Savills has warned that profits will be below the consensus forecast as conditions in both the commercial and residential property markets have deteriorated in the past few weeks.

Analysts had expected underlying full-year profits of about £48m but recently Savills warned that ‘in light of weaker economic conditions we expect underlying profit before tax to be below the current range of analyst forecasts’.

Revised estimates suggest that profits could be down as much as 20%, at about £40m for the full year. The company reported a first-half pre-tax profit of £19m and analysts expect the second half to deliver similar returns. Traditionally transactions-based estate agencies such as Savills make most of their money in the latter half of the year. RBS Hoare Govett recently predicted a further fall in profits to £34m in 2009.

Jeremy Helsby, Savills’ chief executive, warned that the events of the past few weeks had led to a weakening of the commercial property market in particular. Investor confidence has been severely impaired by the turmoil in financial markets, he said, and there had been a sharp reduction in transaction volumes.