Good morning, ladies and gentlemen, and welcome to this morning's presentation of Savills results for the six months ending 30th of June 2022. Before I start, I might just say that Simon and I aren't wearing the same shirt and tie, even though it looks like it on the screen. Simon's shirt is pink, mine is white. Otherwise, we look pretty similar. The format of today's presentation will be well known to you. I will provide you with the highlights of our results, an overview of the main market dynamics that we've experienced, as well as summarizing some of the key business development initiatives we've undertaken during the period. Simon will then take you through the financial review, and I will conclude with our summary and outlook for the second half of the year.
I emphasized in March the grave challenges presented by the war in Ukraine, creating increased concerns over global security, as well as accelerating inflationary pressures. While the cautionary effects of this were already evident actually in March, it is now much more material, affecting many parts of the real estate transaction markets, particularly capital markets, but also feeding into increased hesitation on decision-making within the occupational markets. The result of this will be to suppress transactional volumes in the short term. We do anticipate that volumes are likely to recover once the effects of a recalibration has occurred. Occupational demand, although slowing, is likely to remain fairly robust, especially in sectors such as residential, logistics, and grade A offices, supported by the continuing shortage of supply, the desire for greater onshoring of supply chains, and the need to retain talent in a competitive environment.
Current markets are not characterized by an oversupply of speculative new development, nor over-gearing, as was the case in the GFC, and this should underpin the recalibrated rental and capital values in due course. Equally, the fundamentals of real estate remain compelling as a resilient hedge against inflation, and there is still a considerable amount of equity or dry powder seeking greater exposure to the prime global real estate markets. Okay, moving on to highlights. In the six months to 30 June 2022, Savills has, for the first time, delivered H1 revenues of over GBP 1 billion, in line with our expectations and representing an increase of 11.2% on the prior year.
Underlying profit was GBP 59.2 million, a 10.4% reduction year-on-year, primarily due to the abnormal trading conditions we experienced in the residential markets in the prior period, as well as the increases we anticipated in operational and staff costs this time around. Putting this into context, as a comparison to 2019, a pre-pandemic period, this represents strong growth in both profit and margin during the period. Our policy of maintaining balance sheet strength throughout the year has also resulted in the net cash position of GBP 149 million, an increase of 40% over the prior equivalent period, and it allows us to maintain investments in the business going forward. The drivers of this performance include the secure balance provided by our less transactional businesses, actually representing 60% of our group revenue.
Again, achieving an aggregate 9% increase with growth in every region. The biggest component of this is property and facilities management, and that represents by itself 27% of group revenues, which saw revenues increase by 8%, while the remainder, comprising consultancy, increased by, its revenues by 6%. The recovery in market activity, particularly strong during Q1, allowed commercial transaction revenue to increase by 26% overall. While the continued market strength and increased market share from our U.K. residential business resulted in revenues reducing by only 8% despite national market volumes falling by 22% on properties over GBP 1 million. I would also like to highlight a particularly strong performance from Savills's investment management, with assets under management also increasing by 9% to EUR 26.5 billion as we continue to launch new funds.
In light of this performance, we are declaring an interim dividend payment of 6.6p per share, a 10% increase, supported by the resilient performance of our less transactional businesses and reflecting our confidence in our overall business model. I am very pleased with these results, which I believe validates our desire to maintain the balance of our business whilst continuing to invest in areas we believe will deliver the strongest returns as sectors evolve and markets recover. Finally, it remains fundamental that we continue to take a longer-term view on opportunities for strategic growth, which I'm now highlighting. In fact, in many areas, the current economic uncertainty is likely to provide greater opportunities to grow our core service lines across a number of geographies.
Focusing first on our transactional side of the business, we continue to invest in our global occupied services platform or portfolio services, which has won significant new mandates with clients including Expedia, Getronics, Oracle, and Technicolor. Growth also includes new and strengthened teams in New York, across Canada, in Germany, Italy, and across many parts of Southeast Asia. Our brand strength and profile in the global residential markets has also helped us to continue to expand our activities across Europe and the APAC region, with a number of new offices and initiatives underway. The demand from operators, occupiers, and landlords for services within the flexible office sector has accelerated, in part, due to the current market uncertainty.
Our comprehensive range of flex services under Workthere, covering brokerage, portfolio management, consultancy, and leasing, has extended our operations into nine countries, including the U.S., Europe, and the APAC regions, with more openings scheduled this year. Our focus on the less transactional part of our business includes the growth of project management and workplace consultancy capabilities, with organic growth across Europe and the APAC regions, following the successful integration of Merx, which I highlighted in March. This has been supplemented by the acquisition of a new technology-driven workplace consultancy business, Brickbyte, operating in Germany. In addition, Savills Earth, our sustainability consultancy platform, continues to grow rapidly and is extending into all our regional platforms. Now, moving on to the regional commentary, starting with the U.K. Similarly to the last update, I've split this between commercial and residential sectors.
Despite the forecasted downgrades in U.K. GDP and significant inflationary pressures, we experienced a good resurgence in commercial transaction activity, particularly during Q1, albeit this tempered down during Q2. Commercial investment volumes in the U.K. increased 15% year-on-year, and the U.K. regained its crown, overtaking Germany, to become the most heavily invested property market in Europe, aided by the weakness of the pound. Activity itself was focused on the office and logistics sectors, and leasing activity also saw a significant increase, with logistics leasing up 81% on the long-term average, and office leasing volumes in the City of London up 96% year-on-year.
In light of this resurgence, we have continued to strengthen our UK business, including the appointment of a new head of Central London investment, growing our corporate finance teams, and expanding our office leasing teams across Greater London, the Midlands, and across the North East of England. With the hospitality sector also returning to normal, we've appointed a new team supplementing our national food and beverage coverage. Our investment teams commanded increased market share, transacting 23% of total volumes across Central London and strong market share nationally. During the period, we advised Northwood Investors on the disposal of 200 Gracechurch Street for GBP 200 million, advised Hudson Advisors and Lone Star on the acquisition of The Oak Portfolio for GBP 300 million, and advised Tristan Capital on the GBP 420 million acquisition of a portfolio of 11 hotels.
Our property and facilities management business has also won a number of new instructions, including Pontegadea's London portfolio, a substantial residential portfolio for Dorrington, and key new mandates from the Grosvenor Estate. We've also been appointed to manage two very prestigious constructions, The Scalpel and the Walkie Talkie building, or 20 Fenchurch Street, both iconic parts of the London skyline. Now moving on to residential. As you can see from the chart, annual house price growth is moderating, but has remained surprisingly robust, running at 10.7% to the end of June. Likewise, transaction volumes remain 8% above the pre-pandemic levels, although we are starting to see a slowdown in buyer demand. That said, stock levels are also historically low, some 32% down on 2019 levels.
Within the prime market, we have experienced a rebalance of demand between the country and London, particularly due to a reemergence of international buyers within prime central London, and that has experienced significant price growth of 3.3% during the first six months of the year. The strength and depth of our brand and platform allowed us to increase market share to almost 28% on sales above GBP 5 million in London, whilst our market share in prime country was a strong 17.5%. Our lettings business also continues to grow both market share and revenue, with half-year income up 10% across London and 4% in the country, and we continue to seek opportunities to grow this further.
I also want to highlight the fantastic performance of our auctions business, which this year has undertaken five digital platform auctions and sold over GBP 210 million of stock, up 32% year-on-year, at an all-time record. The market activity and the strength of our business allowed us to grow overall UK revenues across both the commercial and residential markets by 5% to GBP 439.2 million. Now, moving on to the APAC region. The continued pandemic-related restrictions across Greater China are limiting the speed of recovery within the region, while other parts of APAC are starting to recover well. This resulted in a notable decline in commercial investment activity of 18% year-on-year in the first half, with a significant reduction in the industrial sector, but a slight increase in the office sector.
The investment markets evidencing the strongest growth includes Singapore and India, but also some improvement across Australia and South Korea. The office leasing markets are also mixed, with strong demand in Singapore, contrasted by rental falls across Greater China, particularly Hong Kong, where Grade A offices fell by a further 4% and are now 28% below their peak rental levels. With improving momentum across a number of markets, we've continued to grow our teams in Japan and Singapore, as well as our logistics capability across China. In Australia, we've significantly enhanced our property management capabilities nationally. During the period, we also acquired KIA, a leading advisory business in Indonesia, which actually doubles the size of our operation and enables us to provide a full service offer to our growing client base in the region.
Transactional highlights during H1 included the sale of a 6.5 million sq ft industrial and logistics park in Wuhan for SC Capital and UNI, advising PetroChina on their head office in Jakarta, and advising Gaw Capital on a 1.7 million sq ft logistics development in northern Vietnam. Our property and asset management teams also obtained green building certification on the Bund Finance Center in Shanghai, a mixed-use scheme comprising over 4.2 million sq ft. It's also important to mention that our recently developed platform in India has also passed another very important milestone, with 500 employees now operating across seven cities. Thanks to the growth, particularly in the Southeast Asia markets, our overall revenue increased by 9% year-on-year to GBP 311.7 million, despite the subdued transactional markets still occurring in Greater China.
Moving now to North America. Our North American business represents 15% by revenue of our global business, and our activities, as I think many of you know, are focused primarily on the office sector. This provides us with a significant opportunity for growth over the longer term. Leasing demand has improved, up 35% year-on-year, but equally, office availability has also continued to climb, now at almost 23% nationwide. The economic uncertainty is obviously affecting confidence, and we have seen hesitancy and delays affecting office leasing velocity, and this is likely to continue into the second half. This is in contrast to industrial and logistics, where vacancies remain at an all-time low, under 4%, and demand obviously remains strong.
We have strengthened a number of teams during the period, including in New York, national teams across industrial and logistics, as well as new offices in Florida and Utah, with further growth underway across Canada. Both our transactional and consultancy teams remain very active, acting for Tiffany & Co., one of the largest retail lettings at 200 Fifth Avenue, for the U.S. General Services Administration on a very substantial leasing assignment in Washington. Our life science team assisted Graphite Bio, a leading gene editing company, on a new HQ in San Francisco. The improved momentum in the transactional markets and growth of our consultancy services allowed us to increase our revenues by 30% year-on-year to GBP 148.4 million. Next, Continental Europe and the Middle East.
While transactional volumes in the first quarter recovered well, this is tempered, particularly in light of the war in Ukraine, with investment volumes falling 28% in Germany, 11% in Poland, and 42% in the Netherlands, but recovery evident in both Italy and Sweden, increasing by 45%. We have seen a positive improvement in office leasing activity across the Eurozone, up 14% five-year average, with stable vacancy rates. Again, demand for logistics remains strong. Within our own business, we saw a significant improvement in transactional revenues out of Italy, Spain, Sweden and France, together with a continued recovery in the Netherlands and Ireland. Our Middle East business also continued to perform well, with very strong growth in Egypt and Saudi Arabia.
During the period, we undertook a significant amount of organic growth with new teams in hotel and hospitality and also logistics in Italy. We also grew our capital markets teams in Germany, France, and Sweden, as well as growing logistics also in France and Sweden. Our property management business experienced continued growth, thanks to many new contract wins, including the 1.4 million sq ft Zalando distribution center in the Netherlands, Sky Tower, one of the tallest buildings in Poland, and also a very important mandate to manage 38 retail properties across Germany for Paref Gestion.
Our transaction teams also undertook some of the largest transactions during H1, including the sale of 18 supermarkets across Spain for AEW, a similar sized portfolio of retail parks in the Czech Republic and Hungary for Adventum Group, and the sale of the Pirelli headquarters in Milan. Thanks to the improved market momentum as well as strong business wins, our revenues grew 21% year-on-year to GBP 138.1 million. Finally, Savills Investment Management. Inevitably, the market hesitancy I indicated earlier will affect transactional volumes during the third quarter, but we do expect to see more balance on the bid-offer spread during the fourth quarter, again, with greater price discovery.
Our business development here is concentrated on successful capital raise with total equity raise of circa EUR 1.2 billion, a 33% increase on 2021 and across a range of our Pan-European core strategies, particularly in logistics, essential retail, Asian funds and debt and ESG-led investments. During the period, our total assets under management reached EUR 26.5 billion, a 9% increase over the period with a solid transaction pipeline going forward. Most importantly, the performance of our funds continues strongly with 78% of funds by AUM continuing to exceed their rolling five-year benchmarks. Since their inception, 83% of all AUM has beaten its benchmark. Due to our focus on the residential or living sector, we've undertaken a significant amount of strategic recruitment with more to come.
Our strategic alliance with Samsung Life Insurance is progressing very well, with initial seeding of funds well underway into our European debt fund and within Asia, across our German core residential and our Pan-Asian core plus funds, with over $300 million already committed. Revenues for the period grew to GBP 53.8 million, and Simon will provide further details on this growth in a moment. In fact, I will now hand over to Simon to talk through the financial review.
Thanks, Mark. I'll try and drive the presentation a bit straighter as well. Thank you, Mark. Good morning, everybody. If we start with the overall summary, and clearly, as we'd said very, very obviously at this time last year and at the year-end, 2021 was an abnormal year right the way through in terms of trading, particularly from the perspective of discretionary or operating costs. What I have put through this presentation across the board is the 2019 equivalent period comparison as well, which I think is a much more germane sort of long-term comparator for you as you try and assimilate our results. If we start with the summary, you know, good revenue growth over the period to hit that GBP 1 billion mark for the first time in H1.
We did see the extraordinarily positive trading conditions as we anticipated of 2021 start to revert to normal, and we experienced a reduction in our margin as a result of that, as some of the operating costs that I referenced at year-end came back into play in a more normal way. I would say, though, when you look over to the right-hand side, that the first half of 2022 represented a significant step up in all financial performance metrics compared with the pre-pandemic equivalent period in 2019, and that's growth across the board. I'm particularly keen on that 120 basis points of margin improvement. Now, while some of that is pure scale because the size of the business, it's also indicative that we are seeing some permanent efficiency gains, or savings in our discretionary costs.
I would point out specifically the arena of things like marketing, where we're much more digital now as a result of two years of COVID experience, and therefore we're spending slightly less as a percentage of revenue in that arena than we did pre-pandemic. I think that will continue. The other arena would probably be travel, where again, for sustainability reasons, we're not traveling in the same way as we did pre-pandemic, and I'd like to think that would continue as well. To the point where across those captions, I think we should see what I was anticipating is around 20%-25% savings on pre-pandemic run rates of spend. Of course, we do now have wage cost or salary inflation to contend with, which we didn't really have back then.
More of that in a moment. If we turn now to performance by business, this is a story of revenue growth across the board. A little bit of mix in the transaction advisory business and the impact of expansion costs exacerbating the bottom-line effect of the anticipated cost increases I've just been talking about. It follows from what I said just now that when you look at the profit movements period on period, what looks like a series of red declines, with the notable exception of Savills Investment Management, is actually the known return to better than pre-pandemic levels or norms of profitability. With each of those three principal service lines, both either exceeding or at least equaling their 2019 comparative margins. If I turn now to performance by region.
Here you can see the relevant strength, or relative, I should say, strength of the U.K., despite a significant shift as we anticipated between residential transaction activity in favor of commercial transaction activity during the period. In Asia Pacific, we undoubtedly suffered from continued restrictions in Hong Kong and mainland China related to COVID for pretty much the whole period, and we didn't have the cushioning effect of about GBP 1.7 million of employment subsidies in Hong Kong, which cushioned last year's performance in the same period. In North America, we saw good revenue growth and a slight improvement in margin, albeit impacted by investment cost. Finally, in continental Europe and the Middle East, we continued to see improvement over last year.
I hesitate to say this, but that would have been a positive number on the bottom line, but for the fact that particularly in Germany, we felt very significant impact from the Ukrainian crisis on investor sentiment and occupier sentiment during particularly the second quarter. If we turn now to cash flow. To state the obvious, this bridge takes you from the year-end relative cash high to the half-year position of GBP 149 million net cash, which was itself about 40% up on the same period last year, which just so you recall, was about GBP 107 million.
What you can see from this chart, and I'll pick up a couple of points here only, is that our operational cash flow, which is the first three columns of the bridge, reverted to a more normal outflow position for the first half compared with the abnormal inflow of last year. This is a result, as you're more than well aware of paying out bonus incentive payments on prior year's record profits while accruing lower levels of bonus at the current year expected rates. By way of comparison, the pre-pandemic H1 2019 operational cash outflow was GBP 128 million. That gives you a sense of, again, of direction of travel in between times. Apart from that, the two significant movements really in the bridge are as follows.
First of all, an increase quite significantly in shares purchased by the employee benefit trusts to bring our incentive scheme hedging back to normal levels. We've been doing that through the second half of last year and the first half of this year. The effective doubling of our dividend payment as we paid the special dividend declared for 2021. That will obviously be expected to return to more normal levels in due course. For the eagle-eyed who spotted a divestment inflow of nearly GBP 8 million in the middle of this bridge, that's in fact a true-up of the Samsung consideration payment for its stake in SIM on the basis of the closing balance sheet, which was calculated during the course of this period.
If we turn now to our service lines, starting with commercial transactions, and completely in line with our expectations, you can see attractive aggregate revenue and profit growth versus both the comparable period last year and versus the pre-pandemic 2019 comparative. The drivers of that are as stated on the slide. I think what isn't shown here, but is disclosed in the statement, and is an important element of our diversification of exposure over time, is the degree to which we've broadened the Asia Pacific business across the region through the progressive development we've talked to you about over time in Singapore, Australia, Japan, et cetera, over the last decade. This is illustrated by the fact that mainland China and Hong Kong together have gone from representing 65% of Asia Pac's commercial transaction revenues a decade ago to 28% in this period.
If you want to look at that in terms of the whole commercial transaction advisory business, that's a move from 28% 10 years ago to 7% today. Now, for the avoidance of any doubt at all, this is a question of diversification and growth. While the tiger, in a sense, may be sleeping at the moment for all the reasons that are well rehearsed, we're absolutely committed to those markets, which remain a core strength of Savills' business and a significant recovery opportunity for us in due course. In a similar vein, you'll note that the U.S. represents 40% of our commercial transaction business, but in terms of revenue, a fraction of the profits.
While growth in revenue at 26% is attractive, it is still clearly work in progress for us as we grow, as we evolve and broaden our business there over the next couple of years to take advantage of the significant opportunity that market represents for us. Moving on to the residential business. While we've seen the anticipated reduction in activity in, particularly in the U.K., in comparison with the truly extraordinary market conditions of last year, it's instructive to see very strong aggregate growth, compared with the pre-pandemic comparables. I would caution that there were a number of factors affecting markets back then in 2019, not least of which was a prime ministerial resignation. I might just move on that front.
In the U.K., we've definitely seen an improvement in London, as Mark has alluded to, as the regional markets quietened, as we anticipated. Those regional markets, remember, were the prime drivers of performance in 2021 since the COVID lockdown. We also saw greater activity in the institutional residential business, which partially mitigated the reduction in volumes in private residential that we knew were going to happen. In Asia-Pacific, we have undoubtedly suffered from the effects of the pandemic-related restrictions in Hong Kong and mainland China, and particularly the impermeable border between the two, which has affected our high-end residential business during this period.
If we turn now to the less transactional businesses and start with property management, as you can see from the overall 3% reduction in profit, period on period, obviously operational cost increases have had an effect here, including salary inflation. In aggregate, the biggest difference year-on-year is the effect of that GBP 1.7 million subsidy received in 2021 in the Asia-Pacific group in Hong Kong, which obviously, as you recall, I drew your attention to in both the half-year and full year results last time. This clearly abnormally boosted the segment margin, while it lasted. In the U.K., the impact of those cost increases I just referenced in advance of pricing changes temporarily affected our profits in this market.
Finally, in continental Europe and the Middle East, it was gratifying to see the business development of recent periods in Germany, Spain, and indeed the Middle East itself, lead to profits at the half year rather than the loss we reported last time. Obviously, we still got some way to go, but that was a good waypoint for us. Overall, our PM business has continued to perform as we expect it to, and as Mark said, it's a strong keel on this ship. Turning to consultancy, you can see period-on-period movement affected by both staff cost increases and growth costs across the board. However, it's good to see decent overall growth since the pre-pandemic period. In the UK, we saw growth in project management and housing consultancy offset for obvious reasons by the declines in development and planning activity during this period.
These were exacerbated by some significant market adjustments to particularly junior and mid-level professional services salaries in a number of our consulting disciplines. In Asia, we saw trend levels of revenue growth, but investment in new teams, particularly in project management as Mark's referenced, temporarily reduced profits, and the same is true of regional investment in continental Europe and the Middle East, particularly focused on Germany and Sweden. Finally, we saw significant improvement in North America, comprising a full period of T3, which is our life sciences and technology-focused consultancy business, and a post-lockdown resumption of growth in project management, which is Savills Macro. Finally, for me, turning to investment management.
On a housekeeping point, before I go into the performance, you'll note from our release that we continue to consolidate 100% of the performance of Savills Investment Management into our underlying results as we still control the business, despite SLI owning 25%. SLI's share is accounted for as a non-controlling interest in our financial statements, which you'll have a chance to peruse in more detail. Turning to the performance of the business. As Mark referenced earlier, the revenue line in this period, the growth is flattered by two specific factors. The first one is the full period effect of the acquisition of DRC last year, midway through the period or in fact towards the end of the comparable period last year.
The second one is a requirement for materiality reasons now to gross up revenues for the cost of funds payaways, which was not the case. We didn't make a prior adjustment for prior period. That latter point has absolutely no impact on profitability whatsoever. It's a reclassification, but does obviously affect revenue growth and margin. Absent those two factors, in a sense, the true underlying rate of revenue growth in SIM remains strong at about 18%, period on period. Fund performance capital raising was also strong and base management fees were up significantly. We did benefit during this period from growth in both transaction fees and performance fees period on period, recalling the subdued levels of activity in those areas in the same period last year.
Actually overall, it's very clear to see that this business has grown substantially since the pre-pandemic comparable period of 2019. With that, I will hand you back to Mark.
Thanks, Simon. I'll now finish by providing an update on ESG as well as our summary and outlook. Starting with ESG, in March, I detailed our own commitments within ESG to achieving carbon net zero Scope one and two by 2030 and Scope three by 2040. We continue to make good progress on this following the adoption of science-based reduction targets. I will provide you with a further update on this at our full year results. I've also included slides at the back of this deck, which shows the growth of our services or service lines within Savills Earth, which I've referenced, our consultancy business around sustainability. I think it's therefore more beneficial if I concentrate this time on the S within ESG in support of our amazing staff worldwide. Turning firstly to training.
Within the U.K., we were awarded The Times Graduate Employer of the Year for the 15th consecutive year, and ranked first in The Times ratings on placements for apprentices, where we have a current program of over 200 apprentices. In addition, our US business was awarded two national honors for its diversity and inclusion programs. Our programs to enhance gender diversity all continue to pace. 33% of the senior executives in our global business are female, with record levels of female direct promotion in the U.K. this year. Our global staff wellness initiatives have also been developed further, including the extension of our own MindUP mental and physical health programs worldwide. Finally, our support for many worldwide charities continues apace, both through significant financial and voluntary work.
As an employer, we are committed to giving our staff the flexibility they need to dedicate their time to good causes. Moving on to summary and outlook. Standing back and looking at our overall performance against the economic backdrop, I am very pleased with these results, which are driven by an improvement in the performance of our commercial transaction business, as Simon has mentioned. Relative resilience and market share gains in our residential business, and also the continued growth in our less transactional businesses, particularly project and property management. This gives us the very secure balance that we've highlighted. That said, headwinds have intensified due to the strong inflationary pressures affecting the global economy and the subsequent and significant rapid rate rises we've seen, which are affecting investor and occupier confidence in the near term.
While this will moderate the transactional volumes during the second half of the year, we're already seeing positive effects of rapid repricing and recalibration in many markets. It is characterized by less speculative oversupply, relatively conservative leverage, and significant dry powder for further investment. Occupational demand is continuing to be influenced by competition for talent, retaining talent, as well as the need for enhanced sustainability. In light of this, and subject to any greater market volatility, our expectations for the year as a whole remain unchanged. Before I finish, I would like to take the opportunity to thank our global workforce for their continued commitment, as well as our clients and our shareholders for their support as we navigate through more turbulent waters. Thanks also to all of you for attending today's webinar and avoiding the heatwave in London.
Simon and I will now be very happy to answer any questions that you have. Thank you.
Okay. Have the cursor. We have two questions up on the board thus far, both from Joe Spooner. The first one is, "The statement notes real estate markets began to adjust to interest rates in the second quarter. Was there a marked difference in performance at the group level 2Q versus 1Q? And did that focus on a particular area of the business?" Do you wanna take that one?
Yeah, I will. I think the biggest variation, Joe, was around the capital markets started to adjust in the second quarter. We started to see obviously the impact of those interest rate rises starting to feed in and investor hesitation. In some cases, obviously, market instructions started to be withdrawn pending that recalibration. That was probably the biggest variation between Q1 and Q2. Not in every market. Certainly, it occurred in U.K. and Europe in particular and some of the APAC markets. Markets like Australia were impacted. But markets like Japan, Singapore actually maintained pretty good momentum through. It affected definitely the capital markets element first and foremost.
It is feeding through to more hesitancy, as I've indicated, in the occupational markets, as people take stock of what it means. There's more momentum there overall.
I think the second question again from Joe is, "Can you provide color around wage inflation pressures? Where have they been the strongest? And are there any signs that these are easing?" Shall I take that one?
I think first of all, one's got to actually look at the wage inflation in 2022 in the context of the previous two years, where there was very little. Part of what we've done is essentially a true-up from the strange COVID years of 2020 and 2021. If you look at our base or fixed level of wage inflation, it's higher than it normally was. It's 6%-7% across the globe. It's not the same everywhere, and it's not the same at all levels in the organization.
I think if you pick up what I said earlier, particularly around consultancy, I think and you will have seen this in the investment banking industry, et cetera, particularly at the more junior levels, we have had to true up to market what became market levels of rates for the equivalent of analysts, et cetera. That's probably where the most significant rises have been. I do look at it again as that step shift to correct some anomalies of the previous couple of years. Who knows what happens over the course of the coming period? I think we've probably had the biggest movement thus far. We're always having to make sure that we're meeting market requirements and providing attractive packages to our staff. That's a given, and it always is.
I don't think we've had the same systemic requirement here as we had at the year end. The next question is from Chris Millington at Numis. How long do you think it will take prices to recalibrate? Love that. Mark, yeah. The crystal ball, Chris. Look, I think the positive is we are seeing quite a rapid recalibration already occurring. I think less time than we might perhaps have seen in previous cycles where we've seen a downturn. Right now, sort of bid-offer spread is maybe 25-50 basis points between, you know, prior and now. I think it is gonna recalibrate in the third quarter and into the fourth quarter, so it will affect the volumes during that period in different markets.
Not every market is gonna have to recalibrate to the same degree. Equally though, the amount of dry powder, that equity that I mentioned earlier, you know, which is raised, wants to find a home, and some of the biggest global investors have said that they may take three to six months before they see, you know, opportunities. Rest assured, when they say that means they'll go in earlier, and they're already, dare I say, kicking tires to see what opportunities are there already. I think it will take longer, and I think the other piece around that is the fact that we do not have this overhang of speculative development, potential oversupply, which we had in the GFC. The markets are much more balanced, and therefore I think that it will recalibrate therefore quicker, going forward.
Next year, I think we'll see more normalized volumes.
This is really about adjustment to the risk-free rate.
Yeah.
When it comes down to it, isn't it?
Absolutely.
Chris got the next question as well, which is how healthy are stock levels in commercial for both leasing and sale?
Well, again, it varies, Chris. I would say, you know, in the U.K., I saw the team yesterday. They've got the best book they've ever had. Obviously, they've gotta transact that book. You know, both on leasing and sales, you know, very strong indeed. I know the same is true again in the residential markets. We are carrying a very strong book as well. Across most of the world markets, you know, our market share has improved. I think we have got the opportunity to transact. I think the other piece around some of the value increases that many of our clients have had in logistics and other sectors, you know, I think there will be an opportunity for them to take profits in the future.
Maybe not right now, but I think that's the opportunity that we have. I think the future book of work looks good.
I think Chris has asked another question, which is, do you have good pricing power in the less transactional business lines? Are financial year 2021 margins achievable in the medium to long term? I would suggest that it's a shame we're not face to face 'cause I could clarify the question a bit more. I'm assuming you are referring specifically to more annualized margins rather than first half margins. Simply because first half margins are always lower than our annual for all sorts of very good reasons, technically, as well as seasonality. If I answer the question in terms of annualized, we'd like to see us get back to the annualized gross margin that we put up in the full year last year.
In reality, that is going to take probably two, three years yet to get back on a more sustainable basis. Because we are not gonna get back there by virtue of being locked down and being unable to spend on travel, entertainment, et cetera, et cetera, marketing events. I think yes. The answer is yes to the progressive improvement in margin. I think it's worth looking, again, drawing attention to the point I made about the 2021, or sorry, the 2022 half year margin versus 2019. We see some benefit there. I think the pricing power there, it really does depend which element of the transactional business line you're talking about, is the honest answer.
In some of the consulting activities, I think we do have some good pricing power for the quality of our work and the power of our capabilities. In some of the other markets, it's a bit more market driven. If you take facilities management, for instance, that is quite a market driven sort of revenue model. It does vary. I probably haven't answered that question well enough for you, but I can take it up afterwards. Oh, there you go.
Can clarify? I didn't see. You were talking about annual margin.
Annual margin. You are.
Fair enough. I think I have answered that then.
That's the last question that I can see on the board. If there is anything else anybody wants to know, then please do shout now. No? Otherwise, I'll.
Okay. Well, thank you all for attending today. Please do send through any other questions you have to Simon and I. Thanks for your continued support. We look forward to updating you again at our full year results. I hope you have a holiday, have a good summer, and we look forward to catching up with you then. Thanks very much.
Thank you.