By Aby Jose Koilparambil
(Reuters) -Savills said on Thursday it has “reduced” its annual expectations after the real estate adviser posted a 72% slump in half-year profit as high interest rates battered transaction volumes in global property markets.
Shares in the London-listed midcap firm fell more than 10% in morning trade and the stock was among top percentage losers on the FTSE 250 index.
Transaction activity in the global property markets has remained weak ever since the onset of the pandemic, particularly in the office and retail segments, while elevated interest levels and tighter credit conditions have further punctured deal appetite.
Savills said group underlying profit before tax fell to 16.3 million pounds ($20.8 million) in the six months ended June 30, from 59.2 million pounds in the same period last year.
“Market participants, whether investors or occupiers, seek greater certainty on the trajectory of interest rates over the next 18 months, something which has become somewhat clearer in recent weeks than for much of the period,” CEO Mark Ridley said in a statement.
The London-headquartered firm said its expectations for the year as a whole had “reduced somewhat” against the backdrop of uncertain market conditions.
Revenue from its biggest transaction advisory business – of assisting clients with all related-correspondence in a transaction – fell 20%.
Savills, which has operations in more than 70 countries, said transaction volumes in the UK tumbled about 60% year-on-year, and about 46% below the five-year average.
The British company said China has also been slow to recover since pandemic restrictions were lifted.
CEO Ridley told Reuters that high availability of spaces, particularly in the office segment, is leading to a longer-than-expected recovery delay in the group’s China market.
The company said continental Europe had experienced the most significant reductions in activity, particularly in Germany, France and the Nordic region.
($1 = 0.7835 pounds)
(Reporting by Eva Mathews and Aby Jose Koilparambil in Bengaluru; Editing by Savio D’Souza, Nivedita Bhattacharjee and David Evans)