Real estate giant sees first half performance falter

James Evans

International real estate business Savills has reported declines in its half year revenues and pre-tax profits due to the impact of coronavirus.

Announcing results for the six months to June 30, today, it revealed turnover of £791.4m, down seven per cent, and pre-tax profits of £7.7m, a 69% fall on the same period last year.

Net cash of £9.4m was an improvement on a net debt of £139m a year ago.

No dividend payment is recommended.

The business said less transactional businesses, including consultancy and property and facilities management, (65% of group revenue) helped mitigate the significant impact of COVID-19, particularly in the second quarter, on global leasing and investment market volumes.

Property and facilities management revenue was up four per cent, while consultancy revenue was up one per cent.

Commercial transaction revenue reduced 23% overall, with Asia Pacific and North America particularly affected.

UK residential revenue was down eight per cent, reflecting significant reductions in transactional activity during lockdown, partially mitigated by a strong recovery in June.

James Evans, head of Savills Manchester, said: “I am delighted we have been able to deliver these excellent results in spite of the challenging market conditions we have faced during the COVID-19 pandemic.

“It is testament to our great people and loyal client base that our Manchester office has contributed to this success.”

Group chief executive, Mark Ridley, said: “In the context of the significant impact of COVID-19 on global markets in the second quarter, Savills’ resilient interim results highlight the diversity and strength of our global business.

“Looking forward, as a consequence of COVID-19 the economic environment remains highly uncertain, chiefly in respect of expected recovery trajectories across the world and the occurrence of second wave outbreaks causing further lockdowns.

“In addition, it is unclear how significantly the longer term economic impact of COVID-19 will weigh on corporate and investor sentiment.

“That said, the wider context for real estate investment is largely positive with the expectation of low interest rates for longer and continued, or enhanced, investor demand for income reflected in increased allocations to real asset backed strategies.”

He added: “In recent weeks we have seen signs of recovery in residential markets and a number of commercial transaction markets around the world.

“Clearly, our performance in the second half of 2020 will be highly dependent upon the extent to which such signs become a sustained recovery for the markets in which we operate.”