Upbeat: Savills said it had a solid start to 2018
Upmarket estate agent Savills has cautioned over a slower momentum in some parts of the property market, but seems to be weathering the UK slowdown better than its rivals as it cheered a ‘resilient’ performance.
The company saw two different trends in the UK: in London, its core market, prices for second-hand homes fell but exchanges increased 4 per cent, while outside the capital prices moved higher which led to a 5 per cent drop in exchanges.
It comes as it posted a 13 per cent rise in pre-tax profits to £112.4m in 2017 , on revenues up 11 per cent at £1.6billion. Its UK residential business saw revenues rise 4 per cent to £128.9million.
Shares in Savills rose 0.3 per cent to 979p.
‘We have made a solid start to 2018 with a pipeline of business carried over from last year in many markets, although this is against the backdrop of heightened market uncertainty, geopolitical risks and rising interest rates,’ Jeremy Helsby, group chief executive of Savills, said today.
‘We anticipate a tempering of the strong transaction volumes of recent times in some markets; however, at this early stage in the year our expectations for 2018 remain unchanged,’ it added.
The cautioning comes as rivals like Foxtons have been hit hard by a recent slowdown in the property market, especially in central London.
Last month Foxtons said activity in London had plummeted to ‘near historic lows’ and halved its dividend after seeing profits plunge 65 per cent.
But Savills said it was keeping its guidance for 2018 unchanged ‘at this early stage of the year’.
The group had already upgraded its full-year expectations in January after enjoying a stronger-than-anticipated finish to 2017.
As well as the property market slowdown in the capital, the sector has also been hit by a stamp duty hike in 2016 on buy-to-let properties and second homes.
Commercial arm: Foreign investors invested £31bn in commercial property in the UK in 2017
Within its UK commercial arm, Savills saw investment volumes jump by more than a quarter to just under £66billion, with foreign investors accounting for nearly half of it last year (£31billion).
In the London office market the proportion was even higher, with 80 per centr of investment coming from non-domestic investors and £8.4billion from Asia Pacific alone, Savills said.
‘Generally, investors remained heavily biased towards asset classes that offer comparative income security, and this meant that logistics and alternative asset classes rose in popularity offsetting decline in activity in retail, particularly shopping centres,’ the company said.
Outside the UK, Savills said its Asia Pacific arm saw profits shoot up 31 per cent to £55.6million, while North America suffered a 59 per cent plunge in profits to £7.8million and Continental Europe also saw a decline – down 17 per cent to £11.2million.