Knight Frank reports 4.5% fall in profits despite turnover growth
Profits of London-based estate agency Knight Frank have seen a decline of 4.5% to £145.7m as the EU referendum result weighs on the UK property market.
Alistair Elliott, group chairman, said the vote for Brexit and the effect of recent stamp duty changes in the UK were both to blame for the group’s decline in pre-tax profits, which at £145.7m were down 4.5 per cent year on year. Turnover in the 12 months to the end of March rose 3.3 per cent to £476.2m. The UK government’s 2014 stamp duty changes hit buyers of more expensive homes, disproportionately affecting central London and prompting a slowdown in property transactions at the top end of the market.
Mr Elliott said that alongside these UK-specific problems, “political and economic uncertainties around the world” had caused hesitancy in markets. “There were times when the outlook was bleak,” he added. Knight Frank is one of a string of real estate agencies reporting depressed earnings since the UK’s vote to leave the EU last year.
Meanwhile, commercial property transaction volumes have declined since the EU referendum last June but London offices have begun to draw interest from overseas investors, the company said, with China becoming “increasingly influential”. Knight Frank has been increasing its focus on overseas markets, with growth powered by business outside of the UK, notably in Asia-Pacific. The company is also developing its continental European operations, notably in France and Spain, and has increased its staff costs from £183m to £202m. It has seen “significant” rises in sales volumes in Spanish and German cities, it added. Knight Frank ended the year with assets of £224.7m, up from £223.7m in 2016. The group posted a decline in earnings for the year leading up to the Brexit vote, with pre-tax profits down 4.7 per cent at £152.6m. A year earlier, in March 2015, pre-tax profits stood at just over £160m.