Savills stays upbeat amid macro challenges

Savills has underlined the war in Ukraine, inflation, and the rising interest rate cycle as three factors that have “tempered” deal activity, particularly in relation to smaller transactions. In a trading update ahead of its annual general meeting today (11 May), Savills said leasing and deals have both skewed towards larger transactions as a result of wider geopolitical circumstances. However, it noted that its UK business has traded “slightly better than anticipated”, mainly driven by high levels of transactional activity. Savills said continued Covid and travel restrictions, particularly in Hong Kong and mainland China, has also reduced activity in both the leasing and capital transaction markets. The business highlighted that in the residential market, stock availability continues to be “significantly reduced” year-on-year, although it has “performed well”. Savills also pointed to “improved” performance in continental Europe and the Middle East, where it is more dependent upon transactional activity. However, it underlined that supply chain issues, inflation and rising interest rates all pose a challenge to a number of European economies. Overall, Savills said all of its geographies have performed in line with expectations, as well as its investment management arm, which has been trading in a “challenging” environment for equity capital deployment. Mark Ridley, chief executive of Savills, said: “2022 has presented a number of heightened macro-economic, geopolitical, supply chain and, in some locations, continued Covid-related risks both to investors and corporates and to people’s personal lives.” He added that the business is “continuing to undertake a variety of business development activities across the group”. Going forwards, the agent said it remained “confident in its expectations for 2022” despite the geopolitical backdrop. “There remains significant investor interest in the secure income characteristics of real estate, and occupiers are progressively focusing on improving the sustainability characteristics of their portfolios as well as creating environments in which staff can thrive,” he said. “These positive trends stand against a backdrop of geopolitical, economic, practical (supply chain) and, in some cases, Covid-related challenges.” To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews Image © Savills