Savills CEO: 2010 Revenue Growth From China May Slow To 20%

22nd Jun 2010 03:36

SHANGHAI (Dow Jones)--London-listed real-estate adviser Savills PLC's (SVS.LN) revenue growth from its China business may slow to around 20% this year from the average 30% in the last three years, as activity in the Chinese property market will likely cool, Chief Executive Jeremy Helsby said Monday. "There is quite a lot of uncertainty in this market at the moment," Helsby said. "Based on being here for one day, I am more positive than I was sitting in London. The view outside China is more negative than the view inside China." Business from China contributed around 19% to the company's revenue in 2009. However, Helsby said he is more upbeat about growth in China compared to the U.K., where half of the company's business comes from. "That's a mature market, and it's difficult for us to grow market share there other than by buying competitors," said Helsby. "The attraction for China is that it's still a relatively immature market in many areas, particularly outside Beijing and Shanghai, so the opportunity for us to grow is very strong, because the competition is not as strong as it would be in a more mature market." Randall Hall, chief executive of Savills China, said that while the bulk of the company's growth in China will be organic, it is also "looking at two to three acquisitions," but said it was too early to provide details. The firm, which operates in China's high-end residential market, said it remains bullish about the market despite a sharp decline in transaction volume in recent weeks, adding fundamentals of solid demand and restricted supply remain unchanged. Since mid-April, Beijing has announced a slew of property tightening measures such as higher minimum down payment and mortgage rates, which resulted in a decline in home transaction volumes in May, although home prices remained largely stable. Hall said that while there is still a wait-and-see conundrum in China's luxury home market now with buyers waiting for prices to fall while developers are holding out for property tightening measures to ease, buyers will probably give in, especially with expectations of a yuan appreciation following the central bank's decision over the weekend to strengthen the flexibility of the yuan exchange rate. Analysts said the property sector could get a boost from the central bank's decision to abandon the yuan's nearly two-year de facto peg to the U.S. dollar, because the government could moderate tightening measures for the property market, which are widely expected to include higher interest rates. -By Esther Fung, Dow Jones Newswires; 86-21-6120-1200; [email protected] (END) Dow Jones Newswires June 21, 2010 22:36 ET (02:36 GMT)