EMEA And APAC Real Estate Trends Will Unlock Future Opportunities

Key Takeaways

• Recovery in global real estate activity and investor confidence is driving strong transaction pipelines, set to boost revenue and earnings across key regions.
  
• Expansion in consulting, digital automation, and APAC markets supports higher recurring revenues, margin growth, and greater earnings diversification.
  
• Persisting macroeconomic headwinds, sector shifts, market cyclicality, and rising costs threaten Savills' earnings stability and growth across its transactional, advisory, and investment management businesses.

Catalysts

Engages in the provision of real estate services in the United Kingdom, Continental Europe, the Asia Pacific, Africa, North America, and the Middle East.

• The normalization of real estate pricing and increasing investor and occupier confidence have led to the strongest transactional pipelines on record globally for Savills, particularly in EMEA and North America-pointing to a near-term unlock in transaction volumes, which should directly lift revenue and earnings as market activity recovers.
  
• Savills' ongoing investments and market share gains in fast-growing APAC markets, especially via consultancy and property management, position the company to capture long-term secular urbanization and population growth, supporting sustained multi-year revenue growth and regional earnings diversification.
  
• The rising demand for advisory and consultancy services tied to hybrid work, workplace strategy, and the repositioning of assets (including logistics, life sciences, and alternative sectors) has resulted in robust double-digit growth in consultancy; this trend is expected to continue, structurally increasing the mix of higher-margin, less cyclical recurring revenue streams.
  
• Active investment in digital automation and AI-driven analytics, especially in large-scale property management platforms across China and EMEA, is projected to further enhance operational efficiency and scalability, supporting margin expansion over the next several years.
  
• The anticipated rebound in cross-border capital flows and capital market activity, as reflected in significant "dry powder" and strong underlying investor interest, will benefit from Savills' expanding sector specialization and global coverage, providing tailwinds to transaction-based fees and bolstering both top-line growth and net profit as real estate capital becomes more mobile.

Savills Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Savills's revenue will grow by 4.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.2% today to 5.9% in 3 years time.
• Analysts expect earnings to reach £166.4 million (and earnings per share of £0.96) by about September 2028, up from £54.5 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.6x on those 2028 earnings, down from 21.9x today. This future PE is lower than the current PE for the GB Real Estate industry at 15.1x.
• Analysts expect the number of shares outstanding to decline by 0.13% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 10.42%, as per the Simply Wall St company report.

Savills Future Earnings Per Share Growth

Risks

• Prolonged economic and geopolitical uncertainties, such as trade tariffs, slower-than-expected interest rate reductions, and regional budgetary concerns, have materially dampened transaction volumes across key geographies, particularly in EMEA and APAC; persistent macro volatility could lead to continued revenue and earnings volatility in Savills' highly cyclical transactional businesses.
  
• Structural shifts in commercial real estate-including normalization of demand in industrial/logistics, weak office market activity (especially in secondary office segments susceptible to further distress), and subdued new residential construction-pose risks to long-term volume growth and constrain Savills' transactional and advisory revenue base.
  
• Despite strong pipeline commentary, Savills' exposure remains relatively high to markets experiencing cyclical downturns (APAC, selected EMEA, and UK prime residential), as evidenced by 36% capital markets revenue decline in APAC and ongoing price falls in UK prime residential and limited residential price growth; geographic concentration and exposure to market cyclicality may lead to future earnings underperformance.
  
• The company's investment management line saw a 6% revenue decline and a 60% reduction in performance fees year-on-year due to lower transaction and market recalibration, with ongoing challenges in capital raising and liquidity (notably equity tied up in legacy funds); future secular industry pressures on fund flows and asset valuations may continue to compress net margins in this business segment.
  
• Ongoing investments in digital/ERP systems and expansionary hiring-in the face of stagnant/declining revenues in several core markets-raise the risk of operating cost escalation outpacing top-line growth, potentially eroding net profit margins if recovery in transactional pipelines and organic expansion in North America, APAC, and other target markets underdelivers.

Valuation

• The analysts have a consensus price target of £11.53 for Savills based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £13.19, and the most bearish reporting a price target of just £10.4.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £2.8 billion, earnings will come to £166.4 million, and it would be trading on a PE ratio of 12.6x, assuming you use a discount rate of 10.4%.
• Given the current share price of £8.8, the analyst price target of £11.53 is 23.7% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.