Hit for Savills and British Land as property market remains under pressure
Estate agent Savills and commercial landlord British Land disappointed investors on Wednesday as the property sector continues to face a weaker market.
British Land said that it had significantly written down the value of its property portfolio after rises in interest rates.
“Higher interest rates have inevitably had an impact on property market yields and, as a result, the value of our portfolio declined by 12.3%,” it said.
The business said that some of these pressures appear to be easing and it was trying to create medium to long-term value. Shares in British Land fell 6.6% following the news.
Meanwhile Savills warned that it was facing market corrections, although told shareholders that these were going “largely as anticipated.”
Although it is impossible accurately to predict the timing of individual market recoveries, we remain optimistic that markets will start to improve in the second half
Savills
The company said that it was making fewer sales than last year, but that some prime residential markets had performed well, especially London.
Meanwhile the ending of Covid restrictions in China has improved sentiment in the country, but this is yet to really show in the company’s revenue, Savills said.
The first half of this year is expected to be “materially impacted by the ongoing recalibration of global investment markets”.
It said that the possibilities for how the year as a whole might turn out are wider than a few months ago, but the business still expects the markets to start recovering in the second half of the year.
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“In the year to date, global commercial investment volumes have either reached or approached their lowest levels in many years,” Savills said.
“As a result, at this early stage, the range of outcomes for the year as a whole has widened, however our prime commercial leasing, residential, consultancy and property management businesses all continue to trade in line with expectations.”
“Although it is impossible accurately to predict the timing of individual market recoveries, we remain optimistic that markets will start to improve in the second half and we are seeing early signs of this in some areas.”
