Savills, the property services group, said today that it expected to exceed forecasts for the full-year but admitted that activity in its UK business had slowed towards the end of the year because of the effects of the credit crunch.

Annual profits for the year to December 31, 2007, are now expected to rise from £75 million in the previous year to £85 million sending shares in the company up from 240p tp 251p. Savills said that demand for commercial property in the UK during the first half was steady but admitted that "trading volumes in the second half have been restrained by the credit squeeze".

Savills said that the UK residential market had been "more resilient" to the tougher economic environment and while there had been some impact on prices and volumes in the final quarter, prices on its more expensive residential properties "remained relatively firm". In contrast, the company said that the Asian market traded strongly throughout the year in both residential and commercial property.

On the coming year, Savills is more optimistic about its Asia and European business which "currently appear less affected by the credit squeeze". But, on the UK, it said: "The outlook for our UK and US commercial investment, UK residential and UK mortgage broking businesses will inevitably depend on how quickly confidence returns to financial markets."

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