PropertyInvesting.net: Property Investment News

By  Art Patnaude and  Olga Cotaga 
  
For central-London real-estate brokers enduring tough times, spring will bring scant relief.

The end of the luxury-housing boom in the U.K. capital has hurt property brokers.

Now, uncertainty about Britain’s vote in June over its European Union membership is expected to slow property markets in London and across the U.K., according to real-estate brokerage  Savills  PLC.

Both U.K. residential- and commercial-property investment markets will be subdued this year in the run-up to the EU referendum, said  Jeremy Helsby, chief executive at Savills.

“The biggest uncertainty is about investors,” Mr. Helsby said. Ahead of major political events like a referendum or election, investors “tend to sit on the fence and just wait for clarity.”

Uncertainty surrounding the vote in June follows a tough year for real-estate brokers in central London, where prices had skyrocketed because of foreign demand.

Last year, transaction volumes and prices dropped in luxury hot spots like Knightsbridge and Chelsea. Wealthy foreign investors, contending with low oil prices and stock-market shocks, balked at an increased transaction tax, called a stamp duty, on homes valued at more than £937,000 ($1.3 million).

Savills’s London residential deal volumes dropped 4.5% last year from 2014, less than the broader market but enough to spur a focus on building up the business away from the prime central markets, Mr. Helsby said. The average London home sold in January went for £530,409, up nearly 14% from a year earlier amid an acute housing shortage.

Savills isn’t alone. Earlier this week, Foxtons PLC, one of the biggest property brokers in the U.K. capital, touted similar expansion plans after announcing its pretax profit fell 2.6% to £41 million due to cooling of the central London market.

Concerns about the global economy haven’t hit only high-end London residential real estate. Overseas investors have also pulled back from U.K. commercial property, such as office buildings and shopping malls, in recent months.

Uncertainty over EU membership will only further delay deals, Mr. Helsby said.

Bank of England Gov. Mark Carney this week said the possibility that Britain will choose to leave the bloc is the biggest domestic risk to U.K. financial stability. Mr. Carney said the uncertainty is already being felt in financial markets.

Savills, founded in 1855, has long been in the business of selling high-end London homes. But its operation has become increasingly global over the last two decades, providing it some cover from either result in Britain’s vote on EU membership, Mr. Helsby said.

“From our point of view, we’re broadly neutral,” he said. For Savills’s business, “I don’t see any particular advantage or disadvantage to what way the vote goes.”

Savills on Thursday posted a 16% rise in full-year pretax profit to £98.6 million for 2015, while group revenue increased 19% to £1.28 billion. Growth in its European and U.S. businesses helped boost results.

Transaction advisory revenue was up 25%, driven by the contribution from Savills Studley in the U.S., the company said. It also saw a continued recovery in the continental European markets and market-share gains in Asia.

Savills shares rose 5.2% to 691 pence Thursday in London, although they remain down more than 20% from the start of the year.

Looking forward, Mr. Helsby said the greatest growth potential for Savills is in the U.S., where the company will continue to scout for acquisitions of local property businesses and teams. “There are so many large cities where we are small or nonexistent where we see opportunities to grow,” he said.

Write to Art Patnaude at art.patnaude@wsj.com