Covid: Profits slump by 54% at Savills’ UK residential operation
Figures would be worse but for 'an oustanding' performance at its lettings and build-to-rent division, and a sharp recovery in the country sales market.
Savills has reported a 54% reduction in profits within its UK residential business to £1.6m for the first six months of 2020, from £3.5m last year.
This follows an 8% reduction in revenues as trading volumes dropped to the lowest since the global financial crisis in 2007/8, although its figures have been buoyed by lettings and build to rent, which delivered ‘an outstanding performance’ with revenues up 87% year-on-year.
Overall its wider UK operation turned over £52.9 million, £4.4 million less than the first six months of 2019, created largely by a 16% drop in revenue at its sales division, which is blames squarely on the housing market suspension during lockdown.
Under offer
Savills is optimistic about the future despite these difficult results for the first half of 2020, revealing that it saw a record number of transactions going under offer once the market re-opened, and that this will help close the gap for its full-year figures.
“This recovery was primarily in the country market as buyers sought outside amenity space,” says Mark Ridley, its soon-to-retire Group Chief Executive (left).
“But we have also seen a significant recovery in activity in the core London market during the same period together with improved activity from international buyers in Prime Central London.”
Savills overall transaction volumes for exchanged were down 8% in London and 27% in the regional markets, and the company’s figures show the strongest market in London was in the £500,000 to £1.5 million bracket.
New homes sales dropped by 17% during the first of the year, and reservations were down 16%, which Savills pins squarely on the disappearance of overseas buyers from the London market.
Industry reaction
“Savills UK results are robust but perhaps hint at the wealth impact of COVID-19 on the UK Housing market, whilst the average house price in the UK is around £240,000 the average price of the homes Savills sells is £1.2m in the regions is and £1.9m in London,” says Anthony Codling, CEO of Twindig.
