7th May 2008 07:01
Savills PLC07 May 2008 SAVILLS PLC ("Savills" or "the Company") Interim Management Statement Savills, the international property adviser, publishes its Interim ManagementStatement for the three months ended 31 March 2008. Overview When we announced our results for the year ended 31 December 2007, the Chairmanreported that 2008 would be a challenging year for the property industryworldwide. He noted, however, that not all segments and geographies would beaffected equally. Trading in the first three months of 2008 has borne this out. Trading conditions for our UK and US Commercial Capital Markets businesses andour UK Residential and Mortgage Broking businesses have continued to bechallenging with volumes down on the comparable period in 2007. OurTransactional businesses in Europe see more signs for optimism but transactionsare currently taking longer to complete as financing becomes more difficult toobtain. Our Transactional businesses in Asia continue to be more resilient.Demand for our Consultancy, Property Management and Fund Management services,although not totally immune to the impact of the credit squeeze, remained good. Main Business Streams Transactional The UK commercial property investment markets have seen further rises in yieldsin the first quarter, although at a much slower rate than was seen towards theend of 2007. An increasing number of investors now perceive London as being ator close to fairly priced and we are seeing more buyers, both domestic andinternational, looking for prime investment opportunities. As redemptions haveslowed from the retail funds, there have been fewer vendors in the market, andthis has impacted negatively on investment volumes in our UK Transactionalbusinesses. Tenant demand has been fairly resilient across most sectors. However, demand inthe City of London office market has reduced significantly and retailer demandis subdued across the UK. In the UK residential markets, we have seen prices fall in both London and theCountry. Savills Prime Central London index reported a fall of 1.5% in the firstquarter, which followed a 2% fall in the final quarter of 2007. In primeregional markets, prices have generally been more robust with small falls of0.5% in Q1 2008. The current uncertainty has led to a sharp fall in transactionvolumes for our Residential business in London, with less dramatic falls in theCountry. Across mainland Europe, while commercial investment volumes have been lower thanlast year, transactions are still occurring across all sectors, with a heavyfocus on prime property with good fundamentals. The last six months has seen anend to yield hardening in most European markets and an increasing polarisationbetween prime and secondary asset pricing. Tenant demand has generally held upwell across all commercial property sectors in Europe. Overall, our EuropeanTransaction businesses are seeing volumes down as deals take longer to complete. Many of the long-term drivers which have attracted investors to Asia remain,including population growth, rapid household formation, urbanization rates and aburgeoning middle class. Asia's strength at a time of market adjustmentelsewhere is attracting international capital into the region, with Chinabenefitting in particular. Occupier markets remain robust, as firms continue toexpand. Our Asian Transaction businesses have had an excellent quarter. In the US, Savills Granite has continued to perform in line with ourexpectations. We have seen our first cross-border transaction with a Europeaninvestor buying in New York. Consultancy Our Consultancy businesses in the UK have performed well. In these moreuncertain times, due to Savills size and reputation, demand for valuations hasbeen at record levels and housing consultancy has traded strongly. In Europe,our Valuation teams have continued to win new business. In Asia, we had strongperformances, in particular, from our Consultancy businesses in China andAustralia. Property and facilities management Our Commercial Property Management businesses in the UK have performed wellcontinuing the momentum from the second half of 2007. Our European PropertyManagement business has seen continued growth in Germany and Holland. Our AsianProperty Management businesses have had a good first quarter, with strongperformances in Hong Kong, Singapore, Australia and China, although costpressures continue. Financial Services The credit squeeze has had an impact on the main residential mortgage brokingdivision with new mortgage completions down on the equivalent period in 2007.Remortgaging, however, remains steady. Fund ManagementCordea Savills has continued to perform well, announcing the launch of theTurkey Property Ventures Fund. Revenue was ahead of the first quarter of 2007reflecting the higher opening funds under management. Outlook The outlook for our UK, European and US Capital Markets, UK Residential and UKMortgage Broking businesses continues to depend on how quickly confidencereturns to financial markets. However, our Transaction businesses in Asiacurrently appear less affected by the credit squeeze. Our Consultancy, PropertyManagement and Fund Management businesses, which contributed about 40% of ourprofits for 2007, whilst not totally immune to the impact of the credit squeeze,continue to enjoy good demand for their services. As in previous years, the fullyear outcome will be heavily weighted towards the second half. For further information, contact: Savills 020 7409 8844Jeremy HelsbyMark Dearsley Citigate Dewe Rogerson 020 7638 9571Simon RigbySarah GestetnerGeorge Cazenove This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Savills