The Berkeley Group Holdings plc ("Berkeley")

Strategy Update

1 April 2026

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

Ahead of reporting its full year results for the year ending 30 April 2026, Berkeley is providing a strategic update to reflect the current operating environment and implications for the delivery of Berkeley 2035.

As announced in the recent Trading Update, Berkeley expects to deliver pre-tax profit for FY26 of £450 million, in line with guidance put in place two years ago, with around £300 million of net cash.

Context and Operating Environment

Berkeley's business model of developing brownfield regeneration projects in urban areas is wholly aligned to Government housing policy of building new homes where they are needed most. It makes the best use of previously developed land to deliver construction-led growth, providing homes for sale and rent alongside new amenities and services for local communities in well-connected, low-carbon, nature-rich neighbourhoods.

This hugely positive activity for the economy and society requires considerable upfront capital investment which in turn requires a stable, predictable and supportive operating environment. Recent years have seen an unprecedented increase in cost and regulation, at a time of increasing interest rates and faltering consumer confidence, amidst prolonged geopolitical and macro-economic volatility and uncertainty.

We welcome the 'Homes for London' package, announced last week in its final form by MHCLG and the GLA.  It has all the ingredients required to address today's viability challenge and stimulate homebuilding. To be successful, it will now require pragmatic and flexible implementation by local authorities to give homebuilders the certainty to invest and bring forward currently stalled regeneration schemes at pace to address the decline in new home starts in London which currently sit at less than 10% of MHCLG's target.

The implementation of the Building Safety Regulator's new gateway process for building approval has lengthened the time between obtaining planning approval and starting on site by around twelve months. The system is yet to operate effectively and predictably, further impacting the timeline for the delivery of new developments.

Against this backdrop and given subdued transaction volumes over the last three years, the Group has proactively taken action to protect the business and strengthen its balance sheet, maintaining a strong cash balance, lowering land creditors from £900 million to around £470 million and reducing operating costs from £178 million to £150 million, a 25% reduction in real terms. During this time, we have limited new land investment, buying just three sites, funded by non-core disposals.

In the first two months of 2026, we had begun to see signs of a modest recovery in sales volumes. However, we indicated in our Trading Update, that recent geopolitical events and the macroeconomic consequences, including reduced potential for further rate cuts, could reduce confidence in a near-term market recovery. This has now become a reality.

We are today announcing decisive action to maximise long term shareholder value by prioritising value creation from our existing land holdings, tightly sequencing construction, flexing the pace of BTR investment and maintaining disciplined capital allocation while continuing shareholder returns.

Implications for Strategy

Berkeley 2035 includes the following levers of long‑term value creation: Land investment and optimisation; Investment in construction work‑in‑progress in the core business; Investment and growth in Berkeley Living (BTR); and Shareholder Returns. Given the prolonged challenging market backdrop and geopolitical volatility, Berkeley is re‑phasing the delivery of this strategy over the next four years.

1.   New land investment

In this environment, Berkeley does not believe it can make its required rate of return on investment in new land acquisitions. This is due to the continuous increase in the tax and regulatory burden on residential development, which other land uses do not experience, allowing them to pay higher land values. Where residential transactions have been taking place, land prices have been overheated. Berkeley is therefore not proposing to acquire new land while these conditions prevail, except through joint venture arrangements, and will focus on its existing land holdings.

2.   Existing land holdings

Berkeley already possesses unrivalled land holdings comprising over 50,000 homes, with a further pipeline of more than 10,000 homes, located in London and the South-East, the UK's most under-supplied markets.  Our focus will be on applying the principles of the new 'Homes for London' package to our sites to provide the certainty required to bring forward our long-term regeneration sites at returns commensurate with the development risk.

Our target under Berkeley 2035 is to add £2 billion of value to these land holdings through optimisation and bringing our pipeline sites through the planning process.  We have made good progress in the last 12 months which we will report on with our full year results in June.

3.   Investment in construction work-in-progress

Construction phasing will continue to be matched to market demand and the pace of Building Safety Regulator approvals, ensuring disciplined management of work in progress and stock levels. 

4.   Investment in Berkeley Living

We are well advanced with the first six buildings at Berkeley Living. When completed in FY28, the buildings will represent an investment of around £400m at cost. We have launched the marketing of Foundry Yard our first BTR building at Alexander Gate and the lettings are ahead of expectation. 

We remain firmly committed to our strategy to deliver 4,000 BTR homes by the end of FY35 and will review phasing of the second tranche of schemes on an ongoing basis, along with our plans for recycling capital from the initial six buildings as market conditions evolve over the period.

5.   Focus on Operating Margin

Berkeley will target operating margin within its historic range of 17.5% to 19.5%. This requires both the maintenance of development margins and further real reductions in operating costs.  

6.   Shareholder Returns

Berkeley has now delivered £336 million of the £2.0 billion shareholder returns under Berkeley 2035. This included £260 million up to 30 September 2025 and £76 million since.  The next target is a further £564 million by 30 September 2030 which we are currently comfortably on target to meet. In these market conditions where the share price is below NAVPS which is forecast to be circa £39 at year end, we believe that share buybacks are the best way to maximise shareholder value.

Medium-term profit and cash profile

With the ongoing conflict and deterioration of the economic outlook, we are reducing work in progress investment to match the sales levels we are currently achieving. We are forecasting we can absorb the expected cost inflation through optimisation of our land holdings, and the business plan gives the flexibility and agility to do this. Our business plan is based on this economic outlook and we believe that it is in the best interests of shareholders to adapt our approach in this way, rather than pursue short-term profit targets.

As a result of the above, we anticipate delivering above £1.4 billion of pre-tax profit, over the next four years (FY27 to FY30). The profile of profit before tax will likely be slightly weighted towards 2027 and thereafter broadly evenly spread.

We are targeting to achieve a return on capital employed in the core business of at least 15% as soon as possible, and between 11% and 15% in the intervening years.

We will continue to strengthen the balance sheet, maintaining net cash across the period with land creditors continuing to reduce. This will allow Berkeley to increase investment at the point when the market and regulatory environments inflect, accelerate shareholder returns or increase investment in Berkeley Living as appropriate.

In the longer term, the outlook for London remains positive. It is a global City, the largest financial centre in Europe and the second largest in the world. It offers security, heritage, and innovation in an uncertain global environment. For customers with liquidity, the current market dislocation presents a great opportunity to buy.

END

For further information please contact:

The Berkeley Group Holdings plc                                                           Novella Communications

R J Stearn / N L Eady                                                                            Tim Robertson

T: 01932 868 555                                                                                   T: 020 3151 7008          

LEI: 2138009OQSSLVVHQAL78

The person responsible for making this announcement is Victoria Mee, Company Secretary.