Homebuilder Berkeley reins in profit outlook, land buying as Iran war dampens recovery

* Berkeley cuts land buying, slows construction investments

* Berkeley targets operating margins ​of 17.5% ⁠to 19.5% through 2030

* Expects over 1.4 billion pounds ​in pre-tax profit over the four years from fiscal 2027 to 2030

* Shares drop as much as 19% (Adds shares, details ​from ‌report, background and analyst comment throughout)

April 1 (Reuters) - British homebuilder Berkeley forecast that profit growth would slow through ⁠2030 and said it would halt land purchases as the ⁠Middle East conflict and the risk of ​higher interest rates dampen hopes of a housing market recovery, sending its shares down nearly 19%.

Berkeley said it expects to deliver more than 1.4 billion pounds ($1.9 billion) in pre-tax profit over the four years from fiscal ​2027 to ‌2030, with profits "slightly weighted" towards 2027, as it slows construction investment to match weaker sales.

The high-end homebuilder is expecting pre-tax profit for fiscal year 2026 of 450 million pounds. It is also targeting operating margins of 17.5% to 19.5%, below margins of above 20% achieved so far, as it seeks to ​absorb higher costs. The update comes as U.S. and Israeli strikes on Iran and Iranian strikes against Israel, U.S. ‌bases and Gulf states push up building costs and risk keeping interest rates higher for longer, threatening an already fragile recovery in demand and prompting ‌margin warnings from rivals such as Taylor Wimpey and Bellway. London-focused Berkeley said it can no longer achieve its required rate of return on new land purchases due to a sustained increase in tax and regulatory ​burdens on residential development.

EARLY RECOVERY HOPES FADE Despite signs of a modest recovery in sales volumes in early 2026, the Middle East ‌conflict has given way to heightened market uncertainty. “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,” Berkeley said ⁠in a ⁠statement.

The group said it had reduced land creditor balances and ‌cut operating costs to 150 million pounds from 178 million pounds to protect its balance sheet. However, it said it would continue its ​2 billion pounds shareholder return ​programme. “While investors will continue to benefit from strong capital allocation in the ‌form of buybacks and dividends, which the company has reaffirmed its commitment to, the lower earnings trajectory will be a disappointment,” JPMorgan analyst Zaim Beekawa said in a note.

Berkeley Group

Taylor Wimpey

Bellway