Savills’ profits fell by 12% in the first half because of weakness in the UK commercial market, despite strong continental European activity.
Underlying profit was down to £23.7m from £25.3m in H1 2017, while revenue rose by 2% to £280.5m.
In the UK, commercial transaction fee income fell by 14%, which Savills said was a reflection of greater uncertainty and a relative lack of stock compared with last year. Investment volumes declined by 4%, led largely by a fall in retail investment.
Total UK revenue – down by 2% – was bolstered by Savills’ residential transaction business, where revenue grew by 6% to £58.2m, driven by a rise in average sales value, which offset a fall in the number of exchanges.
Activity was strong in continental Europe and the Middle East where transaction fee income rose by 57% to £41.5m. Savills said the Irish, German and Dutch markets were particularly strong.
Savills added that the fall in profits was a short-term result of investment across the business. It recently acquired Cluttons Middle East to drive growth in that region, while Savills Investment Management bought a 25% stake in European investment adviser DRC Capital.
Jeremy Helsby, group chief executive of Savills, said: “In the face of some challenging market conditions, Savills has delivered a resilient first-half performance reflecting our geographic diversity, breadth of operations, recent business investment activity and the strength of our UK residential business.
“Continued growth in our less transactional businesses, significant overseas earnings and strong shares in many of our most important transactional markets position Savills well to weather fluctuations in markets and to capitalise on the opportunities which we expect to emerge over time.
“We have a robust pipeline of activity for the second half, despite an environment of escalating political and economic uncertainty and we continue to anticipate that our performance for the full year will be in line with the board’s expectations.”
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