Savills posts 2018 revenue growth, but expects declining volumes in 2019
Source - SMW
International property agent Savills reported full-year revenue growth for 2018 on Thursday, but expected to see declining transaction volumes in some markets this year in line with global uncertainties.
2018 Group revenue increased 10% to £1.76bn, supported by a "robust" second half of the year, while pre-tax profits slipped 3% to £1.76bn.
"We have made a solid start to 2019; however, the year ahead is overshadowed by macro-economic and political uncertainties across the world. It is difficult accurately to predict the impact of these issues on corporate expansionary activity and investor demand for real estate. At this stage, we expect to see declines in transaction volumes in a number of markets and growth in our less transactional business lines; accordingly we retain our expectations for the Group's performance in 2019," Group Chief Executive Mark Ridley said.
The company's UK residential business continued to perform well, growing market share in "challenging conditions". Revenue grew 2% over the period to £131.5m.
In its second-hand estate agency business, exchanges were up 1%, offsetting a 2% fall in average sales value. Its Prime Central London residential business also performed well with the number of properties exchanged growing by 4% despite average values transacted declining by 4%. There was a substantial increase in transactions with capital values in excess of £15m, which increased by 43% year-on-year.
Outside the capital, however, which represents 54% of Savills second hand agency residential revenue, the number of exchanges and capital values transacted were both flat year-on-year, with strong performances in the North, Scotland and the Cotswolds offset by weaker markets elsewhere.
This led to an overall decline in the UK Residential Transaction Advisory business, which saw a 6% decrease in underlying profits to £17.6m.
The company also said that Yopa, the digital hybrid residential UK estate agent it invested in, had grown to become the sixth largest estate agent in the UK. It added that its investment arm, Grosvenor Hill Ventures, had made a "small additional investment" in Yopa to support its growth.
Savills recommended a final ordinary dividend of 10.8p, making the ordinary dividend 15.6p for the year (up from 2017's 15.1p). The firm also declared a supplemental interim dividend of 15.6p, based upon the underlying performance of its Transaction Advisory business.