Revenues at real estate agent Knight Frank rose 8 per cent year-on-year for the year ended 31 March 2012, figures which indicate the UK-headquartered company's aggressive international growth strategy is paying off.

Group turnover rose 8 per cent to £333.9 million ($537 million) while pre-tax profit was £95.9 million, down from £101.9 million in 2010. The agent said it was helped by a strong balance sheet with minimal intangible assets. Net cash balances were £98.5 million, up from £91.7 million in 2011, and it has an un-utilised £30 million revolving credit facility.

The firm handles prime residential properties - as well as other forms of real estate - and its fortunes are a useful barometer of wealth spending and investment patterns in general.

Nick Thomlinson, senior partner at the privately-owned agent, said that solid international demand has helped boost sales, despite the "very challenging year" on the domestic front, pointing to several landmark deals to foreigners. 

“Our strong links to international capital through our global network have ensured our teams have had an exceptional year and been involved with some of the world’s leading transactions," he added.

He highlighted the sale of Battersea Power Station to a Malaysian consortium for a reported £400 million, and the sale of St John’s Wood Barracks to a global investor for a reported £250 million. Knight Frank also looks after the office leasing for the iconic Shard, the tallest building in western Europe.

In Asia, Knight Frank has been making its mark, with the sale of 18 Kowloon East in Hong Kong for HK$2.51 billion, and the sale of 215 Adelaide Street and 235 Edward Street in Brisbane for AUS$134.5 million.

“The firm has made substantial investment into the business over the past year as we believe that this represents the right time to build for the future and continue to extend our global network," said Thomlinson.

Within the last year the agent has grown its residential and commercial businesses with new office openings, and has hired around 280 staff, growing its ranks by 4 per cent to 7,067 globally. The new offices are in South Africa, Calcutta, Dubai and Qatar, four offices around the UK and two offices in Australia. The agent plans to open further offices in Scandinavia, Germany, and Asia-Pacific.

Knight Frank has also grown its foreign language and technology capabilities. Its new iPad/iPhone app is fast approaching four million property views, and it has updated its website with a global search engine giving direct access to properties in 8 languages, rising to 21 languages by the end of 2012.

Regional Forecasts

UK

The prime residential London market has seen very strong performance over the past year, with prices rising 11 per cent in the past 12 months to a new high said Knight Frank. Prices are now nearly 50 per cent higher than they were in March 2009. Since the 2012 Budget and the changes to stamp duty rates for £2 million plus properties, sales volumes in London above this threshold have declined by around 20 per cent year-on-year. However, sales volumes below this level increased through the summer, said Knight Frank.

Continental Europe

The euro crisis has held residential volumes back; whilst prices have not risen for some time, there is a lot of interest from buyers who are waiting for opportunities to capture the best value.

Across Europe, buyers both within the continent and those from other regions have been focusing on the most established markets - those with long term strength through their international appeal. While the opportunity of finding value is driving many (especially those coming from currencies that have strengthened against the euro), the defining characteristic of buyers in the prime markets is the focus on the security or stability of the asset; concerns about capital growth or rental yields are secondary.

As such, areas including Paris, the Cote d’Azur and prime spots in Italy and Geneva are still in demand internationally, albeit at lower volumes. Despite the economic uncertainty and the recent tax changes in a number of countries, the appetite for second homes still exists, and the outlook for prime
locations remains positive.

Asia-Pacific

Although the Asia-Pacific region has continued to be the main growth engine of the world economy, there has been a slowdown across most of the major Asian economies this year. The ongoing crisis in the eurozone and the sluggish recovery in the US have hit exports and generally weakened market sentiment.

In terms of residential markets, price performance varied in 2012, as continued government intervention across many markets in Asia proved effective in cooling off booming markets. China, the largest housing market globally, has seen prices stabilise, with the central government resolute in maintaining measures to mitigate the risk of an asset bubble. Asian investors with excess savings have continued to be important buyers in “safe haven” residential markets in the UK, the US,Australia and Canada, said the agent.

Middle East

The first signs of a recovery within Dubai’s prime residential market emerged in the first quarter of 2012 when sales activity strengthened on the back of renewed foreign interest. Prime prices rose on average by 2.3 per cent in the year to June 2012 although there remain two distinct markets, with villas outperforming apartments by some margin.

The low to mid-market remains oversupplied and there is a lack of quality stock but tighter supply in the prime market is supporting prices. "We expect prices in the best locations such as Emirate Hills, Downtown Dubai and Palm Jumeriah to see continued growth in 2012 and 2013," said Knight Frank.