Savills has reported a record performance in the first half of 2021, based on the depressed market in 2020.
Year-on-year, Savills has delivered massive increases in performance across many segments of its business, a clear indication of a return to activity as the Covid-19 pandemic eases.
Group revenues across the business were up by 18% to £ £932.6m with pre-tax profits up to £63.8m from £56.1m. Based on 2019 figures, when the UK was dealing with political uncertainties and Hong Kong with mass demonstrations, revenues increased by 10% with profits up by 72%.
Underlying profit in H1 2021 was £66.1m, some 401% higher than the first half of 2020 when just £13.2m was made. The agent said the massive uptick was a result of an increase in transactional revenues and the benefit of “abnormally low” levels of marketing, travel and entertainment/events-related expenses.
By revenue, transactional advisory contributed the most to the business in the six months ended 30 June and saw the biggest recovery over the period, up by 30% to £362m. This was followed by the investment management business, which was up by 25% to £38.2m and consultancy, up by 20% to £173.2m.
Property and facilities management saw the smallest growth – up by 6% to £359m.
In the UK, revenues increased by 40% to £417.4m, with underlying profits up by 254% to £53.1m, following a very quiet H1 2020 when just £15m of profit was made. Transactional advisory revenues in the UK were up by 70% to £142.7m, again reflecting the impact of Covid on the investment markets in 2020.
Despite the increases in activity, group chief executive Mark Ridley said a return to “normal” trading in both the leasing and investment markets was a little way off. Leasing activity in London is still 60% down on its five-year average he said, with investment activity down by 42% on the five-year average. However, Ridley added that he expects the return of overseas investors as travel restrictions continue to ease and the fact the UK still looks good value compared with its European counterparts will boost activity.
The star performer of the first half of 2021 was the firm’s residential business, with revenues from transactional advisory (new and second-hand homes) up by 97% to £104.2m. Underlying profits in Savills’ UK residential transaction business increased from just £1.6m in H1 2020 to £20.5m in H1 2021.
Country homes and the regions performed strongly as homeowners sought space to live and work, with regional revenues up by 200%. Despite a drop in overseas investors for prime London residential, revenues were up by 131% for the firm’s London business.
The firm’s private rented sector performed less well, year-on-year, with revenues down by 27% on H1 2020. Savills said this was due to a number of big deals in H1 2020 and that based on H1 2019, this year’s revenues were actually up by 37%.
“Our strategy of maintaining full operating strength and high levels of client service through the pandemic has proven successful through the progressive recovery of many markets in which we operate,” said Ridley. “The combination of strong trading in the less transactional service lines, improving transactional markets – including the completion of previously delayed transactions – alongside continued cost management, has resulted in a record first-half performance for the group.”
He added: “Looking ahead, we expect some discretionary cost to start to normalise in the second half of the year and, while pandemic risks continue, including the current lockdowns in a number of Asian markets, we are confident in the group’s ability to both benefit from progressive recovery in transactional markets and to continue to execute our growth strategies. Assuming no new material disruption, the board expects the performance for the year as a whole to be meaningfully ahead of its previous expectations.”
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