Savills, the upmarket estate agent, posted sharply improved full-year figures, boosted by City bonuses and London’s buoyant property market.

The group said that full-year underlying pre-tax profits were up 31 per cent, at £75 million, giving the prospect of bumper bonuses for the company’s 4,000 staff.

The company will pay-out £125 million in bonuses for the year, compared with £90 million for 2005.

Analysts had expected profits to come in at about £68 million. Underlying revenues were up 38 per cent, to £517.6 million.

Savills said that it had turned in an “exceptional performance” in the UK amid rising commercial and residential markets.

It added that it expected conditions to remain strong this year.

The estate agent said that residential property prices had risen about 10 per cent in 2006 as buyers shrugged off a string of interest rate rises.

It noted that buyers’ expectations of another interest rate hike, to 5.5 per cent, was likely to temper price increases, but said: “At this stage we see no reason to alter our expectation of a 7 per cent increase in UK house prices during 2007."

The group added: “Driven to a great extent by City bonuses and overseas purchasers, the top-end prime markets are less sensitive to the cost of borrowing.

“With last year's City bonuses fuelling demand and global economic growth set to continue, we anticipate at least another year of high price growth in prime markets, assuming that current uncertainty in financial markets is a short-term issue.”

It also noted improved economic activity in Europe and said that its Asia-Pacific business had experienced a 38 per cent rise in revenues.

Nearly half of the growth was driven by the acquisition of a 55 per cent holding in Korea Asset Advisors and BHP Korea.

The group added that establishing an investment business in the US was “a top priority”.

Shares in Savills fell in early deals, sliding 17p, or more than 2.5 per cent, at 642p, in a broadly negative market.

The FTSE 250 index was 210.3 points lower at 11,050.6.

Savills proposed a final dividend of 11p, up 38 per cent, to give a total ordinary dividend of 16p, compared with 12p in 2005.

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