Savills profits plummet as rising interest rates hit property market

A hoped-for rebound in China’s property market has been “somewhat slower” than expected, real estate adviser Savills has said, as parts of the global market struggle to regain momentum after a slump caused by higher borrowing costs.

In half-year results on Thursday, the FTSE 250 group reported pre-tax profits of £6mn for the period, down from £50mn in the first half of 2022. This was led by a slide in turnover at its transaction advisory business, which includes commercial and residential property deals, with revenue down by a fifth overall. 

Group chief executive Mark Ridley told the Financial Times the sector was “always going to have this moment”, when the period of low interest rates came to an end, knocking asset prices and testing investor confidence.

“It’s now upon us, and markets are recalibrating at different speeds,” he said. London and the wider UK market are recovering “quite quickly”, he added, but China’s recovery had been “slower than we hoped”.

All regions had suffered a “material decline in trading volumes” as they adjusted to a rise in borrowing costs, the group said in the earnings statement, as investors “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”.

Shares in the FTSE 250 company were down 9 per cent by late morning trading in London.

The UK-based property group is the latest to report sliding earnings on the back of rising global interest rates, which have led to a drop in real estate deals.

Savills said it was seeing continued strength in Japan and good signals in the UK, but that in China and continental Europe reduced market volumes were now expected through much of the rest of the year.

In its mainland China commercial business, the

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