Savills' profits hit by slump in commercial property deals ahead of EU poll
Upmarket estate agent Savills has taken a hit from falling commercial property transactions as spooked buyers remained on the sidelines in the run-up to the EU referendum.
The firm said that in the six months to the end of June, its fees from UK commercial property deals fell 23% to £32.1 million, with investment trading volumes declining by around 34%.
"In central London, many of the hitherto significant buyers - sovereign wealth, international private equity - elected to remain largely on the sidelines during this period," Savills said.
As a result, underlying profits for the estate agent's UK commercial transaction business declined by 54% to £2.7 million.
The firm also said it has seen a reduction in activity in residential following the referendum result, although it added that there is "evidence of increased demand, particularly from overseas buyers and transactions are completing, particularly where vendors are prepared to accept small discounts".
Savills said it is "too early to make a clear judgment on market volumes for the remainder of the year".
Residential transaction fee income increased 10% to £57.2 million, with the firm flagging an increase in activity in advance of the stamp duty surcharge in April. This was followed by "a tempering of activity in the lead-up to the EU referendum".
On a group basis, Savills said a strong general performance in residential "more than offset the impact" of falling commercial transactions.
Group revenue for the first six months of the year rose 14% to £622.7 million, although pre-tax profits dipped 3% to £25.5 million.
Chief executive Jeremy Helsby said: "At this stage, in the traditionally quieter summer period and so soon after the EU referendum result, it is not possible to obtain a clear read on the direction of activity in a number of the group's principal markets, although the fundamental attributes of real estate as an investment class remain strong."