Savills plc (LON: SVS), the international real estate advisor, published today the following trading update in respect of the year ended 31st December 2019.
The Group has delivered a full year performance reflecting both the robustness and geographic diversity of our market positions generally, and the strength of our less transactional businesses.
Savills has shown considerable resilience in a year which exposed the Group to significant challenges in the UK and Hong Kong, two of our key markets. In the UK, the effect of Brexit and political uncertainty suppressed market activity in both Commercial and Residential transactional markets until mid-December. The clear outcome of the General Election prompted a strong close to the year as confidence to transact returned to the market. In Hong Kong, the political unrest severely reduced the volume of trading activity from mid-year and continues to do so. The strength of Savills positions in both markets contributed to a resilient performance through increased market share, despite lower volumes of activity generally.
Thanks largely to an excellent performance in the UK, significant year-on-year growth in the US and a strong performance from Savills Investment Management, the Group anticipates that underlying results for the year to 31 December 2019 will be at the upper end of the Board’s expectations.
Despite the backdrop of uncertainty, the UK performed well across all business lines, latterly benefitting from improved investor sentiment in both commercial and residential markets. Our Residential business continued to outperform the overall market conditions, in particular taking share in the core London market.
Our Asia Pacific business as a whole performed slightly below our original expectations primarily as a result of the unanticipated difficulties experienced in Hong Kong and increased time taken for the recruitment drive of the last 18 months in Australia to bear fruit.
In Continental Europe our business performed broadly in line with expectations in the context of a decline in the volume of transactions in some of the major markets.
In North America, we delivered significant growth in the Occupier Service business (including tenant representation brokerage) and our capital markets teams improved profits year-on-year. This led to a much improved performance overall for the business.
Savills Investment Management performed ahead of our expectations with both new product launches and significant capital deployed by our Major Account Investment Team. In addition, we benefited from performance fees on certain products, reflecting continued strong investment performance across the business.
Looking to the year ahead, increased political stability in the UK should maintain improved sentiment in real estate markets. Global investor demand for secure income, restricted supply and expectations of continued low interest rates suggest that the medium and long term dynamics of the UK real estate market should remain largely positive. Nevertheless, some caution may remain until the full impact of Brexit is better understood. Certain other global markets continue to be overshadowed by macro-economic and political uncertainties. As a result of these factors, at this early stage in the year the Board’s expectations for 2020 remain unchanged.
Savills plc will report 2019 full year results on 12 March 2020.