Watkin Jones Cuts Full-Year Profit Forecast on Property Deal Delays

UK property developer Watkin Jones (LON:WJG) has issued a profit warning, lowering its outlook for the full fiscal year due to delays in finalizing real estate transactions. The company attributed the slowdown to institutional investors delaying deal closures in a climate of elevated interest rates and broader economic uncertainty.

Revised Annual Guidance

Watkin Jones announced on Friday that it no longer expects all of its anticipated investor-backed contracts to be completed by its fiscal year-end on September 30. This reverses a previous forecast that anticipated a stronger second-half performance.

The company now projects its annual adjusted operating profit will be at a similar level to what it achieved in the first half of the year. The firm specializes in developing built-to-rent and student accommodation properties, which it then sells or forward-funds to institutional buyers.

Sector-Wide Pressures

The challenges facing Watkin Jones reflect wider headwinds in the UK's property development sector. Persistent high interest rates have made financing more expensive and investment returns less certain, causing large-scale investors to become more cautious before committing capital.

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These macroeconomic pressures are compounded by other industry-specific issues, including elevated construction costs and significant expenses related to building safety remediation. The source noted that other developers, such as student accommodation provider Unite (LON:UTG), are also navigating this difficult environment.

Company Outlook

Despite the near-term challenges, Watkin Jones expressed confidence in its financial position. The company stated that its robust balance sheet leaves it well-placed to capitalize on a recovery when market conditions improve.

Management pointed to strong long-term fundamentals and sustained demand in its target sectors of rental and student housing as a basis for future growth.