Group Strategy

Introduction: Savills is entering a new phase in its evolution

Savills has established successful businesses in many of the major property markets around the world, focusing its energy and resource on building strong local businesses with excellent local people. Each of the subsidiaries has had the freedom to maximise its earnings relatively independently, and to grow rapidly with the markets in which they are operating. As we enter 2008, the objective for the Group continues to be to grow earnings, but the strategy to achieve that growth will emphasise growing market share in the markets in which we are already established, making more of what we have already, for example through more effective cross-selling and client relationship management.

Savills vision

The vision overall for Savills remains: ‘To be one of the leading providers of real estate services in the major markets of the world’.

There is clearly a separation between the truly global players and the rest of the property services competitors. Savills is already a major global player and intends to stay in the top league. However, while total global revenues are important, being perceived as a leader by clients and prospective employees is essential, and this requires a careful balance between being global – in range and capability – and local – having depth of expertise and breadth of service in key local markets. By getting the balance right, we believe we will deliver superior returns to shareholders, and we will be the employer of choice for outstanding individuals in our chosen markets.

The market

Clients – trends

There is no doubt that property remains an important asset class and, as markets become more transparent and the corporate users of property continue to sell off their property assets, this trend will continue. We plan to continue to strengthen the services we can offer our clients, from transaction and corporate finance advice, through valuation, leasing, property management, and, in places, facilities management.

We also believe that more global cross-border capital flows into property will continue – cross-border investors have represented the fastest growing segment of most markets over the past two years and, in Europe, now account for almost half of the total investment market. The domestic investment markets remain large however, particularly in North America and Asia, reinforcing the importance of strong local businesses. Savills will focus on expanding share in the largest markets in which it operates, prioritising growth efforts on the cities and countries that have substantial domestic markets as well as being both sources and destinations for international capital investment.

For developers, the trend worldwide is for mixed-use projects, where offices, hotel, retail and residential are all important elements. Savills is uniquely qualified among the major global players in this market, with its depth and breadth of both residential and commercial businesses. This will be an area of focus for Savills over the next few years.

Investors are looking to the emerging markets for greater returns. While these markets are currently small, their future potential and forecast growth rates are appealing. Savills will be taking a proactive approach to identifying the right opportunities to enter these markets.

The competitive environment

We have a strong and diverse client base that is the envy of many of our competitors. In more challenging market conditions ahead we will have to compete effectively to retain existing and win new clients. In particular, we will be aiming to do more to retain our current clients and ensure they understand the range of our services and the value we can bring to their business.

The employment market for top quality staff remains highly competitive in all countries. However, Savills has an excellent track record of hiring and retaining top people both at graduate and more experienced levels. We are continuing to make improvements to our working environment, career development prospects and remuneration structures to ensure we remain the employer of choice in the industry.

Savills strategy – focused expansion and making more of our existing assets

Based on the assessment of the market dynamics and trends, our strategy for 2008-2010 builds from our strengths and achievements in 2007.

Building scale and brand recognition in the major cities and countries of the world

In the UK, we will continue to strengthen and grow our share in existing segments through selected acquisitions and hiring. This includes areas where Savills is already a leader, for example in Planning and Housing Association work, and also in higher growth sectors and discipline areas that have a different revenue profile from transactions.

We will also selectively expand into new areas of specialisation. We will continue to grow our UK Residential business, although expansion of the network will slow down during the current period of economic uncertainty, and we will focus in 2008 on improving productivity in existing offices and integrating the teams and businesses acquired and recruited in 2007.

In the US, the Savills Granite business is focusing on expanding its share in New York City and adding capability in selected sector-focused teams. The priority in the US is using New York City as a platform to build and expand our presence in the US with the aimof building our share of international capital flows into and out of North America.

Expansion in Europe will be focused on the countries which we believe will benefit themost from increased cross-border investment activity. In these key markets we will be increasing our Capital Markets teams and expanding into new sectors and cities. We will also be expanding our Consultancy teams across Europe with particular focus on our existing Valuation and Property Management teams. We will selectively establish in new locations and we have already opened a new office in Brussels.

We have initiatives in place to improve our cross-selling from London to Europe and, having established our relationship with Asteco in the Middle East in 2007, we will now be working to grow referrals between them and the rest of Savills’ businesses.

In Asia our strategy is to consolidate and extend the regional platform that has been built over the past few years. We will be creating an integrated regional service platform to better handle clients’ pan-regional requirements. In China we will grow revenue from existing offices, marketing our services to domestic investors, as well as extending into new cities when the time is right. Selected sector teams will be strengthened and Japan will be restructured to improve profitability.

Continued pursuit of the cross-border investment market

The aim is to establish a leadership position in this market through improved client relationship management and team work. Some of our leading investment specialists have been taken out of their previous roles to concentrate on developing this area of the business.

Exploring new opportunities in the strongest emerging economies

We will continue to pursue opportunities in selected emerging markets.

Growth in fund management

We continue to see fund management as an important part of our global business. Cordea Savills plans to continue expanding its product range in Europe and in Asia to build on its stratagic venture with Nichani Group in India.

Exploit our strength in residential on a more global scale

Savills has an enviable, nationwide prime Residential business in the UK, and New Homes businesses in a number of major cities around the world. In addition, we have an associate network of residential agents in popular, up market resort destinations around the world. This breadth and depth of customers and knowledge gives the business a real advantage over commercial competitors in advising our clients on mixed development opportunities worldwide. It also supports the Savills brand positioning as ’premium’ and ’international’.

Exploiting our strengths

An important theme for Savills over the next few years will be making better use of our strengths and assets. This relates to taking a longer term view of client relationships, as well as how we manage the business internally. More effort will be directed to make clients aware of what we can do for them. For 2008 there are already initiatives in place to further improve the co-operation between our UK Mortgage Broking and Residential businesses, between the various Commercial departments in the UK, and to grow international cross-referrals of clients between the US, UK, Europe, Asia and the Middle East. We have improved management structures to strengthen intra-regional co-operation within both Asia and Europe. Team structures and remuneration will be selectively adapted in order to support this initiative. Following a review of our HR policies and practices in 2007, we will be working to improve our people policies and management practices.

Building the brand

One of the most important assets of the Group is the Savills brand and our aim is to strengthen the Savills brand recognition across the globe. We have started to review its identity, and to understand better the perception of clients, and both current and prospective employees. This in turn will help us to improve our marketing and communications over the coming years and ensure that investments in marketing are most effective. The identity revolves around the people who work at Savills – passionate, creative, hungry, fun, entrepreneurial – and our premium, global reputation in the market. We aim to maintain this focus on great people and premium brand positioning. We have recently established a new Marketing and Communications working group, reporting into the new Group Chief Executive.

Back to top