Savills first half to be impacted by price corrections

In an update ahead of its annual general meeting, Savills said that as capital values adjust to higher interest rates, global capital transaction volumes for the year to date are at their lowest levels in a decade, impacting its commercial transaction business in the early part of the year.

"As a result, at this early stage, the range of outcomes for the year as a whole has widened, however our prime commercial leasing, residential, consultancy and property management businesses all continue to trade in line with expectations," it said.

The company said leasing markets have remained more resilient across most sectors, although office take-up is heavily skewed to prime stock with strong sustainability credentials.

Although volumes are lower than last year, as expected, prime residential markets have performed well with a particular emphasis on the London market, it said.

In terms of regions, Savills said Asia Pacific, Japan and Korea have traded well and sentiment in mainland China has improved significantly since the New Year.

In the UK, its performance has been largely in line with expectations, driven mainly by good levels of activity in the prime residential markets and some recovery in retail.

"Other commercial capital markets have been severely impacted as pricing adjusts, however we have enjoyed an unusually high market share in prime transactional markets, which has partially mitigated the significant decline in volumes," it said.

In Continental Europe and the Middle East, volumes - particularly in the major markets of Germany and France - have been severely reduced during the period, with leasing momentum still subdued.

In North America, Savills has performed in line with its expectations, albeit individual transaction sizes are currently much reduced.

Savills also said that the investment management business has traded in line with its expectations.

Chief executive Mark Ridley said: "The strength of our less transactional businesses has helped underpin the group's performance overall. The anticipated market corrections in 2023 are happening largely as anticipated.

"As greater certainty over the future pattern of global interest rates is emerging, we expect progressive recovery through the third and fourth quarters of the year and into 2024."