Savills reports slide in UK investment volumes

Savills said said trading conditions for its UK and US commercial capital markets businesses have continued to be challenging with volumes down on the comparable period in 2007

The property adviser's trading statement for the three months to 31 March 2008, noted decreased transaction volumes were due in part to a slow down in redemptions from the retail funds. As a result the company said 'there have been fewer vendors in the market, and this has impacted negatively on investment volumes in our UK Transactional businesses'.

According to the statement demand for tenancies in the City of London have reduced 'significantly' and although UK commercial property investment market yields rose in the first three months, they did so at a slower rate. Savills added that 'investors now see London as fairly priced or almost so'.

While the company's residential sales volumes and mortgage business slowed sharply, its consultancy, property management and fund management divisions, which together account for 40% of group profits, continued to experience good demand.

Mainland Europe showed more signs for optimism and the European Property Management business saw continued growth in Germany and Holland. Although volumes in Europe were down and deals took longer to complete, transactions still occurred across all sectors, particularly prime property with good fundamentals. The company said the last six months had seen an end to yield hardening in most European markets and an increasing polarisation between prime and secondary asset pricing. Savills added that tenant demand has generally held up well across all commercial property sectors in Europe.

Transactional businesses in Asia also continued to be more resilient with strong performances from Hong Kong, Singapore, Australia and China. Last year the region accounted for 17.5% of operating profits that totalled £83.4 mln (EUR 1.6 mln). The company said abiding strength in Asian markets made for a good quarter.

In the US, Savills Granite also continued to perform in line with expectations. The company added that it had achieved the first cross-border transaction with a European investor buying in New York.