Property boom spells good news for Savills: Surge in sales and profits as residential and commercial buyers snap up high-end homes and warehouses
- Savills said 2021 profit would be ‘very significantly’ ahead of previous forecasts
- The group added that central London property market had also been strong
Savills experienced an ‘extraordinary strong’ sales period in the UK and across Asia Pacific in the final few weeks of 2021.
In a trading update, the high-end estate agency group said its full year performance had been ‘very significantly’ ahead of expectations.
The group reiterated that it had been able to benefit from ‘substantially lower levels’ of discretionary expenditure in respect of travel, entertaining and marketing events, but it expects these costs to return to near pre-pandemic by the end of the year.
Savills expects its underlying pre-tax profit for 2021 to be ‘very significantly ahead’ of the upper end of its previous range of expectations, but gave no ballpark figures today.
Strong sales: Savills has said it experienced an ‘extraordinary strong’ sales period in the UK and across the Asia Pacific
Shares in the FTSE 250-listed company rose sharply today and were up over 8 per cent to 1,435.00p this afternoon.
The group saw a surge in residential and commercial buyers looking to snap up high-end homes and warehouses as 2021 drew to a close. For many commercial buyers, warehouse space has become increasingly vital amid a surge in online shopping.
Businesses have been flocking to snap up more warehouse space, while a high number of residential buyers sought out idyllic retreats in the countryside during the pandemic.
However, Savills said sales in the pricey central London property market had also held up well.
It said: ‘The UK prime residential market continued to perform exceptionally strongly through the last quarter and volumes in the Prime Central London market clearly began to improve.
‘Currently there is a definite shortage of sale stock, so despite outperformance in 2021, our expectation of a moderation of activity in 2022 remains intact.’
Data from the Office for National Statistics published in December revealed that London remained the most expensive area in the country in October, with homes coming in with average price tags of £516,000.
On Savills’ website today, some properties for sale in London are listed as ‘price on application’, but the property commanding the highest visible price tag in the capital at present comes with an asking price of over £39million.
Capital sales: Savills said sales in London had been strong
The group said its Asia Pacific business performed well ahead of its expectations.
Hong Kong sales activity and market share remained strong through the period, and Australia, Singapore and Japan also enjoyed strong trading activity in the final quarter, it added.
For the year ahead, the group has maintained its outlook. It said inflationary pressures in many markets will result in employment costs increasing at the highest rate for many years and thinks discretionary costs will ‘progressively normalise’.
The group added: ‘In respect of trading revenues, at this stage, we anticipate some normalisation of commercial capital transaction volumes and a moderation of levels of activity in some residential markets, particularly in the UK.’
Peel Hunt analysts believe the group’s annual 2021 pre-tax profit could come in at up to £190million, which is 33 per cent higher than the figure reported for 2019. The estate agency group will publish its annual results on 10 March.