Berkeley shares face demotion from the Footsie
One of Britain’s biggest property names – the housebuilder Berkeley Group – is facing demotion from the elite FTSE 100 index on Tuesday.
Its exit in the index’s quarterly reshuffle, triggered by a sharp decline in the firm’s share price, brings a loss of kudos. It also highlights the downbeat mood in the property market – and the slowdown in construction despite the Government’s vow to ‘build, baby, build’.
It comes as property website Rightmove also faces falling out of the top index following a sharp slump in its share prices over the past 12 months.
Such are the issues in London that, earlier this month, Berkeley’s executive chairman, Rob Perrins, said builders could ‘no longer invest’ in the capital.
Loss of kudos: Berkeley’s exit in the FTSE 100 index’s quarterly reshuffle highlights the downbeat mood in the property market
Southwark council recently turned down Berkeley’s scheme to build 867 homes in the down-at-heel, half-empty Aylesham Centre shopping site in Peckham, South-East London. The Labour council, which has since given way to a Green Party-Lib Dem alliance after this month’s local elections, said the decision was ‘a great day for Peckham’, though it dealt yet another blow to the Labour Government’s failing plan to deliver 1.5 million new homes by 2029.
Berkeley’s share price has tumbled by 18 per cent over the past 12 months to £34.34, giving it a market capitalisation of £3.2 billion. In April the developer, which focuses on London and the South East, cut its profit forecast, blaming taxation and an excess of regulations.
Berkeley also announced that it would no longer be buying land. The business blamed the war in Iran for the decision but said that the new strategy would continue even if the conflict ceased, given the high level of interest rates and supply chain upheaval.
It comes after David Thomas, the boss of rival builder Barratt Redrow, told the BBC that the conditions facing first-time buyers are now as bad as at the time of the 2008 global financial crisis, and called for the return of Help to Buy, the taxpayer-subsidised aid package.
He also said the typical construction cost of a home was £75,000 higher than in 2021.
Meanwhile, Rightmove’s share price is 45 per cent lower than a year ago at £4.17, giving the firm a market value of £3.1 billion. This is half the £6.1 billion offer made by the Australian firm REA, part of Rupert Murdoch’s News Corporation, when it unsuccessfully tried to acquire Rightmove in 2024.
While the firm remains Britain’s number one property website, Rightmove has been caught up in the so-called ‘SaaSpocalypse’ – the fear that businesses supplying software as a service (SaaS) risk being made redundant by the add-ons to Anthropic’s Claude artificial intelligence (AI) system.
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