Savills reported a mixed but resilient picture across its residential business, with London continuing to outperform the wider UK market despite increased caution from buyers and sellers following the escalation of conflict in the Middle East.
In a trading update released yesterday morning ahead of its AGM, the global property adviser said overall trading for 2026 to date had been “marginally ahead” of board expectations, although heightened geopolitical uncertainty and concerns over interest rates continue to weigh on sentiment.
Within its Residential Transactional Advisory division, Savills said the UK market had started the year strongly before activity slowed more recently.
The firm said: “After two strong opening months we have seen greater caution among both buyers and sellers since the onset of the Middle East conflict.”
LONGER COMPLETION TIMEFRAMES
While this has resulted in longer completion timeframes, Savills noted there had been “no corresponding rise in fall-through rates”.
Transactions agreed across the UK during Q1 increased by 1% year-on-year, driven primarily by London, where agreed sales rose by 13%. This offset weaker activity across regional markets outside the capital.
The update reflects the increasingly two-speed nature of the UK housing market, with prime London continuing to attract domestic and international demand despite wider economic uncertainty and elevated borrowing costs.
Savills also pointed to growing pressure on its Middle East residential business, where sales activity has “slowed materially during the crisis”. Residential transactions account for around half of the region’s underlying profit contribution.
However, the firm said its consultancy and property management operations in the region remained resilient.
REDUCED TRANSACTION LEVELS
Looking ahead, Savills expects reduced transaction levels to continue across the UK residential market in the near term, while geopolitical instability is also likely to weigh on its growing international residential business.
The company said: “For our Residential Transaction Advisory business, we are assuming somewhat reduced transaction levels to continue in the UK market, and for the slowdown in sales activity in the Middle East to temper the performance of our growing International Residential business.”
Despite current uncertainty, Savills said it continues to expect full-year performance to remain in line with expectations, assuming a timely resolution to the Middle East conflict.
The group also confirmed that its proposed acquisition of US real estate advisory business Eastdil Secured remains on track to complete around the end of July, subject to regulatory approval.
