Real estate giant Savills recorded a slowdown in sales in the first half of the year as investors digested the implications of tariffs, but recorded strong results.
The real estate giant delivered a 6 per cent increase in revenue to £1.1bn in the six months to end June.
Underlying profit rose by 6 per cent to £23.3m up from £21.2m, while reported profit before tax increased by 78 per cent to £15.8m.
Underlying basic earnings per share decreased to 11.7p, reflecting an increase in taxes paid.
Savills’ investment management arm reported a revenue drop of 6 per cent to £43.6m, which the FTSE 250-listed firm said was in line with expectations as “some existing products came to the end of their life” while new strategies launched in 2024 will “take time to achieve scale”.
Assets under management (AUM) remained stable at £22.1bn.
Savills’ share price dropped 0.8 per cent to 967p in early morning trading, continuing a six month slide.
The board declared an interim dividend of 7.4p, up from 7.1p in the first half of 2024.
Mixed conditions in EMEA
Economic conditions in Europe, the Middle East and Africa (EMEA) were mixed, with weak manufacturing and business sentiment, driven by high market volatility following the announcement of US tariffs in April.
Weak investor sentiment was felt in the Asia Pacific region, where market transactions fell 26 per cent, as the region was particularly rocked by US trade policy uncertainties.
However, Spain reported a strong property market, with Germany also improving due to the Government’s intentions to invest further into infrastructure.
In the UK, the impact of potential fiscal change in the upcoming Autumn Budget, put a “dampening effect” on corporate and private investment activity, resulting in a 13 per cent reduction in real estate market investment.
The US office market showed early signs of recovery, but economic headwinds impacted occupier’s confidence in pursuing leases for large lots, with similar conditions in the US industrial market.
Mark Ridley, group chief executive of Savills said: “Q2 saw a slowing of transactional activity as occupiers and investors digested the implications of tariffs and geopolitical events.
“Our performance reflects the geographic weighting of our capital markets business.”
Business resilient
Despite the sales down, Savills enhanced its presence in Northern Ireland through the acquisition of established commercial property agency, Osborne King & Megran Limited.
Its non transactional businesses provided a resilient earnings stream during the period, with the real estate agents’ digital businesses performing well.
The company’s auction business sold over £420m worth of commercial and residential property during the first half of the year, up 8 per cent.
Its flexible office market business, Workthere, also doubled its revenue.
Savills’ expectations for the full year remains unchanged, as it believes the slow down in its core markets will “prove to be temporary”.