Berkeley Group will raise £50m from investors to help build up a £300m war chest to buy land at knockdown prices as cash-hungry housebuilders withdraw from the market or become insolvent.

The London and southeast-based housebuilder said that the £50m placing, underwritten by UBS, would allow it to make purchases without going into debt.

Tony Pidgley, chief executive, is known for his sharp sense of market timing. He called the top and bottom of the late 1980s and early 1990s housing boom and bust, and started a move out of volume housebuilding in 2005. The placing is equivalent to 5 per cent of existing share capital, and management said it would also abandon plans to return £3 a share to investors by 2014 as the money would be better invested in land. The shares rose 51p to close at 897?p.

'They are positioning themselves to buy land at attractive prices in a market where the competition is saddled by debt,' said Jon Bell of Shore Capital. 'They have a competitive advantage and should be able to capitalise on quite an interesting opportunity.'

Financial Times, The Independent