Savills boosted on town and country demand

Published 17th Dec 2009

Savills, the international estate agency, alerted shareholders today that its profits this year would be significantly higher than expected as it revealed that the slowdown in the market for smart town houses and country estates was much less acute than had been feared.

The profits upgrade comes exactly 12 months after Savills was forced to issue a profit warning as the full extent of the property slowdown became apparent.

Now, however, it said underlying performance for 2009 would be "significantly ahead of our previous expectations."

Analysts, who had been predicting pre-tax profits of around £17 million for 2009, upgraded their forecasts to around £22-£24 million. But that is still lower than the £33.2 million recorded last year and the £85.5 million achieved at the height of the property boom in 2007.

Savills said it clinched more UK prime residential transactions than it expected. Commercial property deals in the UK were also up. In Asia, which accounts for 40 per cent of its business, transaction volumes remained strong — in contrast to expectations that the market would cool.

Savills also said it had achieved cost savings at the top end of its target range.

However, it said it remained cautious about whether the pick-up in the UK and the continued strength in Asia would be sustained next year.

Analysts expect the dividend, which was halved to 9p last year, to be held unchanged.

Meanwhile, the estate agent Knight Frank said today that country houses showed positive price growth across the UK for the first time in two years.

For the first time since autumn 2007 every UK region covered by the index reported a quarterly price increase. Prime country house prices rose by almost 2.3 per cent.

Rupert Sweeting, head of Knight Frank’s country department said: “The question everybody is now asking is how long the recovery can continue and will prices fall again in 2010.

“Currently, we see few signs that stock levels of the best houses will increase markedly in the New Year and the forthcoming general election could exacerbate the situation further. Coupled with the growing number of frustrated buyers looking for houses, this should help to ensure prices do not fall back.”

He added: “There is speculation that the Government’s new bank bonus tax will have an impact on prime property prices, but this has probably been overstated and, regardless, there is still a large pool of UK and overseas buyers whose purchasing power is not reliant on bonuses.”

Source: ' Times '

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