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London prime fuels 173% profit surge for Savills

The strength of the London prime and home counties markets has helped Savills report a 173% surge in pre-tax profit to £36.8m for 2010.

This was on group revenue of £677m, which is 21% higher than the £560.7m generated in 2009.

Savills' residential transaction advisory division, which includes agency, increased underlying profit by 13% to £13.3m on revenue of £86.8m, up 22% from £11.8m, which the group attributes to prices in the capital having regained peak levels. But it expects prime across the rest of the country to experience a slower recovery in the first half of 2011.

The group's new homes division was particularly strong, with revenue having more than doubled since 2009 due to new deal wins, including One Hyde Park and the Lancasters.

Savills' property management teams, which include residential, rural and commercial, increased revenue by 12% to £72.4m in 2010, but the group claims that the recruitment of 26 staff, including five directors, caused profit to dip by 18% to £5.8m.

Overall, the group's staff costs, including those associated to share scheme awards, remained between 60% and 65% of revenue.

Meanwhile, commercial agency generated underlying profit of £7.7m, up £1.2m year-on-year, on revenue of £85.5m, which is up 76% on 2009, and UK consultancy revenue increased 11% to £97.5m. However, the group claims the team suffered as a result of fee pressure.

Its planning consultancy team reported a 14% decline in revenue, which resulted in a 20% dip in profit to £1.6m. However, the group expects it to improve throughout this year, due to increasing developer interest.

Chairman Peter Smith says: "In the near term, it is unclear how markets will react to the recent catastrophic events in Japan, particularly at a time of unprecedented global economic and political change. For the markets of Mainland China, Hong Kong and Singapore, these events come on top of government measures of the last 12 months to address property speculation.

"The longer term potential of our Asian business remains compelling, but at this stage we continue to expect a reduced volume of transactions in the region in 2011. At the same time we anticipate further recovery in the US and parts of Continental Europe, some growth for the prime London Residential and Commercial businesses and continued growth in Fund Management."

He adds: "Although it is impossible to be certain in current circumstances, we anticipate that any slowdown in Asia should be largely offset by improving performances elsewhere."