Savills posted a significant drop in annual profits on Thursday, but said it expected to see a recovery in the property market later this year.

Group revenues in the year to 31 December fell 3% to £2.2bn, while underlying pre-tax profits declined 42% to £94.8m.

Pre-tax profits tumbled 64% to £55.4m.

Property and facilities management saw profits rise 5% to £48.8m. But the transactional business saw profits plunge 94% to £4.3m.

The estate agency said global property markets had been “extremely challenging”, hit by higher interest rates, geopolitical unrest and uncertainty about the future of the office.

It continued: “These factors, together with certain location-specific issues, significantly reduced capital transaction volumes in global markets to their lowest levels for a decade.”

However, looking to the current year, Savills struck a more upbeat tone.

Mark Ridley, chief executive, said: “Current economic and political conditions remain uncertain, and although we expect this to continue for some time, most markets appear to be past the moment of peak uncertainty.

“There are some early signs of underlying market improvements, which would set the course for a broader recovery during the second half of the year and into 2025.”