Real estate adviser Savills rides 'disproportionately strong' housing market

Bengaluru

REAL estate adviser Savills lifted its 2021 outlook on Thursday as Britain's housing boom and the closing of many deals that were postponed during the height of the Covid-19 pandemic boosted first-half profit five-fold.

London-based Savills, which said the housing market was "disproportionately strong", expects its performance for the year to be meaningfully above previous projections after a record result from its UK residential business in the six months to June 30.

The 160-year-old company said underlying profit in its UK residential transaction business jumped to £20.5 million (S$38.5 million) from £1.6 million a year earlier, when the pandemic "all but eliminated" the key spring sales season.

Savills, which has 39,000 employees working out of 600 offices across 70 countries, said residential markets, especially in Britain, remain strong on pandemic-driven preference for larger houses in most markets worldwide as more people work from home.

Total pre-tax profit on an underlying basis rose to £66.1 million from £13.2 pounds last year.

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Savills' results follow strong performances by UK homebuilders Taylor Wimpey, Barratt Developments and Persimmon which have forecast robust housing demand even after a tax holiday on property purchases ends in September.

But the situation in the commercial property market in Britain and elsewhere was still far from ideal, with Savills saying office demand was still down 42 per cent compared to pre-covid levels.

"H1 2021 saw commercial markets showing varying speeds of recovery from the pandemic, reflecting different local lockdown restrictions, rates of vaccination and international travel restrictions," Savills said.

It said the recovery in the US office market was uneven, adding companies were both re-occupying existing spaces that had previously been scheduled for sublease and considering upgrading the quality of space in some places.

Savills chief executive Mark Ridley told Reuters that the challenges from new restrictions and the inevitable return of the UK residential market activity to normal levels could lead to a moderate second half in some markets. "We have got to be realistic that this (re-imposition of restrictions) can have an impact on market volumes, particularly commercial transaction volumes," Mr Ridley said. REUTERS