Savills shares slide 10% as rate hikes hit global property market 

An aerial view of The Thames in London. Savills said transaction volumes in the UK tumbled about 60% year-on-year, and about 46% below the five-year average.

Shares in international property advisory firm Savills ended 10% lower after posting a  70% slump in half-year profit as high interest rates battered commercial property deals. 

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, 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 company said continental Europe had experienced the most significant reductions in activity, particularly in Germany, France, and the Nordic region.

Savills said group underlying profit before tax fell to £16.3m in the six months to the end of June from £59.2m a year earlier. "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," chief executive 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 fell 20%.

The company said China has also been slow to recover since pandemic restrictions were lifted.

Mr Ridley said that high availability of spaces, particularly in the office spaces, is leading to a longer-than-expected recovery delay in the group's Chinese market.

 Reuters