Savills reports huge fall in global profits but UK prime holds fast
Group profit before tax is down from £50 million to just £6 million, the firm reveals in its half-year results.
Savills has revealed a massive drop in pre-tax profits in its half-year results, down from £50.4 million to £6 million.
Transaction advisory revenue was down 20% although property revenue was up 16%, the firm says in its half-year results.
Cash rich prime house buyers, particularly in the UK have remained relatively buoyant in the first half of 2023 despite the increasing economic headwinds., the firm reports.
“This is in contrast to those mainstream or residential new build markets which are more highly dependent on mortgage finance,” the firm says.
But for an established property company like Savills to report such dramatic figures will concern many in the industry. Interest rate rises are having a major impact on the market, and this is now being reflected in company results.
Steep rise
Mark Ridley, group CEO of Savills plc, says: “During 2023, global real estate markets have faced the obvious challenges associated with inflation and the related steep rise in interest rates.
“Different regions have varied in the pace of their adjustment to current conditions and all have experienced a material decline in trading volumes during that adjustment process.
Reduced expectations
“Market participants, whether investors or occupiers, seek greater certainty on the trajectory of interest rates over the next 18 months, something which has become somewhat clearer in recent weeks than for much of the period,” he says.
“Accordingly, our range of expectations for the year as a whole has reduced somewhat. We do, however, continue to anticipate a significant improvement in volumes of activity through the balance of the year, and into 2024.”
Meanwhile, it was also announced that Stacey Cartwright will succeed Nicholas Ferguson as chair of Savills when he retires from the board at the end of this year after seven years in the post.
The results are a dramatic turnaround compared to a year ago for the firm, when it reported a ‘substantial’ performance.