Savills Middle East seeks growth through acquisitions in 2019 after Cluttons takeover
Global real estate consultancy Savills’ Middle East unit, created from the takeover of fellow consultancy Cluttons in May, aims to double in size over the next five years through acquisitions and new business lines to serve clients in the region.
In particular, the company wants to establish a project and building consultancy and international sales advisory team. For the latter, it appointed a director this year and aims to hire two more recruits in 2019.
It is also on the lookout to acquire any specialist property agencies from the region that could help it to meet its objectives, Savills Middle East chief executive Steve Morgan told
“[Acquisitions] are definitely a priority for 2019 – particularly companies that are strong in service lines we are not at the moment.
“For example project and building consultancy and any kind of boutique, specialist practitioners that operate in areas we don’t cover, such as retail advisory, ports and airports, industrial and logistics,” Mr Morgan said.
The ideal acquisition would be a small company. “When you look at large businesses that sort of do what you do, you have to question what value you’re adding,” the chief executive said.
“The key for us is getting the cultural fit right and making sure any business that comes in is able to complement that as opposed to dilute it.”
Project and building consultancy teams provide support to developers and other stakeholders when planning, building, operating and managing properties.
Savills Middle East aims to establish this unit regardless of whether it does so through acquiring a whole company or team, or by growing organically, Mr Morgan said.
Savills Group completed the takeover of Cluttons Middle East for an undisclosed sum, giving the London-listed company its first wholly owned unit in the region. Cluttons Middle East will be rebranded as Savills Middle East from January 1.
The former Cluttons Middle East has offices in the UAE, Bahrain, Oman and Saudi Arabia, while Savills has a network of more than 600 offices and 35,000 staff across the globe.
Real estate companies in the GCC are seeking to consolidate as they emerge from a three-year oil price slump that muted construction activity and squeezed their profits.
Although property prices are still declining, renewed economic growth is now buoying investor sentiment and re-energising the market.
Under the Savills deal, the Cluttons entity retained all of its 190 regional staff and has since grown to employ 230 staff, including a director appointed to build a team advising Middle East investors buying overseas property.
Mr Morgan wants to double the size of the business by the end of 2023 after achieving similar growth in the past five years. In this aim, “the Savills marriage has been good for us”, he said.
“I think to [double in size again] we need to have a truly international platform otherwise we’d struggle to grow at the same rate.”
Middle East outflows to international real estate remain strong, particularly in developed markets such as the UK, US and Europe, he said.
In Britain, investors have an approximately 20 per cent price advantage compared to 18 months ago.
This is due to the strong US dollar – to which most Arabian Gulf currencies are pegged – and also the weak pound because of Brexit uncertainty. Islamic economies in South East Asia are also growing their appeal.
The UAE, Oman and Bahrain continue to generate high single-digit revenue growth for the Middle East business, and stand to benefit from government stimuli to boost their economies and encourage expats to invest in local real estate.
But the fastest-growing markets are Egypt and Saudi Arabia, which present opportunities for Savills in the education, health care and affordable housing segments in the years ahead, Mr Morgan added.
The company also intends to expand its agency business in UAE luxury residential property.