Savills has significantly upgraded its profit forecasts after the estate agent enjoyed a rush to buy expensive homes and warehouses at the end of last year.
The FTSE 250 company, which sells residential and commercial property worldwide, said on Wednesday it had benefited from “extraordinarily strong” activity in the last seven weeks of 2021 and a pandemic-related drop in travel and entertainment costs.
Without spelling out its expectations, it said pre-tax profits for 2021 would be “very significantly ahead” of previous guidance when it reports results in March.
Analysts at Peel Hunt said the trading update suggested pre-tax profits could be as high as £190m for 2021, far ahead of the upper range of expectations and 33 per cent up on the £143m reported in 2019.
Shares in the company rose 3.4 per cent to £13.65 pence on the announcement.
Demand for logistics facilities and warehousing surged globally last year, with investment reaching record levels amid an ecommerce boom and supply chain disruption. Demand for high-end homes in the British countryside also provided a boost to Savills.
“In some sectors or markets, you will have seen a surge created by the lockdown. People weren’t able to transact in a normal way so accelerated trading,” said Mark Ridley, Savills’ chief executive.
“The segment I’d highlight is residential in the UK — £1m-plus transactions were up 60 per cent on 2019,” he added. “That’s a surge. We anticipate that normalising.”
Across the board investment activity stepped up in the final months of 2021 as uncertainty around the pandemic began to lift, Savills said.
As yet, the spread of the Omicron variant of coronavirus had not meaningfully curtailed activity, according to Ridley.
“Omicron slowed down activity in terms of enacting deals . . . But in terms of decision-making, I haven’t seen anyone stop and pause,” he said, adding: “Learning to live with it: outside of China, that’s the way we’re approaching it,” he added.
But corporate demand to take on new office leases, a core business for Savills, remained below historical averages. The group warned that the frenzy of transactional activity might abate this year.
Winkworth, the estate agent, also upgraded its revenue and profit expectations on Wednesday, citing the enduring strength of England’s housing market even after the government withdrew its stamp duty holiday in September.
The number of property sales agreed by the company last year was 13 per cent ahead of a bumper 2020 and 42 per cent up on 2019.
“The cost of finance remains at a record low and we believe that there is still pent-up desire from households to relocate,” said Dominic Agace, chief executive of Winkworth.