Business is booming in the UK for international real-estate specialist Savills (SVS), but its full-year results, due to be published on 20 March, may be hit by lacklustre trading in Hong Kong. The island's developers have been turning their attention to investment opportunities in mainland China, prompted in part by an increase in the local stamp duty. This will mark an abrupt reversal of the pattern of previous years, when the company's roaring Asia Pacific business has compensated for a near-stagnant market in the UK and losses in continental Europe.
Savills' management nonetheless said last November that the strength of its other markets - Japan has been particularly hot, with revenues more than doubling - would be sufficient to propel full-year results towards the top end of its previous guidance. Following that update, analysts at broker Numis Securities hiked their 2013 forecasts by 10 per cent; they now expect pre-tax profits of £71m and EPS of 40.8p, rising to £76.8m and 44.3p this year.
As well as an increase in transactional revenue from buy and sell side instructions, Savills has seen a useful income boost from valuation and associated work. But margin growth may be restricted by the increased investment levels needed to meet the expanded demand for its services.
