Okay, just wait for everybody to enter.
Yes, everybody come through.
The gate's opening slowly, but I think we're there.
Just a few more that are coming through.
Yeah, yeah.
Okay, I think those numbers are stable. So with that, we'll start. Good morning, ladies and gentlemen, and welcome to our presentation of Savills' interim results for the six months ending 30th of June 2024. Today's presentation will follow a similar format to that presented in March. Back then, I highlighted the dramatic reduction in transactional volumes experienced across most sectors of real estate, leading to a rapid recalibration of market values. In many markets, this recalibration has remained underway, with sentiment around anticipated interest rate cuts turning to higher for longer during the period. This has resulted in a reduction in market liquidity, as well as a lack of commitment from investors.
That said, the Bank of England's decision to reduce rates last week, and a further reduction by the ECB, are welcome signals to the market, and they're likely to improve investor confidence. If there is a silver lining, it's the fact that the development activity is also much reduced, and this is now causing occupiers to consider earlier their requirements in light of a diminishing supply equation. In some markets, this is already leading to strong rental growth, which is also likely to encourage investor appetite going forward. The continued resilience of the residential market is also worth highlighting, driven by both limited supply and strong demand, with the sector remaining at the forefront of many government economic policies.
Against this backdrop, geopolitical risk and economic uncertainty remains at an elevated level, with those markets retaining a safe haven status, seeing stronger signs of recovery and renewed investor appetite. In light of this, our strategy is to focus on the continued growth of our less transactional business lines, namely property management and consultancy, whilst maintaining and improving our transactional bench strength and future pipelines in core businesses, core markets. At the heart of this strategy is our desire to provide our clients with the comprehensive advice that they need. Our business remains focused on caring about their business. Turning now to the highlights of our results. I'm pleased to announce that the group concluded the first half of the year with an improved performance, which highlights the strength and balance of our business, despite the continuing headwinds that most real estate markets are still experiencing.
The strong balance within the business allowed us to increase group revenue by over 5%, over 7.5% in constant currency, to GBP 1.06 billion, resulting in underlying profit of GBP 21.2 million, an increase of 30% year-on-year. The drivers of this improved performance are evident across most of our business lines, the strongest improvement being within our transaction advisory revenues, up 9%, as many regions are now starting to experience improved activity. Our residential transaction revenue remained extremely resilient, increasing by 4% overall, with strong recovery in many core markets, limited by market declines in the APAC region.
Our less transactional or more recurring revenue, now totaling or some two-thirds of our total revenue, continues its good performance, with revenue up 3% and with continued growth in property and facilities management up 5% year-on-year. As anticipated, within Savills Investment Management, first half revenues were adversely affected by reduced transaction and performance fees, reflecting market-driven declines, as well as challenges for deployment, with revenue reducing by 10%. Our net cash position at the end of H1 has increased to GBP 34 million, and in light of our performance, we're declaring an improved interim dividend of 7.1 pence per share. Turning now to global market sentiment. So what's changed since our update in March? Well, the market recalibration we highlight continues, and in some markets, it's now starting to bottom out.
However, the much-anticipated interest rate reductions have, on the whole, been delayed, leading to reduced activity and liquidity in many markets. Political uncertainty also continues, albeit in the U.K., with the general election now out of the way and the recent rate cut. There seems to be greater stability on outlook for the second half of the year, which should improve transactional prospects. However, uncertainty remains still in Central Europe and also North America, whilst trade barriers are also increasing and therefore leading many investors to focus on markets with this safe haven status. Geopolitical security tensions are also on the increase, weighing heavily towards a more conservative sentiment.
Finally, some facets of the behavioral change we all experienced post-pandemic continue to evolve, with work from home being replaced by hybrid or flexible working, with greater emphasis back on the office fulcrum. What is not changing is a polarization to prime, with employers needing to provide staff with better accommodation and amenity, as well as continued focus on improved sustainability. This is all well and good, however, the future development supply is now falling, and the previous hesitancy by occupiers from decision-making early has been replaced by a fear of missing out, with greater commitment now evident. Turning now to capital markets. Against a sobering backdrop of a 44% reduction in transactional volumes experienced last year, market expectations in H1 were for a moderate improvement. However, with only limited interest rate reductions, this actually caused volumes to fall a further 9%.
Once again, the lowest since 2012. This decline was experienced across most markets and sectors, while the environment in which to raise new equity for real estate fund products also remained extremely challenging, with total capital raised across the global markets down 45% during the first half. The result was that investors kept their dry powder very dry, albeit we have definitely started to see improvements across a number of core markets, particularly the UK, but also Southern Europe and some of the main markets in the APAC region. And with property values now regarded as bottoming out in some markets and more interest rate reductions anticipated in H2, there is greater buyer conviction, but liquidity still remains low and the market for larger lot sizes remains very thin.
In truth, the second half this year may, across some markets, represent the best buying opportunity for investors over the last 10 years. Moving on to leasing activity. Well, the transactional markets are fast becoming a tale of two stories. While investors hesitate and do sit on their hands, occupiers are justifiably conscious of this fear of missing out, I referenced earlier, as both supply and future development supply reduces across most markets. For an office perspective, this has led to an increase in leasing volumes up 9% across North America, 10% in the U.K., and broadly stable volumes maintained across the main European and APAC markets.
The polarization to prime has led to rental growth accelerating in rade A offices across a number of markets, albeit this is no panacea for the entire office market, with demand for secondary stock still remaining weak and leading to falling rents and increased availability. Across the industrial and logistics sector, the normalization of demand I referenced in March has continued. Take-up has remained stable across Europe. It remains 5% higher than the pre-pandemic average, emphasizing the resilience of the sector. And finally, retail. Well, consumers' desire to return to physical shopping continues, particularly at the luxury end, where we've seen reducing voids, increasing retail rents, and a return in footfall and vibrancy, the drivers of future rental growth. Now on to the residential markets.
Well, I mentioned in my introduction the resilience of this sector, too, and the first half underlines this, with UK mainstream transactions up 2%, and more importantly, 5% on the pre-pandemic average, with house prices increasing by 1.4% during the first six months of the year. UK prime sales volumes also increased, with agreed sales above GBP 1 million increasing by 14% and leading to prime price rises in London, albeit prime regional markets experienced a small price fall due to increased stock levels. A continued lack of availability in the rental sector also led to rental increases influenced by shortages of supply. Outside the UK, the international markets are also exhibiting much of the same resilience, with particularly strong demand evident across Dubai, Portugal and Italy. However, government cooling measures in specific markets, such as Singapore, tempered activity in the short term.
There is also no reduction in international buyers considering luxury resort and lifestyle locations. Whilst at the country level, the creation of a number of residential safe havens by adopting tax and visa incentivization programs is also influencing buyers. I will now hand over to Simon, who will take you through our financial review.
Thank you, Mark. Good morning, everybody. You've had, I think, a decent amount of context and some key highlights for the performance in this first 6 months of the year. So I think I'll probably focus on a few key salient points over the course of the next few slides. The first thing I'd like to do is to draw your attention to the operational leverage in our 30% improvement in profit, off a 5% increase in revenue. The obvious slight increase in margin, and down at the bottom of this slide, the stronger cash performance, of which I'll talk a bit more in a moment.
With single-digit profit growth from the less transactional businesses in aggregate, and a 20%+ improvement in the bottom line year-on-year in the transactional side, as you heard, we've had greater, but perhaps still a bit cautious, confidence that the capital markets in particular are turning positive. And I think if we just step back to look at interest rates is coming up a lot in this presentation, but I can't recall the six-month period in which interest rate expectations and the long bond rate were so volatile. So if you look at the first quarter of the year, everybody would have been anticipating at least 3 rate cuts by now, with a couple more to come.
By the end of March, that had turned to no rate cuts till at least January next year, and obviously, in the last 10 days, we've had cuts and a directional indicator of more to come. So I think that's giving us a little bit more clarity, but it's by no means certain yet. But with all that in mind, we felt that an increase of inflation plus in our ordinary interim dividend was merited by the performance of the less transactional business, and while slightly less covered than normal by the direction of travel for the business as a whole.
So if we look now at the components of our performance, starting with our service lines, obviously, you can see the beginnings of an encouraging recovery in transactional activity, and this is primarily a function of very stable and improving leasing activity and a bottoming out and initial recovery in commercial capital markets in many locations. Residentially, a resilient UK performance partially offset the impact of more difficult markets in Asia Pacific, particularly China, and the impact of growth costs in our global residential business as a whole. Nonetheless, you see an encouraging beginning to the recovery of our transactional business overall, and as I said, that 20%+ improvement in the bottom line.
In the less transactional businesses, good performances from consultancy and property management, and particularly when you look at the leverage to the bottom line, were affected by a reduction in profits in investment management that you've heard about, particularly around deployment of capital in key European markets for our platform of Germany and France. But if we now look then to the regional breakdown, first, you can see revenue growth across the board, which is a good thing and of note, but caveating that this is only half year data. A solid performance in the U.K. was coupled with pleasing recoveries in profits in both Asia Pacific and in North America, and that's particularly pleasing because a lot of local management and indeed, central management attention, has been devoted to this arena over the last 18 months to two years.
In all regions, there is a degree of expansion cost that is uncovered by revenue during the period, in the absence of which, for instance, the U.S. would have made a profit during the period. However, it's continental Europe and the Middle East, where some of the major markets, such as Germany and France, as you've heard, are lagging the general recovery in both the advisory side and in the investment management side. We bore significant net costs of expansion in the residential business, particularly in the Middle East, Italy, and Spain. Absent these, and the reduction of about GBP 1 million in profit in the investment management business in the region, the bottom line would have improved by 10% year-on-year.
I don't say this as a kind of woulda, coulda, shoulda kind of comment, but more to illustrate that the medicine we're applying is working on an underlying basis, and we're pretty well set for improved markets. I'll move now on to our cash flow, if I may. Excuse me. Net cash of GBP 34 million at the end of the period compares favorably with the GBP 12.8 million last time out, and the big difference here between between the two periods is the more than halving of the working capital outflow year-over-year to GBP 104 million, as you can see here, from 227 or so last time out.
The roughly a third into that bridge, the GBP 11.7 million positive investment cash flow, represents the proceeds from the exercise by Samsung of its option to acquire a further 4% of Savills Investment Management, which happened in March. And just remembering, the trigger for that was the committed capital of their $1 billion into our programs. Aside from those two items, really everything is very similar. The only perhaps more significant difference, you can see the impact in the dividend line of the reduction in our transactional dividend last year, the final dividend, where this time last year, we paid out GBP 40 million, and obviously, it's only GBP 23 million in this period.
Now, if we look more generally at cash, we do expect largely some normal seasonality in the generation of cash in the second half, recalling we consume in the first half, we generate in the second. But note, we do have some fairly substantial deferred consideration payments coming due in the second half. But that said, by way of context, GBP 34 million at June had turned to GBP 73 million by the end of July in net cash. So we're well on the way towards normal behavior, in fact, slightly better than normal. So if we move on to our service lines individually. Excuse me. Globally, you can see the growth in revenue in commercial transaction advisory business and an improvement in the loss position in H1 for all the reasons we've talked about, and despite those exceptional markets in Europe and Asia Pacific.
Also despite uncovered growth costs, as previously referenced. Generally, leasing pipelines have improved and larger transactions returned as corporates began to commit to strategic moves, as you've heard, and that's been most notably felt within the North American side of our business. But certain Asian markets, and particularly Hong Kong and China, did not feel that effect of higher, higher corporate, or larger corporate transactional moves. All that being the case, and recognizing the extreme volatility in interest rate expectations that I've talked about, with a little bit more clarity emerging more recently, we generally feel that transaction markets have turned the corner. And whilst the recovery may be slower or the gradient slightly flatter than it was, for instance, post the global financial crisis, we do have a degree of confidence in that this is going in the right direction.
Turning now to residential. Overall, a very resilient performance in some pretty challenging circumstances, and it's really a story with three component parts to it. First of all, UK prime residential resales, i.e., conventional estate agency, grew 10% in some pretty challenging market conditions. This then, secondly, mitigated declines in new development sales and the private rented sector, which are both more highly attuned to the cost of debt, among other things. And then thirdly, in Asia Pacific, a small number of very high-end transactions in Hong Kong mitigated significant or partially mitigated, at least, significant falls in activity in mainland China and Singapore. And added to this, the cost of new team developments in our global residential in Australia also contributed to the reduction in profits in the Asia Pacific region year-on-year.
That said, we have continued to invest, as I've said, in our global residential business during the period, and largely because of more realistic vendor pricing expectations. Moving on to the less transactional businesses, starting with property management, a strong performance globally, with double-digit profit growth of single-digit 7% constant currency, 5% as reported revenue growth. And this was largely driven by the UK, where revenue and profit growth were at the upper end of expectations, and the benefits of our technology investment started to show through in the performance of our residential lettings management business. In Asia Pac, revenue reduced slightly in China as we exited unprofitable contracts, but this did achieve a marginal improvement in profits during the period. And secondly, we also benefited from improvement in profitability in our facilities management business in Singapore.
Finally, in continental Europe and the Middle East, improved profits in the Middle East, Ireland, and Southern Europe were outweighed by reductions in France and Germany. The latter particularly affected actually by scale-up costs in advance of business wins. In some of the implementation of business wins, I should say. So in summary, globally, a strong property management performance overall. We turn to consultancy. It was good to see a return to growth and decently improved profits overall at the halfway stage, recalling where we were this time last year. And this came about largely through an improvement in valuations, project management, and the return to activity of some of the longer term projects involving development and planning, consultancies, which you'll recall this time last year, had largely been put on the back burner as uncertainty prevailed in the market.
Marginal falls in profits in the UK and the Asia Pacific region were more than mitigated by improvements in project management in both continental Europe and the Middle East and in North America, which collectively returned to profitability during this period, and that assisted the strong recovery of the segment overall. Finally, if we turn to investment management, the first half of 2024, as you've heard, continued to be affected by the challenges facing the core markets for our broadly European platform, being Germany and France. Capital deployment remained challenging, and disposals remained challenging. And this affected transaction fees, and the latter particularly affected performance fees, which were down 70% year-on-year and are the fundamental reason for the reduction in profitability in the business during the period.
Of note is that base management fees are very stable and accounted for 89% of revenues during this period. And most importantly, our product performance remains good, and that helped us to raise GBP 1.1 billion new capital during some very challenging market conditions, particularly, as I've said, in Europe. I think the overall summary for this is that it feels like this period is the nadir for P&L performance or income statement performance, for, for Savills Investment Management. And over the last six to eight weeks even, we've seen a marked increase in the number of issuances of RFPs for major investment mandates, including within Europe and including within some unloved sectors of the last couple of years, and a greater willingness generally amongst institutions to consider both real estate and near real estate infrastructural opportunities.
And this gives us a much greater degree of confidence, and that perhaps we'll see slightly reduced profits in 2024, but nevertheless, a solid expectation for the year and progressive growth through next year and beyond. So on that note, I'll hand back to Mark to look a bit more forward.
Thanks, Simon. Turning then to our strategic priorities for growth. As I highlighted in the introduction, our focus has remained on growth of our less transactional businesses, while maintaining and improving our transactional bench strength and future transactional pipelines. In Residential Services, we're continuing to develop our coverage of prime global markets, helped by our market-leading reputation in the sector, so as to provide high value and consistent services through a wholly owned network of offices. As part of our service, we also continue to extend our prime lettings and residential block management services across the scalable markets, while our strategy to maintain core transactional bench strength in development and land sales is starting to reap dividends as volumes recover.
The growth of our occupier and leasing services continues apace, particularly centered around increased mandated accounts within Global Occupier Services, and we have linked all our international operations together to provide integrated services across service lines, including lease administration and consultancy, with greater in-market depth than geographic coverage. Turning to Investor Services, well, the challenge, as we said, of interest rates remaining higher for longer, gives call to the need to support our clients across debt and capital advisory services, whilst we've also strengthened our recoveries and auctions platforms in light of greater activity. As a market-leading provider of property management services, we've extended our platform further to provide both global investor and occupier clients greater services, whilst within Savills Earth, our green consultancy business, we're rolling out GreenFit, our retrofit project management service for obsolete assets. Now moving on to individual markets.
In the UK, as Simon's already mentioned, we were pleased to see revenue growth across all segments of the business, and transactional improvements driven by capital markets, leasing, and residential resales, but a relative market weakness remaining in new build sales. Business development across Investor Services therefore focused on further growth of property management, where we've taken over the assets of Montagu Evans portfolio with a team of sixty staff. In addition, we created a new self-storage team and expanded our national portfolio capital markets business. Our strength here is highlighted by our national capital markets teams, ranking number one in terms of transaction sales during H1 across all property types. We also continue to expand our auctions and recoveries teams, undertaking circa GBP 400 million worth of sales, which is up 50% on the period, with a 79% success rate.
Within occupier and leasing services, we acquired Situu, the leading London office flex advisory business, and our global occupier services teams continued their organic growth, thanks to mandate wins on behalf of clients, including City, BP Pulse, Wickes, and Howdens. Our commercial leasing teams were also extremely busy, acting on some of the largest national deals, including the relocation of the BBC in Birmingham, as well as the 1.4 million sq ft letting to Nike on their new logistics hub. Residential services, well, here we maintained our leading national market share on sales over GBP 1.5 million at almost 19%, while our share increased to 24% on residential sales over GBP 5 million in London. Within residential capital market transactions, our share increased to over 60% during the first half of the year.
Turning now to the Asia Pacific region. Here, we were able to maintain our more stable, less transactional revenues, which now represent 81% of total revenue from the region. We were also able to improve transactional revenues in selective markets, including Japan and Australia, as well as achieving market share gains in Hong Kong and South Korea. Business development activity across investor services was principally focused around the growth of our property management platform across Australia, Thailand, and South Korea, together with growth in project management services, which included the recent acquisition of PMCC in Malaysia. Despite reduced transactional market volumes across the region, we increased our market share in a number of markets, including Hong Kong, where our share increased to over 84%, with significant gains also achieved in Japan, South Korea, and Vietnam.
In occupier and leasing services, growth was focused on our teams in Australia and India, as well as establishing a new regional center for lease administration within the Philippines. In light of the continued growth of manufacturing and logistics in the region, we also undertook significant recruitment, mainly organic, in Australia, South Korea, and India. We won a number of notable mandates during the period, including clients such as Asus, Google, and Nvidia, and we also undertook the largest industrial and logistic portfolio sale transaction in Australia, totaling over 3.4 million sq ft on behalf of Rest Super. Our teams across India also undertook a number of very large project management mandates for clients, including Google and Caterpillar, as well as executing several very large substantial land transactions.
Across our residential services platform in the region, we strengthened the teams there by appointing new residential heads of sales in both New South Wales and Queensland, and expanded our residential teams further in Vietnam and Thailand. Okay, on to North America. Here, our revenue growth of 3% or 5% in local currency was influenced by recovery in markets including Atlanta, Washington, D.C., and New York, with some improvement in San Francisco and Houston. Focused on global occupier services in particular, this allowed us to grow our revenue here up 4%, with incremental growth also within project management and consultancy services. In global occupier services, we actually onboarded, during the period, 20 new major accounts, which comprises 12,000 locations and over 100 million sq ft, acting for clients including Piedmont Healthcare, HubSpot, Warner Bros., and Technicolor.
Our brokerage teams also acted on behalf of major occupiers, including Covington & Burling in New York and San Francisco, American Eagle Outfitters on their new headquarters in New York, as well as undertaking a series of very significant transactions for the General Services Administration in Washington, D.C. From a business development perspective, we made a number of new board appointments, including a new president for North America, a new CEO for Global Occupier Services, and new regional leaders in both Texas and Florida. As a direct result of this, we also made significant hires in Miami, New York, and San Diego. We also appointed a new country head in Canada and grew our project management and workplace consultancy teams nationally. Finally, Europe and the Middle East.
Here, our revenue growth of 6% was driven, as Simon said, by increases in property management and consultancy, while commercial transaction revenue fell in line with the continued weakness in capital markets. We are, however, starting to see some green shoots in selective markets, including Ireland, the Netherlands, and the Czech Republic, as liquidity improves. Growth within our investor services focused around the development of our industrial and logistics capability in Germany through a significant team lift, the appointment of a new head of office leasing in Paris, as well as the appointment of two new country heads in both Poland and France. We also grew our property management platform across Spain, Germany and Italy, driven in part by a number of new contract wins for major clients, including Brookfield, Morgan Stanley and Mirastar.
Despite the subdued transactional volumes, we undertook some of the largest capital market transactions in the region, including a portfolio sale of some 6 shopping centers, totaling over 2.2 million sq ft in Poland, as well as the sale of a 750,000 sq ft logistics asset on behalf of M&G in Belgium. We also grew our global occupier services and tenant rep teams in the main European markets, securing 15 new accounts from clients including Willis Towers Watson, Worley, Cencora, and Qualcomm Technologies . We invested further in the residential services part of our business, too. Simon's rep, particularly in the Middle East, where our Dubai-based residential business took on a further 50 brokers during the year, and they've already transacted over GBP 700 million worth of residential stock.
We also established new residential businesses in both Barcelona and Marbella, while elsewhere, we also increased our own shareholding in our very successful business in the south of France and acquired a new residential operation in Verbier. So Savills Investment Management. Simon has already referenced the overall revenue reduction here, and our business focus, therefore, has remained on the development of our main logistics, living, and debt funds, all with significant dry powder to invest and which will lead to transactional activity as liquidity and price transparency improves across those target sectors. Despite the market-driven valuation impact, our discretionary funds under management continued their strong performance, with 68% outperforming their five-year targets. And we were also able to achieve first closes on both our Pan-European Whole Loan Fund and also our Simply Affordable Homes Fund during H1.
We then also appointed recently a new global head of natural capital to focus on green infrastructure and natural capital products in light of strong investor demand. Finally, our strategic alliance with Samsung Life continues to progress well, and there is continued support for our various fund products. So finishing on our summary and outlook, I am pleased with our improved performance during the first half of the year, which has been driven in part by signs of recovery in some of the transactional markets, and particularly within commercial leasing and residential sales. However, both economic and geopolitical uncertainty continues, delaying an overall capital markets recovery as investors understandably look for greater certainty over interest rate reductions. Underpinning our performance has been the continued growth of our less transactional businesses, particularly property management and facilities management, together with improvements also in consultancy.
Through our strategy of maintaining our core bench strength, we have maintained and built strong market share and future transactional pipelines, which, as market conditions continue to improve, will support a progressive recovery. In addition, our strong balance sheet enables us to continue to invest across all the strategic priorities for growth. In light of this, our expectations for the remainder of the year therefore remain unchanged. Thank you very much for attending today's webinar. Simon and I will now be very happy to answer any questions that you have, and there may be some already.
A quick look.
Or have we answered all the-
It's a good presentation. Completely clean question list. So we'll give you a minute-
Yeah
... to do some typing if you're interested. If not-
You can enjoy the English summer that's arrived already.
Yeah. No, I think we've made-
No, I think the Olympics and other-
Yeah
... other results are taking precedence today. In which case, can I thank you all very much for attending and for your continued support? And thanks obviously to our staff, who obviously supported these results, and also our clients, that we're very grateful for their continued support. In which case, we look forward to updating you at the year-end. Enjoy your summer. Thank you.