CBRE is preparing for continued pressure on its transactional business after “better than expected” but “still down significantly” Q1 results.
Across the whole business, revenue remained largely flat in Q1, rising by 1.1% from $7.3bn (£5.8bn) to $7.4bn. However, its advisory business saw a decline of 17.5% in revenue over the period from $2.5bn in Q1 2022 to $1.8bn this year.
Capital markets revenue fell by 41% due to “severely constrained capital availability”, said CBRE. The Americas and EMEA led the decline, with revenue down by 43% in both regions. APAC held up slightly better, reporting declines of 30%.
CBRE said most debt capital sources had sharply curtailed their lending activity during the quarter, which meant global mortgage origination revenue had declined by 51%. Loan origination volume was down markedly with nearly all private and public sector capital sources, it said.
In leasing, global revenue dipped by 8%, largely driven by the Americas, where revenue fell by 10%.
Valuations revenue was down by 9%.
CBRE president and chief executive Bob Sulentic said: “Our first-quarter results were slightly better than we expected going into the year, but still down significantly from last year’s strong first quarter.
“Although we anticipate pressure on our transactional businesses to intensify further this year, we are maintaining our earnings outlook for full-year 2023… Our full-year outlook is supported by the same dynamics we saw in the first quarter – benefits from the diversification of our business and our intense focus on cost.”
CBRE reported revenue increases across a number of its other business segments, including loan servicing, which was up by 5%, property management, up by 1%, and its it global workplace solutions business, which reported an 11.1% increase to $5.3bn.
Sulentic concluded: “There is more uncertainty in our outlook than there was 60 days ago, with our expectations underpinned by our view that a recession this year will be moderate and that an eventual easing of the Fed’s monetary policy will spur a rebound in economic activity in 2024.”
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