Property Management

Property Management

Our Property Management business consists of three main elements:

• Property Management – we manage commercial and residential property on behalf of owners.
• Facilities Management – we provide a comprehensive range of services to occupiers including all services relating to a building, project management and strategic advice.
• Land and Farm Management – in the UK we provide a specialist service to manage agricultural land including managing farms.

Performance in 2007

During 2007 we increased revenue by 16% to £159.7m although, profit decreased by 5%. UK and Europe followed a slow first six months with a stronger second half performance resulting in a slight increase on full year profits. In Asia, profits fell by 15% reflecting year on year currency movements and reduced income from our operations in Australia and Korea.

Our Land and Farm Management business benefited from the marked increased in confidence following CAP reforms and a rise in commodity prices. However, the challenges in the UK investment market in the second half of 2007 meant it was harder to win new commercial instructions but there are signs of investors focusing on the need for more intensive asset management and this has benefited our business.

We achieved a significant increase in revenue in Europe through a mixture of organic growth and newly recruited teams. The profit was held back however by investment in growing the infrastructure.

In Asia, we continue to expand our business and now manage 437m sq ft (2006: 334m sq ft) in Greater China, where we are increasing our market share. Margins reflect increasing competition from local operators in China, Hong Kong and Korea. In addition, Savills has made further investment into winning new business and improving its infrastructure, the benefits of which will emerge in future periods.

Key achievements of 2007

We have continued to grow our UK Property Management business. We opened new departments in Leeds and Bristol and expanded our existing teams in London, Birmingham, Manchester, Glasgow and Edinburgh. This has enabled us to secure new clients, including Delancey and WELPUT, whilst consolidating existing relationships with other major clients including RREEF, British Land and GE Capital. We now have national property management mandates with GE Capital, ING Real Estate Investment Management, Morley, Diageo and Resolution Asset Management.

In Europe, there has been increasing demand from investors for quality property management services. In order to meet this demand, we have expanded our operations, both through acquisition and recruitment. The focus of this expansion has been in the Netherlands, Spain and Germany, where we acquired Theodor Schone, a leading property management firm based in Hamburg. This was in addition to further expansion of our Property Management team in Berlin. We have also set up a new Property Management department in Warsaw, managing in excess of 47,000 sq m.

Our Paris team won instructions to manage 171 high street retail units in Paris for Generali and 18,000 sq m of high technology warehouses in Caen for Societe da la Tour Eiffel. The team are also working on behalf of Henderson (for their Herald Fund) managing 8,300 sq m of retail warehouse in Franconville, north west of Paris.

The Asia Property Management practice continues to grow as demand for better quality property and asset management services increased. China and Hong Kong remained particularly strong while demand from other markets gathered pace.

In China our office in Guangzhou has been appointed as property manager to the largest international residential and commercial project in Dongguan CBD, which has a gross floor area of 980,000 sq m. In Chengdu, we were instructed to manage ‘Sun Dynasty’ a mixed use complex of over 650,000 sq m.

In Japan, Savills secured a number of asset management instructions from international investors, including Deka and Credit Suisse.

In Korea, Savills was appointed as the corporate facility manager for Standard Chartered First Bank Korea’s 414 premises located throughout the country.

The Hong Kong government is actively encouraging anti-pollution measures in a bid to improve air quality and reduce waste. Our Facility Management business in Hong Kong is responding by exploring a number of eco-friendly initiatives including eco-park management, reverse vending machines (RVM’s) and bio-engineering greening techniques for use on many of the buildings and property schemes under our management. The business has also been instructed to manage a number of elderly home operations, and currently we have 500 beds under management.

The Rural Management business in the UK has had an excellent year as markets gradually emerged from a long recession in British agriculture. The exception was the livestock sector, which has continuing problems in disease control. Global and city interest in soft commodities remains strong and this has led to increased professional work with rent reviews and farm contracting arrangements. We also advised on specialist sectors such as organics and our research department carried out a considerable amount of work on the measurement of carbon emissions.

We won 18 new estate management instructions across the country, including the appointment as Estate Consultants to Imperial College London.

In November, we opened a specialist Country House consultancy business targeting advice to high net worth individuals in the delivery of services and management of their homes and estates.

Future plans

We will continue to focus on growing our Property Management operations in UK and Europe. In Asia, property and facilities management is a cornerstone of our business and helps us secure additional advisory instructions.

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