Savills sees real estate move past ‘peak uncertainty’

Savills has said most real estate markets are past “the moment of peak uncertainty”, as the agency posted annual results that showed how tough dealmaking became during the past year. In results for 2023, the agency said it made revenue of £2.24bn, a 3% drop year-on-year. Profit before tax fell by almost two-thirds to £55.4m. Among the best-performing business lines were consultancy and property management, where revenue grew by 4% and 11% respectively. Transactional business saw a 17% drop in revenue during the year to £772.9m. In the UK, commercial transactional revenue fell by 15% to £100.6m. Chief executive Mark Ridley said: “In the context of extremely challenging real estate markets, which saw the lowest levels of transaction volumes for a decade, our less transactional businesses have provided a solid platform for the group with a resilient and growing earnings stream. “Current economic and geopolitical conditions remain uncertain and although we expect this to continue for some time, most markets appear to be past the moment of peak uncertainty. There are some early signs of underlying market improvements, which should set the course for a broader recovery during the second half of the year and into 2025.” In an interview with EG, Ridley said several markets are now showing tentative signs of an upturn. The residential market is seeing normalisation, he said, while the industrial and logistics sector is posting “elevated levels of take-up back to post-pandemic levels”. In terms of offices, Ridley said: “I wouldn’t suggest that all markets are going to recover at the same rate, but we are seeing strength already in the prime markets.” He noted that office take-up in the City of London is increasing, as it is in prime regional markets.  The agency said it had focused on maintaining “core bench-strength around the world” as rivals cut jobs, but said it reviewed the business for “locations or service lines where the anticipated time frames for market recovery remain protracted”. “This resulted in selective restructuring of certain transactional and related support teams and resulted in one-off costs of £13.9m being incurred,” it added. The restructuring was centred around transactional teams in markets Savills does not see recovering in the short or medium term, such as Germany, France and the US, Ridley said. The chief executive added that Savills’ philosophy revolves around “maintaining our core transactional bench strength” to accelerate as markets recover. Savills is also recruiting in developing markets where Ridley said it sees greater opportunities for the business, such as India.