Capital growth lifts Savills

Wealthy overseas buyers buoyed demand for prime London homes and helped property adviser Savills shrug off the malaise afflicting much of the UK’s housing market.

While the lack of mortgage lending remained a “significant obstacle” for the wider market, it said foreign investors increasingly saw central London as “a store of value in turbulent economic conditions”.

The strong market in London drove a 9 per cent sales hike in the group’s UK residential transactions business, while profits rose 11 per cent to £14.8 million.

It reported growing signs that homeowners in London, where prices have bucked the national declines in recent years, are now considering moving to the home counties where they will enjoy “purchasing power” in more depressed markets.

Savills benefited from the popularity of new up-market projects such as One Hyde Park and said prime central London postcodes continue to be in strong demand at the start of 2012, with multiple cash buyers for each home.

It expects this to continue unless there are changes to property tax.

Overall revenues rose 7 per cent to £721.5m and pre-tax profits lifted 9 per cent to £40m, helped by 43 per cent growth in profits in mainland China.

Its UK commercial business saw profits fall 40 per cent to £4.6m despite growing its share of a declining market.

And its continental European commercial business doubled its losses to £8.8m as revenues fell amid the eurozone debt crisis.

Savills expects the central London commercial and residential markets to remain stable this year although it said it is too early to see a sustained recovery in Europe.

Shares were down 3 per cent, but Chris Millington, an analyst at Numis Securities, said: “In our view 2011 was a good year for Savills against a challenging market backdrop.”