Estate agency Savills has reported shrinking profits as a result of an “extremely subdued” global property market and efforts to restructure the business.
The global business said higher interest rates and geopolitical events had led to the lowest levels of sales volumes in real estate markets for a decade.
It reported a 64% drop in pre-tax profits, from £153.9 million in 2022 to £55.4 million in 2023.
The decline was further impacted by one-off restructuring costs of £13.9 million, as it reorganised parts of the global business which it said were likely to take longer to recover. This is understood to have been mainly in Germany and parts of continental Europe.
On an underlying basis, which strips out one-off costs, pre-tax profits declined by 42% from £164.6 million in 2022 to £94.8 million in 2023.
This was primarily driven by a 19% drop in global residential sales year-on-year.
It comes amid a well-reported slowdown in the property market over the past year, helped by higher interest rates which have pushed up the cost of borrowing, and a post-pandemic slowdown in house buying.
Sales were also impacted by more volatile economic conditions and uncertainties over the future role of offices leading to delays in major leasing decisions.
But Savills said it benefited from growth within other parts of the business which are less sales-driven.
Within its consultancy and property management division, revenues rose 4% and 11% respectively year-on-year.
Savills’ group chief executive Mark Ridley said: “Savills’ resilient performance in 2023 highlights the diversity and strength of our global business.
“In the context of extremely challenging real estate markets, which saw the lowest levels of transaction volumes for a decade, our less transactional businesses have provided a solid platform for the group with a resilient and growing earnings stream.
“Current economic and geopolitical conditions remain uncertain and although we expect this to continue for some time, most markets appear to be past the moment of peak uncertainty.
“There are some early signs of underlying market improvements, which should set the course for a broader recovery during the second half of the year and into 2025.”