Savills sees profits rise but doubts linger over property market recovery

Shares in Savills have faced new pressure, despite the property agent announcing a significant rise in profits for 2024. The firm reported a 59 per cent increase in pre-tax profits, reaching £88.3 million compared to the £55.4 million recorded in 2023. This performance was supported by a 7 per cent growth in revenues, which climbed to £2.4 billion from £2.24 billion in the previous year.

While Savills’ financial position has strengthened, concerns remain regarding the pace of recovery in the commercial property market. Investors fear continued geopolitical instability and high interest rates could slow progress further. Savills’ leadership acknowledged the uncertain environment but remains cautiously optimistic about a positive trajectory for the rest of 2025.

The firm credited its strategy of retaining staff during the 2023 downturn for its sharp recovery. Unlike some competitors, which reduced headcounts to manage costs, Savills chose to maintain its workforce. This decision, described as “sacrificing short-term margins” by finance chief Simon Shaw, left the firm well-placed to capture transaction opportunities as markets improved.

Residential property formed only 10 per cent of Savills’ business, with the bulk of its income coming from consultancy, investment management, and property management services. Notably, there was a significant uptick in UK property activity last year, including a trebling of hotel sales and £2 billion-worth of shopping centre transactions—the most since 2016. Residential transactions also surged as falling mortgage rates encouraged buyers back into the market.

Despite these successes, Savills’ shares continued their decline, dropping 7 per cent to 922p—reaching a 15-month low. This reflects growing unease among investors about the broader market, including trade wars and inflation, which have cooled enthusiasm for the sector.

Chief executive Mark Ridley predicted an increase in transaction volumes as landlords seek to refinance or sell properties, alongside a renewed demand for office spaces as more companies encourage staff to return to offices. The final dividend was raised by 45 per cent to 23.1p per share, offering some assurance to shareholders amidst the uncertainty.