Savills’ share price has moved remarkably closely with interest rates for years. On days when yields rise, the stock almost automatically comes under pressure. For many investors, the reasoning is simple: higher financing costs lead to fewer real estate transactions, and therefore lower revenues for a real estate adviser. That view has largely shaped sentiment around Savills in recent years. At the same time, the numbers tell a different story. Revenue is growing, profits are developing steadily, and an increasing share of the business is less dependent on transactions. For that reason, Sharesunderten is taking a position. We are buying 200 shares of Savills. Profile Savills is a British real estate advisory firm originally founded in London in 1855. What began as a traditional land and property agency has grown into a global service provider within the real estate sector. Savills’ growth has taken place in phases. For a long time, the focus was mainly on the United Kingdom, but from the 1990s onward, and especially after its stock market listing in 1989, international expansion accelerated. The company built a strong position in Asia-Pacific, with significant operations in markets such as China, Hong Kong and Australia. In Europe, the network was expanded further, while its presence in the United States remained relatively limited for a long time. That is precisely where Savills has been trying to gain ground in recent years. Today, Savills consists of several business lines. The best-known activity is real estate transaction advisory, where the company acts as adviser in the purchase and sale of commercial and residential property. This has traditionally been the most cyclical division, as revenues depend on transaction volumes and therefore on factors such as interest rates and market sentiment. In addition, Savills provides consultancy services, including valuations, strategic advice and market research for investors and companies. An increasingly important pillar is property and facilities management. In this area, Savills manages real estate portfolios for clients and handles operational management, maintenance and rent administration, among other services. These activities generate recurring revenues and are less sensitive to fluctuations in the property market. Finally, Savills is active in investment management, where it manages real estate funds and mandates for institutional investors. Results Savills’ 2025 results present a picture that clearly differs from the negative sentiment surrounding the stock. Revenue rose by 6% to £2.55 billion, while underlying profit before tax increased by more than 11% to £145 million. Earnings per share grew even faster, rising 16.6% to 77.2 pence, pointing to clear margin improvement and operating leverage. This improvement was partly driven by earlier cost measures and a more efficient organisation. Notably, the growth was broad-based. The transaction business reported revenue growth of 4%, while profit in that division increased by 13%. The less cyclical activities, such as property management and consultancy, grew faster, with revenue up 8% and profit up 15%. This makes the earnings model visibly more stable. The cash position also remains solid at £168 million, while the dividend was increased by almost 12% to 33.8 pence. Looking ahead, Savills expects a gradual recovery in the real estate market in 2026. The transaction pipeline is improving, and profitability in the transaction division should continue to recover. At the same time, the more stable business lines continue to grow. Analysts broadly agree with this view. They are not expecting a rapid recovery in transaction volumes, but they do recognise that Savills’ profit development is more resilient than the market often assumes, with medium-term earnings growth estimated at around 10% to 12% per year. Revenue by division. Source: Savills.Profit before tax by division. Source: Savills. In a recent update, management reported a strong quarter that came in slightly ahead of its own expectations. In the commercial real estate market, the United States remained particularly strong, with investment volumes increasing by more than 20% year-on-year. Asia-Pacific also delivered a strong quarter, with growth of 16%, while EMEA recorded a 4% decline. Within the residential activities, Savills initially saw a strong start to the year in the UK. However, since the outbreak of the conflict in the Middle East, buyers and sellers have become more cautious. This has led to longer transaction timelines. The number of agreed transactions still rose by 1% in the first quarter. Looking ahead, Savills remains positive, although management is allowing for longer transaction timelines due to elevated geopolitical uncertainty. Management has therefore maintained its outlook for 2026 and expects the profit split between H1 and H2 to be similar to that of 2025. Acquisition Alongside its annual results, Savills also announced an acquisition. Eastdil Secured represents one of the largest strategic steps in the company’s history. Eastdil is not a traditional real estate adviser, but rather a real estate investment bank. Whereas Savills has traditionally focused mainly on broking transactions, managing properties and providing advisory services, Eastdil operates on the financial side of the market. The company advises on major real estate deals, mergers and acquisitions, joint ventures and, most importantly, financing, including debt structures and loans. With this acquisition, Savills aims to become less dependent on pure transaction activity and to strengthen its position in real estate capital markets. This is precisely where Eastdil earns its money. By adding Eastdil, Savills moves higher up the value chain: from a company that primarily assists with transactions to a player that can advise clients across the full financial and strategic process of real estate investment. The deal also strengthens Savills’ position in the United States, the world’s largest real estate market, where Eastdil is a dominant player. As a result, the nature of Savills’ revenue also changes. Eastdil generates a large share of its revenue from activities such as debt advisory and structured finance, which are less directly dependent on the number of property transactions and often continue even in weaker markets, for example when refinancing is required. This could make Savills’ overall earnings profile more stable. At the same time, the acquisition also brings risks. It is a major