Savills sees return to office boosting real estate

Global real estate company Savills expects the drive to get employees back to the office will boost transaction volumes in 2025, it said on Thursday after reporting a profit that beat expectations.

Market activity is already expected to be spurred this year, analysts say, as easing interest rates and looser credit conditions outweigh the increase in economic uncertainty linked to US President Donald Trump’s trade tariffs.

“We expect activity driven by refinancing and the trend towards corporates requiring greater office attendance for staff to continue to be positive for transaction volumes,” CEO Mark Ridley said in a statement.

The company said most of its markets were already in recovery and would be helped this year by expected reductions in the cost of capital.

Savills, which generates more than 60% of its revenue from non-transactional businesses, said revenue from consultancy and property management services grew by 8% and 5%, respectively, in 2024.

It did not give detail on the benefits it expected from a return to the office, though it said take-up in the London office market rose 2%.

It also cited demand from the generative AI and cloud computing sectors in its North America market despite “largely muted” leasing activity in the technology sector there.

Real estate investment volumes across Asia-Pacific jumped 15% to $168.1bn after two years of contraction. China was an exception, where transaction volumes fell by 18%, the company said.

The London-based group’s underlying profit before tax rose 38% to £130.4m in 2024, compared with an average analysts' estimate of £129.6m, according to data compiled by LSEG.

Reuters