Buoyant Birmingham property market boosts full year revenues for Knight Frank
BIRMINGHAM’S buoyant commercial property sector has contributed to improved full year turnover for consultancy Knight Frank.
In the year ended March 31, 2016, group turnover rose 4% to £460.9m (2015: £443.1m), however, pre-tax profit dipped 4.7% to £152.6m (2015: £160.1m). The balance sheet showed net assets at £223.7m (2015: £210.8m).
Alistair Elliott, senior partner & group chairman, said that while profit levels were constrained, they were nonetheless encouraging given the significant investment made by the firm during the year.
“Our focus on strategic recruitment of outstanding people in key locations is paying dividends, demonstrated by our growth in market share and our ability to complete market-leading deals,” he said.
“With no debt and strong profits every year, we are in robust shape to continue the development of our business and address the future cycles. Our focus on profit delivery will continue.”
Commenting on the local performance, Ashley Hudson, partner and head of the Birmingham office of Knight Frank, said: “It has been another positive year for the Birmingham office of Knight Frank, both in terms of commercial and residential property, further enhancing the firm’s reputation as one of the leading property consultancies in the city.
“We have continued to cautiously expand, with new hires in our valuation, automotive, building surveying and property and asset management teams, on the back of a number of significant new instructions.
“Despite Birmingham continuing to attract high levels of inward investment, capital flowing into the city slowed for a period over summer, partly as a result of the uncertainty surrounding Brexit. However, our agency and professional teams are as busy as ever, with the post-Brexit hangover showing no sign of having any real impact, particularly in the office and industrial sectors.
“What is encouraging is the amount of development currently happening in the city, evidenced by the number tower cranes occupying the Birmingham skyline. Coupled with good investment fundamentals – increasing rental values, strong occupier demand, attractive yields – we fully expect the investment market to bounce back, with buyers becoming increasingly active and pricing in some sectors being at or ahead of pre-Brexit levels.
“Alongside the commercial business, Knight Frank’s residential agency team in Birmingham is in good shape, buoyed by the city’s resurgent residential property market and the increasing demand for new homes.”
Mr Elliott said the UK’s strong regional commercial markets had helped the group achieve a second successive record year.
“The immediate aftermath of the EU referendum led to concerns that drove a sharp adjustment in REIT prices and the suspension of trading in a number of daily-priced retail funds,” he said.
“However, this initial financial market reaction corrected quickly, with REITs reversing much of their falls and retail funds working through strategies to re-open. This shock to the investment market should be considered in the context of industry trends already in motion in the first half of 2016 which had already seen a slowing of investment volumes following a record year in 2015. Pricing was also already softening in many markets as is consistent with the late phase of the cycle.
“Whilst a few transactions were aborted because of the EU referendum, many continued, albeit at a slower pace, as investors took time to assess the changing economic environment.”
