PropertyAug 9 2016

Savills’ strong Q1 figures offset post-Brexit uncertainty

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Savills’ strong Q1 figures offset post-Brexit uncertainty

Savills’ UK residential transaction business increased its underlying profits by 37 per cent to £7.4m during the first half, which included the costs of new office openings, compared to £5.4m during the same period last year.

Residential transaction fee income rose by 10 per cent to £57.2m by 30 June - from £51.8m in 2015 - on the back of “a significant increase in transaction volumes in advance of the stamp duty increase in April”.

In the second hand sales market, Savills overall transaction volumes were up by 14 per cent in London and 23 per cent in the country market.

The average value of London residential property sold by Savills in the period was £2.5m - down from £3m during the first half last year - and £1m in the country.

“The lower London average value indicates further progress in implementing our strategy to expand in London markets with values below £1.5m,” explained the first half results.

The new build market also displayed “resilient performance”, with national transaction volumes increasing by 26 per cent over the first half of 2015.

Since the EU referendum there has been an expected reduction in activity, however there is evidence of increased demand, according to Savills, particularly from overseas buyers.

Transactions are completing, particularly where vendors are prepared to accept small discounts, the statement added.

Group revenue was up 14 per cent from £547m to £622.7m year-on-year during the first six months, although overall profit before tax was down 3 per cent from £26.4m to £25.5m.

During the period, the group incurred an aggregate restructuring charge of £1.7m - up from £500,000 in the first half of 2015 - and acquisition related costs of £15m - up from £10.6m last year.

The restructuring charge related principally to the integration of Smiths Gore with the Savills UK business.

Group chief executive Jeremy Helsby said that looking to the second half, “at this stage, in the traditionally quieter summer period and so soon after the EU referendum result, it is not possible to obtain a clear read on the direction of activity in a number of the group’s principal markets, although the fundamental attributes of real estate as an investment class remain strong”.

peter.walker@ft.com