Savills plc (SVS) Earnings Call Transcript & Summary

In which case, good morning, ladies and gentlemen, and welcome to our presentation of Savills interim results for the 6 months ending 30 June 2025. This will be the last time that I update the market on our results as I'm retiring as CEO of the group at the end of this year after almost 30 years at Savills. Needless to say, I am absolutely delighted that Simon on my right will take on this role after -- on 1st of January 2026. He and I have worked together very closely over the last 17 years during a critical phase of the growth of Savills as well as direct partners as CEO and CFO for the last with them around the 7 -- it's also this year exactly 10 years since Savills first started, a heritage and culture that all of us at Savills are very proud of. And we will ensure that the culture and core values and commitment to serving clients will continue going forward. This legacy of stability and resilience remains critical in a world experiencing even greater unpredictability, both on a macroeconomic level, following events such as Nation Day and others as well as the increasing global security tensions ratcheting up across many regions. The market recalibration that we mentioned in our results this year, in many cases, more or less completed, i.e., pricing has stabilized across many of the real estate markets. The improved investor and occupier confidence experienced at the end of last year and beginning of this somewhat during Q2, particularly in capital markets due to the heightened volatility, albeit this is now translating into much improved transactional pipelines, which we anticipate unlocking during the second half of this year. We therefore remain on track to deliver against our expectations for the full year, thanks to the breadth and the depth of our global business. Turning to the highlights I'm pleased to announce the group concluded the first half of the year with an improved performance, taking into account that uncertainty I mentioned, particularly during Q2. The strong balance within our business allowed us to increase group revenue by almost 6.1%, 8% in constant currency to GBP 1.128 billion, resulting in an underlying profit of GBP 23.3 million, up just under 10% year-on-year. And the drivers of this performance were an improvement in many of the global transaction markets with overall transactional revenue up 2%, but with a strong rebound in EMEA with commercial transaction revenues here up 19%, offsetting temporary reductions in activity across APAC and North America. In addition, our residential transaction revenue also experienced growth of 12% per annum during the period, driven by activity across the European and Middle Eastern markets where we've been continuing to invest. The resilient revenue contributed by our less transactional business also continues to grow, now representing 67% in aggregate of our group revenue with revenues up 8% year-on-year. Breaking this down further, our Property and Facilities Management business grew by 5% during the period, whilst Consultancy continued to experience strong demand with revenues up 20%. Finally, as anticipated, we did see a modest decrease in revenue 6% from Savills Investment Management, reflecting lower management and performance fees during the period in line with the prevailing market conditions but stable assets under management. In light of the continued strong performance, particularly of our less transactional businesses as well as the outlook for the rest of the year, we've increased our interim dividend to 7.4p per share. Turning now briefly to examine the factors affecting the main transactional markets in which we operate. Focusing on capital markets activity, some of the strong momentum we experienced during the last quarter of 2024 and into 2025 dissipated across a number of markets in which I've already referenced in Q2, particularly those affected by economic uncertainty of trade tariffs as well as a slower-than-anticipated reduction in interest rates. Global investment volumes improving Q4 despite that improvement, market activity in H1 could be best described as only trailing water, achieving only the same total volumes as the prior year. An increase was experienced across North America of 10%, but other markets experienced falls with EMEA down 7% and APAC down 13%. Just drawing out the U.K. volumes that fell 13% year-on-year. Capital raising for real estate also remained challenging with a significant amount of equity tied up in legacy funds, reducing liquidity. Therefore, market conditions remain difficult for disposing of larger lot sizes with great demand and activity polarized towards smaller lot sizes attracting private investor activity. [indiscernible] experienced strong demand continue to include beds and sheds or living and logistics whilst overall sentiment for the office sector is continuing to improve with appetite moving beyond prime. The U.K. office sector in particular, saw a bounce back with volumes traded up 26% year-on-year. Okay. On to the leasing markets. Well, with a lack of speculative development starts, leasing momentum and occupier commitment is continuing with limited prime stock now available in a number of markets, hence pre-lettings becoming more prevalent as a market feature. Office leasing transactions continued their recovery in North America and also the U.K. as well as a modest increase across major European centers, particularly Germany, which experienced an 18% but of a lower prior year comparable. North American activity was led by markets, including New York, Florida and Texas, whilst there remain a sluggishness in Washington, D.C. with government activity diminished. With the dwindling supply equation, we are now seeing strong rental growth in a number of core markets, including Central London, the major Western European cities as well as selective APAC markets such as India, Australia and Japan. In March, I highlighted a normalization of demand occurring across the industrial and logistics sector. And whilst this resulted in a fall in overall take-up across EMEA, prime stock is still experiencing strong demand and therefore, rental growth. Inevitably, retail markets have been affected by the imposition of trading tariffs across a number of markets, but the prime retail remains resilient with rental growth here still occurring, especially in many super prime locations. residential. Within U.K. mainstream, we experienced a surge in activity during Q1 driven by the end of the stamp duty holiday at the end of March. The overall result was an increase in agreed sales of 4% per annum, but with fairly limited annual price growth of only 2.1%. And despite government reforms planning in efforts to drive greater availability of new homes, house builder activity remains subdued with new completions down 10% year-on-year. Within U.K. prime, prices during the period actually fell by 2.2% in Prime Central London and 2.1% in the prime regional markets. A combination of factors is continuing to affect this with Prime Central London affected by both earlier changes to the nonbond status as well as perhaps a nervousness of prospective changes to the U.K. tax environment, while prime regional markets are perhaps adjusting more to the rapid price increase that they experienced during and immediately after the pandemic. It's also perhaps worth noting that the prices in Prime Central London are now some 2.4% below the 2014 peak value, which is also starting to generate greater interest. The market for sales over GBP 1 million held up pretty well, increasing by 3% during the period with good demand-led activity for houses whilst the continued reduction in availability in a number of rental markets, in particular London, led to prime London rents increasing by 1.5% in H1. On to the international markets, there is a broad resilience with strong pricing growth experienced in a number of markets, including Berlin, Dubai, Sydney and Tokyo. In addition, market activity is also starting to pick up in Hong Kong, particularly in prime, whilst Mainland China experienced a 13% increase in sales volumes in Tier 1 cities. Globally, we have seen the greatest demand for locations, which provide a combination of lifestyle appeal as well as security and tax benefits as international buyers remain extremely mobile. Markets like that include Lisbon, Milan, Dubai and Australia, and they are clearly the beneficiaries of some of this activity. I will now hand over to Simon, who will take you through our financial section.

Thank you very much, Mark. Good morning, everybody. You'll have pretty much picked up by now that the first half of 2025 was itself a game of 2 quarters, Q1 being a continuation of the clear recovery of Q4 last year with the expectation at that point of multiple interest rate cuts to come, et cetera. Then came Q2 with the tariff threat affecting property markets, particularly in EMEA and in the APAC region. And in addition, in the U.K. we had the emergence through Q2 of budgetary concerns for October. All of these things dampened the compulsion to transact despite the underlying trend, we believe, of positive improvement across the globe. So I'd emphasize here that we believe the quieter Q2 period with a hiatus in execution and for both investors and occupiers and not a reduction in intent. So in the light of that and some adverse currency movements due to the strength of sterling, we're pleased to come away with a 6% increase in top line and the operating leverage driving a near 10% improvement in underlying profit. I would point out the rather anomalous looking underlying basic earnings per share performance during the period. That is entirely down to a prior year tax adjustment which affects the underlying earnings per share and that is a one-off and will be largely washed through as the numbers get larger through the balance of the year. Our cash flow movements, you'll notice we moved into a small net debt position at the half year, and that shouldn't be a surprise to those of you who followed us for a number of years now, and I'll talk a bit more about cash in a second. And finally, as you've seen, we put the interim dividend up over 4%, which is supported by the performance of our less transactional business lines. So if we now turn to the performance of our business. On the transactional side, you can see moderate growth yielding a better bottom line at the half year much of which was associated with cost savings and improved performance in a number of markets. We'll go into that in a moment. The consultancy business performed very well. I should point out that approximately half of that 20% revenue growth was down to the first-time consolidation of our Indian consultancy business. Remembering we took a control position in August last year, September last year, I should say. And much of that is property project management. And it affects top line, but actually didn't significantly affect the bottom line in the period due to timing on revenue. So you can consider that 14% growth largely organic on the consultancy business as a whole. Our Property Management business, as you've seen, grew 6% in constant currency, 5% nominal. The bottom line overall was really affected by 2 things during this half year, the timing of investment versus revenue on new contracts won in many locations and by the reduced contribution from treasury operations in a lower interest rate environment than this time last year. And finally, as you've seen, our investment management revenue fell slightly through the reduced management and performance fees that have been referenced. But the effect of prior period cost savings improved our margin by 350 basis points period-on-period. So if we turn now to where we made money, -- as you'll recall, from the 1st of January, our U.K. and Continental European and Middle Eastern business management was combined under a single EMEA Board for the region as a whole. And that was done with a view to improving the linkage between our businesses and the linkage in the treatment of our clients, and that is working. As promised in this transition year, we have full disclosure in the appendix to this document, which will appear on the web shortly of the old U.K. and old Continental European and Middle East contribution to the now EMEA performance. And I am delighted that we have benefited from this combination, together with the restructuring savings and renewed growth in Continental Europe to post a healthy increase in revenue and that significant increase in profits despite some still challenging market conditions. In Asia Pacific, our commercial transaction business continues to be challenged with year-on-year reductions in activity in a number of countries, and I'll go into in a moment, mitigated by growth in Hong Kong, Taipei and Korea in particular. And meanwhile, the positive impact of restructuring largely in Mainland China and Australia helped us to improve the margin. Finally, in North America, delays on large occupier transactions and project management assignments in Q2 compared with the same period last year took revenue down by 6% as reported, 4% in constant currency. And this, together with continued investment growth in the brokerage space, increased losses during the period. I would add that our mandated pipeline in North America has never been stronger with a year-on-year increase at the 30th of June of over 21% and with the large assignment element of that increase up 37%. So I'll turn now to our cash flow before going into more detail on the businesses. You can see our working capital utilization up largely through the increase in receivables through trading. And you can see a reasonably significant move in our financing and investing activities. It's really down to 3 or 4 things. First up, there was a reduction in the investment cash flows year-on-year because you'll recall, this time last year, we received GBP 10 million from Samsung Life on the exercise of its option to acquire 3% of Savills Investment Management. That was a one-off in that instance, not repeated this year. Furthermore, we have a larger investment by the employee benefit trust in H1 into share purchases at a time when we were able to acquire shares at lower than the face value of the original awards and the trustees elected to increase the hedging position as a result of that. We've also had a significant increase year-on-year in dividends, about GBP 10 million in taxation as well. And the final piece is the loss on FX translation because of sterling strength, which is the majority of that final bridge point marked other on the right-hand side of this schedule. All this culminated in a small net debt position at 30th of June. But just to reassure you that our normal cash profile is functioning. By the end of July, that has converted to a GBP 31 million net cash position. So if we now go into our business lines in performance in more detail. Starting with the commercial transaction business. Globally, our leasing business grew by about 4% during the period, which was comprised of a 22% increase in EMEA and 38% in APAC, together with the decline I've already mentioned in North America for the reasons I've already set out. And that, in summary, really caused the overall drop of 2% in the commercial transaction advisory business for the period. In local currency, it was actually up 0.5%, so call it stable. Other than the large leasing transactions, it's really the capital markets business, which felt the brunt of the Q2 slowdown we've been referencing. And if you look at overall market volumes during the year -- during the half year, I should say, courtesy of MSCI, you can see it quite starkly affected those countries were to be affected by tariffs. The U.K. was down -- market was down 13% year-on-year. EMEA as a whole down 7%, Asia Pacific down 13%, but Greater China in there was down 26%. And the bright light was the U.S. where capital transactions were up 10%, which was wonderful by the fact that we have a very small capital markets business relative to our peers in the U.S. market. Our capital markets revenues fundamentally reflected our weighting to those markets more affected by this Q2 uncertainty. But our overall capital markets revenue growth of 3%, but the trend and speaks to increased market shares, reflecting a 37% increase in revenue in EMEA, which is very solid. with significant growth in Spain, Germany and France, albeit the latter 2 off very low basis, as you will recall and a small decline in the U.K. which again speaks to market share improvements as we were about half the market decline overall. In APAC, our capital markets revenue declined 36%, centered around China, Australia and Japan and Vietnam, the latter 2 markets against an unusually strong comparable in the first half of last year. And finally, we enjoyed a small increase in our U.S. capital markets practice. Under the circumstances, we were pleased with this performance and our global pipelines are stronger than ever. And on the bottom line, the restructuring we conducted last year also helped us to reduce the underlying loss at the halfway stage. Flipping now to residential. Overall growth came from U.K. development sales off a low base, it should be said, U.K. institutional residential transactions, that's multifamily, students, et cetera, and 74% growth out of Southern Europe and the Middle East. This is offset by a decline of 8% in our U.K. residential agency for reasons you will well understand. In Asia Pacific -- sorry, on the -- in Asia Pacific, growth was driven by Australia, Singapore, Vietnam and India. And the Middle East profit, net of continued growth costs drove the increase in our residential profits during the period. So if we turn now to our less transactional service lines, starting with property management. As you can see, the proportionality of our business is pretty much even between EMEA and APAC and the growth rates in the period in local market are not dissimilar, 7% in EMEA and actually in local currency, 6% in APAC, which reduces to the 2% reported as you see here. In the U.K., Property and Facilities Management grew at high single digits with rural management flat and residential management, including lettings at 4%. Profitability was reduced during the period by investment in lettings in advance of the renters rights bill coming through in the U.K. and by reduced contribution from treasury in a lower interest rate environment. In Continental Europe, gross revenue growth of 15% was driven largely by Germany, Spain and the Middle East but profitability held back by continued investment in a number of countries as we seek to scale up further. While in APAC, significant growth in both PM and FM in Singapore was counterbalanced by double-digit reduction in Mainland China, both as a result of ad hoc work reducing in more challenging market environments, which is typical and also as a result of contracts we've given up through our restructuring in Tier 2 or 3 cities last year. We've also, in China, continued to roll out a significant IT and automation program, which will yield benefits progressively over the coming years. to consultancy now. In EMEA, we saw revenue growth at the higher end of our normal expectations with significant increases in leisure, rural and housing consultancy in particular and a significant increase in profitability during the period. In APAC, headline growth was largely due to the first-time consolidation, as I said, of our Indian project management business. Absent that, the underlying growth of the APAC region is about 7%. It's the lower end of our normal expectations, but it reflects the impact of lower market transaction volumes on security valuations during the period. In North America, the revenue reduction, 5% as reported, 2% in constant currency reflects the timing of revenue on some major project management contracts in Manhattan, largely offset by improvements in Life Sciences and in Workplace Consultancy. And finally, at the profit line, EMEA growth and the benefit of prior period restructuring in APAC that I referenced outweighed the reduction in North America to enable that 14% increase overall year-over-year. And if we finally move to Investment Management, as you heard, base management fees represented 89%, which I think is the largest ever of Investment Management's revenue and we reduced by about 6% due to the impact of aggregate changes and recalibration, I should say, in gross asset value, net asset value, which drives the calculation of those base fees through the first half of this year. So we're really talking about the 2024 recalibration having that effect. Performance fees were down 60% year-on-year -- but that's largely down to a reduction in disposal activity because our overall performance of our discretionary funds, which is 70% is outperforming its target or benchmark since inception. And while the good news in the revenue line is the transaction fees were up 21%, which speaks to improved deployment and growth in local operating partner asset management contracts, particularly in Southern Europe. And this latter point is particularly important in a world where raising capital for blind pool core funds remains very challenging. As Mark said, AUM was stable, growing slightly and reflecting the net effect of revaluation offset by new product issuance. And I particularly draw out our Simply Affordable Homes Fund, which is rapidly investing its initial and first follow-on capital, our growing pan-European whole loan fund and our brown to green office repositioning debt product, which is really gathering momentum. At the bottom line, the restructuring of last year helped Savills Investment Management to increase its profits by 30% year-on-year. And with that, I'll hand you back for the last time to Mark.

Thank you, Simon. Okay. Before I highlight the business development activities we undertook in the first half of the year, I do think it's worthwhile perhaps remind you of the strategic priorities with the main areas of our client services. So starting with Investor to come back on as well. Whilst capital market transaction revenues have reduced in a number of markets which we've referenced, they will rebound back and pipelines remain exceptionally strong. Hence, we are continuing to strengthen our capital markets capability in many key markets as well as ensuring we have the appropriate level of sector coverage and specialization as investors look for returns across alternative sectors to continue to rebalance their portfolios. Turning to occupier and leasing services. We're continuing the buildout of our global occupier services platform as well as ensuring we've got the necessary infrastructure to supply all associated services in a cost-effective and efficient manner. With the resurgence of retail interest, we are continuing to focus on our prime global retail platform within the markets that retailers are now focused on in line with the residential market activity highlighted earlier, our focus remains on developing a wholly owned network of prime global residential sales and consultancy services in the main markets across EMEA and APAC. And the linkage of this network is being further facilitated by strengthening our private office and cross-border activities for high net worth and family offices to access the markets they need. Moving on to our regional update, starting with EMEA, as I say, obviously includes U.K. has referenced our overall revenue increase of 9% was driven mainly by market share gains across the main transactional markets with continued growth across our resilient business lines of consultancy and property management. During the period, we completed the acquisition of King, an established full-service business in Northern Ireland as well as expanding our capital markets expertise in a number of specialist areas, reflecting the investor appetite I referenced earlier. From a capital market share perspective, we maintained our leading positions across many markets, including the U.K., Spain and Ireland. And this also allowed us to undertake some of the largest transactions during H1, including advising Australian Super on the acquisition of a large pan-European logistics portfolio from Oxford Properties, advising System Capital Partners on a portfolio of 50 hotels totaling some EUR 400 million as well as advising -- no Living on the Lavenzaiving portfolio, a landmark EUR 1.2 billion transaction and the largest ever student accommodation deal transacted across Mainland Europe. In line with the strategic focus outlined earlier, we continue to grow our industrial and logistics platform across core markets in EMEA, allowing us to maintain our #1 position in the U.K. on industrial leasing, where we transacted over 4 million square feet in H1 as well as strengthening our prime retail teams in the key European centers. Across the office sector, our teams were extremely active, including lettings of over 240,000 square feet to Legal & General and [indiscernible] in the city, advised the Premier League on their acquisition of 70,000 square feet at Olympia and our retail teams undertook a number of the most significant retail transactions during this year, including acquiring a new flagship store for Mango on Oxford Street. Continuing the focus on the development of the global occupier services business, we are also pleased to be awarded mandates from Howden, Capgemini and BT, maintaining our strong momentum in this area. Turning to residential services. We consolidated our ownership across a number of key European markets and continued investing across the UAE and where we now have over 180 residential brokers active across these markets. Our focus on prime residential markets allowed us to maintain strong market share on transactions over 5 million in London, actually around 20%. Also within the rural markets, we secured a 43% market share on properties over 1,000 acres. This included the sale of the Sutton Bridge estate in Lincoln, extending to 5,000 acres, indicating the strength of this continued market interest. Turning now to Asia Pacific. Across this region, we saw overall revenues growth 5%, as Simon referenced driven by the strong performance in consultancy, a resilient performance in property management, whilst our transactional revenues did experience a decline, albeit significantly less than the market declines. During the last 6 months, we made a number of key appointments, including recruitment of new CEOs heading Australia and New Zealand and Japan, whilst undertaking the full integration of our newly acquired platform in the Philippines. Focusing on our investor services, we significantly strengthened our Australian capital markets platform with a new national head and market-leading team in New South Wales. In Singapore, we have continued our rapid organic growth of our facilities management business it's also worth noting that the platform itself grew its revenues by some 22% during the period. We also established a new capital markets team in India and acquired an asset management platform to complement our activities in Japan. In terms of market activity, this allowed us to maintain our dominant market position on large capital transactions in Hong Kong, just over 42% market share as well as maintaining #1 spot on capital market transactions in Korea, where we transacted over USD 2.5 billion worth of trade, including the sale of the asset, the largest single property transaction traded at over USD 800 billion in the last 12 months. Within Leasing services, we grew our centralized hub for lease administration and Global occupied services in Manila as well as establishing a new rep team in Shanghai. And we also enhanced our industrial logistics capabilities across New South Wales, Australia with over 18 new brokers. Thanks to this investment, our global occupied services teams were awarded contracts during the period by Experian and Medtronic, whilst our tenant rep teams also acted for Black & Beach across the region. Within Residential Services, we undertook a number of the highest value individual transactions in the region, including the sale of the Penthouse at Hong Kong for over USD 65 million, the sale of the Prime Freehold landed development at Bed Avenue in Singapore for over SGD 50 million and the Penthouse on Sydney Harborside for AUD 55 million. Moving on to America. Simon has already mentioned the variations in activity we experienced across a number of markets. And despite the revenue reduction, the transaction pipeline remains strong. And as a counterbalance, we saw revenue improvement in markets, including New York, Boston and Chicago. Outside the office sector, our industrial and logistics revenue actually grew by some 25% with stable revenues attached to our global occupier services platform. Turning to business development during the first half. We have just completed the acquisition of a leading management consultancy platform Hoffman headquartered in New York, which clearly adds to our consultancy services around the occupier. We've also appointed new leadership teams in New York, Washington and Austin and continued the expansion of our tenant rep capability onboarding 27 senior new brokers. In terms of the regional expansion during the period, we opened a new office in San Antonio and extended our network across Canada focused on Montreal and Toronto. And the strategic benefit of this continued investment in our global occupier services business is clearly evidenced with new accounts won from Moderna across 45 locations, MKS Instruments across 191 locations as well as indeed.com across 37 global locations with a strong future pipeline. Finally, Investment Management. As you have heard, our overall revenue declined by some 6%, but our capital raising activity remains on track with just under GBP 1 billion worth of new equity raised. And whilst market conditions do remain challenging, we anticipate further improvements in H2 has also referenced the resilience of our base management fee is also very apparent now representing some 89% of gross revenue. In terms of the business development focus, it's really very much the continued performance of our funds with over 70% of our discretionary AUM outperforming their targets. The success in the capital raising area allowed us to launch Savills IM's first APAC mandate with a global strategic client, initially some USD 120 million to deploy. whilst the Italian SGR business continued its strong momentum with over EUR 700 million of new inflows during the year. In addition, we're making good progress on a number of segregated mandates for clients, including and KOC and currently have around about GBP 1.2 billion worth of dry powder in total to transact during the year as market conditions allow. Now moving on to summary and outlook. I am very pleased with the improved performance during the first half, which is driven in part by a recovery across a number of the transactional markets, particularly during the first quarter. The temporary hesitation in market momentum, which we experienced during Q2 was influenced obviously by the economic uncertainty from trade tariffs, but this has now translated into stronger transactional pipelines, which we are carrying into H2. I'm also very pleased with the continued growth and positive performance of our less transactional businesses and in particular, the strong revenue growth of our consultancy business. Looking forward, our commercial pipelines are in fact stronger than ever and our EMEA residential business is continuing successfully to grow as we continue the build-out. This secure footing and the strength of our business should allow us to accelerate the business development through the recovery cycle with more opportunities now presenting themselves. In light of the performance, our expectations for the full year remain unchanged, albeit the usual second half weighting and final outcome is obviously dependent on the pace of our transactional pipelines being unlocked during H2. Thank you for attending today's webinar. Simon and I will now be more than happy to answer any questions that you have. And hopefully, the lights will stay on during this session. Thank you.

I think it looks like you've covered everything.

Well, I hope I haven't you have got all the answers you need through that presentation. Again, in the appendices, there's quite a lot of further information which we haven't covered. So if there are any questions that you would like us to ask going forward, please do get in touch, and we'll make sure we try and answer those. With that, I'm going to say very well. Thank you very much. I remain in office until the end of the year. Thank you very much indeed for your continued...

We've found some questions.

I'll go back.

I do a bit of reading first, Mark, you can. And this one is for Chris Millington. First, I want to wish Mark the best of luck for his next chapter. It's been a pleasure working with you. Could you please comment on the expectations for net cash at year-end? How should we think about Savills desire for acquisitions? Would the company run leverage if the right opportunity presented? And how do you think Savills market share in North America leasing fared in H1? Do you think the region can be profitable in the full year? And can you add any numbers, geographic comment to comment around strong pipelines? As I indicated just now with the return to net cash in July pretty marked and very normal for us. We would expect our normal level of cash flow generation to occur through the balance of this year and absent transaction moving into solid net cash again for year-end plays into the second question, which is around our desire for acquisitions.

So Chris, I think we frame where we are focused. You've seen us obviously traditionally acquire platforms, which probably when we made sort of M&A acquisitions, they're more likely to be in the sort of consultancy, property management, facilities management. So they established platforms to add to. And that still continues and that will continue, some of the transactional market activity has meant that the pricing has somewhat moderated. And areas like residential, prime global residential, these will be potentially market opportunities for us to continue to grow our presence going forward. So more to come in that global occupier services again, if there are adjacencies in markets that we feel would be additive, again, whilst we're doing our organic growth there, that would also continue. And probably, Simon, capital markets, we've done a lot of organic growth.

I think particularly as a generality, opportunities to diversify our business in North America, we will look at seriously. And there is undoubtedly, whether it's investment management or anything else, there is a more realistic approach to valuation currently than there has been for probably the last 5 to 10 years. So we certainly look to those. And following on to the sort of financing point, the reality is if the right opportunity presents itself, we are a strong cash flow generation business. I'm not averse to running leverage for a period if that is the appropriate way to finance a sensible transaction. So I'm not wedded to a net cash balance sheet at all times at all. But it's got to be the right opportunity and critically, keeping discipline on pricing is absolute prerequisite to that. North American leasing...

Yes. I think in terms of what we saw there was very much around larger transactions were the ones that where there was a level of hesitancy. The normalized volume actually remained pretty constant. But of course, the larger ticket sizes does affect revenue and profitability. So we've got a significant -- actually the pipeline Simon has increased. We've done an examination of our pipeline and it actually increased some 30%, thereabouts.

Yes. So we're 37% up on the large transactions, as I said, and we're 21% plus on all transactions. And just to give you an indication, that equates to and I should caveat what I'm about to say, the known pipeline because there is always a degree of activity, which doesn't appear in the pipe at this point and sometimes not until very close to transaction. But the pipeline at the half year around to about GBP 150 million which was substantially up, as I said, on the same period last year. And that's for Savills North American occupier transactions.

And I would say that without adding any more numbers because I think it's invidious to do so, if you looked at the pipelines for both capital markets and leasing around the globe, you would see probably the strongest ever actually in almost every market that we operate in. And as we said earlier in the piece, the exam question for us all is how much of that executes in the second half of 2025. And to some extent, that will be what it is I'm just extraordinarily pleased that we're seeing that fundamental underlying building of the pipeline.

Yes. And the next question was Clyde, which was what was the acquisition pipeline look like? I'm just calling it out because I think we've probably answered that one. At any moment, just to recall, we've normally got something around GBP 400 or so million of potential desired expansion coming from around the globe into the center. That is probably somewhat larger at the moment. And that is larger probably because of a deliberate trend to look towards rather more substantive acquisitions than a lot of what we've done over recent years is 10 million bolt-on stuff. So there is a push to do things that turn the dial in individual markets for us a little bit more obviously. But other than that, you have to wait and see. And I think that's a repetition of Chris how is the Chinese market evolving?