains strong, the housing market in London and the South East has remained subdued over the last year, in spite of the well documented endemic under-supply,” commented Rob Perrins, chief executive.
The statement also addressed concerns with regards to fire-safety of its high-rise buildings, a year after the Grenfell tower inferno horrified the nation.
Chairman Tony Pidley commented in a statement:
“One year ago, we shared the horror everybody felt at the Grenfell Tower fire. Since then, Berkeley has reviewed its high-rise buildings, engaging with local fire authorities, residents, fire safety experts and MHCLG to ensure our buildings are safe while the future regulatory approach is clarified, following the Hackitt review.”
Specifically, the group raised their profit guidance for the year, following a rise in annual pre-tax profits of 15.1 percent to £934.9 million in the 12 months to April end.
Nevertheless, weak demand led to weaker sales of properties throughout the period, resulting in a dip in revenue of 0.7 percent.
The average selling price of properties increased by 5.9 percent, but the company ultimately opted to halve their total dividend to 146.7 pence per share from 254.6 pence per share.
However, Berkeley also announced it would be raising its pre-tax profit guidance for the two years ending 30 April 2019 to at least £1.575 billion, easing investor concerns.
Shares in Berkeley group are currently trading -5.12 percent as of 12.23PM (GMT).