Savills revenues rise 27 per cent as London market stabilises

Emma Haslett
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Weak growth in the residential market was offset by a strong performance in its commercial arm (Source: Getty)

Property services giant Savills reported a jump in revenues this morning, despite uncertainty during the run-up to the General Election.

The figures

Group revenues rose to £547m in the six months to the end of June, up 27 per cent from £430.8m during the same period last year.

Profit before tax rose seven per cent to £26.4m, up from £24.7m last year. Meanwhile, underlying basic earnings per share rose 16 per cent to 20p, while the company hiked its divi seven per sent to 4p per share.

But there were signs of trouble: the company's UK residential transaction fee income fell 13 per cent to £51.8m, from £59.6m last year, with transactions falling 15 per cent in the capital.

However, its commercial business picked up the slack, with transaction fee income rising 38 per cent to £41.9m.

Why it's interesting

While UK house prices continue their inexorable rise, parts of the UK property market are looking less rosy - particularly the high-end London market Savills places a particular focus on.

That's in part thanks to new Stamp Duty measures the government introduced last year, which mean those buying homes worth more than £2m (the average price of a postage stamp-sized apartment in parts of the capital) pay seven per cent Stamp Duty.

Uncertainty over the outcome of the General Election - during which two out of three of the main parties were vowing to introduce a Mansion Tax - meant the super-rich held off buying homes in the capital in the weeks before 8 May.

But commercial property and many of Savills' overseas markets, which includes the US where revenues "increased substantially" from £11.1m during the first half of last year, to £86.7m in 2015, "more than offset the weakness in the UK residential market", Savills said.

What Savills said

Jeremy Helsby, the company's group chief executive, said:

Savills has delivered a strong first half performance as a result of the contribution from Savills Studley in the US and the strength of our existing businesses in key transactional markets of the UK and Asia. Our performance in these markets mitigated the effect of the pre-election slowdown in the UK Residential market, where, lately, we have seen activity levels starting to improve.

Looking to the second half, we currently see no significant change in the overall outlook for our business. Our core markets continue to be highly demand-driven as a result of the continued substantial capital allocation to real estate around the world. Furthermore, in many markets we are now seeing rental growth and increased occupier confidence. Savills is well placed to act on the opportunities arising from occupier and investor demand globally.

In short

A weak performance in high-end UK residential, one of Savills' core market, was more than offset by strong growth in commercial and the US.

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