By Aby Jose Koilparambil
(Reuters) -Real estate services company Savills (LON:SVS) said on Thursday there were early signs of underlying property market improvements globally that could lead to a broader recovery in the second half of the year and into 2025.
Transaction activity has been weak since the onset of the pandemic, particularly in the office and retail segments, while higher interest rates and tighter credit conditions have also punctured deal appetite.
"What occurs in uncertain times is prices re-calibrate and we are already seeing that...and with potential interest rate reductions in the second half of this year, investors are coming back to those markets that have re-calibrated and volumes are going up," CEO Mark Ridley told Reuters.
Savills said annual profit was driven by its less-transactional businesses such as property management and consultancy which produced a combined 7% growth in revenue to account for 63% of group turnover.
Ridley said the group is now looking to diversify and expand its geographical footprint for those businesses, pointing to opportunities in the Asia-Pacific region and more particularly India and the Middle East as fast growing markets
"With more manufacturing (industries) moving to some of those regions, we have to make sure we can supply services to our customers there," he said.
Savills' consultancy business encompasses transaction- and portfolio-related valuation assessment, litigation support and housing consultancy, while property management includes facilities management like security and cleaning services, and advising property investors on their assets.
The London-based group's underlying profit before tax fell 42% to 94.8 million pounds ($121.32 million) in 2023, mainly hurt by weak transaction volumes in global property markets.
($1 = 0.7814 pounds)