Savills to meet forecasts despite 'challenging' year

Updating on trading, the FTSE 250 property firm said the property market had been "challenged" by higher interest rates, geopolitical events and weaker demand for offices in light of hybrid working.

It continued: "These factors, together with certain location-specific issues, significantly reduced transactional activity in global markets during the year.

"The most affected were North America, Greater China, Australia and Northern Europe, particularly the largest markets of Germany and France."

As a result, global market conditions were, it noted, "extremely subdued for longer than originally anticipated at the start of 2023", with a "significant reduction in profits" in its transactional business.

However, the London-based firm said its less transactional businesses, such as the consultancy and property management arm, fared better, delivering a "resilient” earnings stream.

It continued: "Consequently, the group expects that its full-year performance for 2023 will be in line with the expected range of outcomes."

Analysts are currently looking for underlying 2023 pre-tax profits of between £85m and £97.1m.

Savills also sounded a more upbeat note for the current year.

It said: "Challenging market conditions are expected to continue for some time. However, most markets appear to be either at, or past, the moment of peak uncertainty.

"While it is too early to determine the 2024 outlook with clarity, we believe that the first half will see underlying market improvements which would set the course for the broad recovery in most of our markets during the second half."

Shares in Savills, which is due to publish full-year results on 14 March, were largely flat as at 0930 GMT, at 973p.