Regional markets stay strong, despite fall in Knight Frank figures

Property group Knight Frank saw revenues and profits fall in the year to March 31, it has revealed.

Sales for the year fell 2% from £525.9m to £517.4m, while pre-tax profits of £148.4m showed an 11% fall from £166.7m the previous year.

However, the group said it has a strong balance sheet with net assets at £260.8m, compared with £262.9m in 2018.

The headcount rose 5% during the year to more than 19,000, across around 500 owned and associated offices in 60
territories.

While figures slipped on a group-wide basis, the Manchester office of Knight Frank made a “significant contribution” to the property specialist’s performance in the last financial year.

Head of office, David Porter, said: “‘We had another strong profitable year across a range of service lines, both transactional and consultancy, whilst growing our teams with the introduction of key recruits such as Matt Stretton, partner leading our capital markets team.

“Key deals at 125 Deansgate, Windmill Green and Circle Square demonstrated the continued demand from occupiers.

“Plus, companies doing some pre-Brexit housekeeping saw our building consultancy team report on more than £1m sq ft of assets in just one month.”

He added: “We have started this year with uplifted forecasts with capital markets, consultancy, office and valuations again leading the way.”

Alistair Elliott, senior partner and group chairman, said: “Coming off the back of a record year, we are very encouraged by our performance in 2019.

“We experienced widespread political and economic uncertainty that resulted in a slowing in transactional activity across many of our principal markets.

“We are continuing to invest heavily in our future with a focus on developing our digital capabilities, expanding our global platform and improving the environmental and working efficiency of our offices around the world.

“We are particularly pleased that our margin has remained very strong at 29% whilst absorbing the cost of these investments. We are committed to our independence and remain debt free.”

He said: “In the UK, our capital markets, valuations and residential lettings teams excelled and our regional commercial offices continued to perform very strongly.

“We also saw improvements in London residential sales, despite the difficult market conditions. Knight Frank Investment Management (KFIM) had another record year and its investment performance, as independently measured by MSCI, continues to outperform the various peer benchmarks.

“Assets under management grew by nearly 30% to £2.98bn and, in line with a long-term strategic ambition to extend the business into continental Europe, KFIM is now active in a number of European locations, including France, Spain, Germany and central Europe.

“Our continental Europe and MEA regions were generally stable with a record performance from our Berlin office and double-digit growth in Abu Dhabi and Dubai.

“Asia Pacific proved more challenging with the US-China trade tensions affecting a number of territories.

“Nonetheless, Indonesia, Malaysia, Singapore and Thailand all delivered record performances, reflecting the increasing breadth of our capability in those countries, which have been built on consultancy and valuation capabilities.

“We continue to pursue a heavily transactional-based model across our group, backed by very strong advisory and consultancy capabilities, making us more sensitive to challenging trading markets around the world. We have great confidence that, as soon as a sense of political clarity and stability returns, we will see a marked improvement in real estate trading volumes, as pent-up investment and private demand returns to the markets.

“We also see immediate opportunities presented by emerging markets, senior living, healthcare and private rental sectors and are growing our capabilities in these areas.”

He added: “It remains remarkable to me that whilst activity is constrained in some areas, our trading year to date is similar year on year. There is enormous scope for growth and we remain committed to building our platform.”