Savills benefits from excellent Hong Kong market and increasing facilities management profits

After a difficult few years, sales at the international property consultancy Savills rose in 2010. The increased revenue was thanks to a buoyant property market in Hong Kong and an increased focus on stable, profitable business areas such as facilities management.

Increased dividend to reflect Savills’ good year

Savills’ chief executive Jeremy Helsby has begun to rebalance the group towards more stable but less lucrative areas such as facilities management.

And, Helsby has devised an unusual new dividend policy to reflect Savills' two distinct business areas - an estate agent and a diversified property group. The full-year dividend has been frozen at 9p, but there will also be a ‘supplemental interim’ dividend of 4p to reflect the cyclical ‘superprofits’ earned in Hong Kong.

Profits from Savills’ Asian commercial real-estate arm rose to £13.4m, while profits from the residential business nearly doubled to £4.3m. However, Mr Helsby says the supply of Hong Kong properties is now much tighter, suggesting that transactions - if not prices - will be lower this year.

Facilities management jobs help earnings grow 14 per cent

Pre-tax profit from UK residential property rose 13 per cent to £13.3m, while the commercial business recovered very strongly from a low point in 2009.

And, Savills' various non-transactional businesses put in a mixed performance. Pressure on surveying margins and the cost of establishing a new office in Beijing office hit the consulting division.

However, the low-margin facilities management side of Savills’ business saw earnings grow by 14 per cent, mainly thanks to decent organic growth in both Asia and the UK.