Upmarket property agent Savills yesterday said year-end City bonuses had helped it to sell more top-notch London homes last month as the firm pencilled in forecast-beating 2005 results.
Analysts had expected Savills, which has a major office in Birmingham, to post a pretax profit of around £51.3 million for the year to the end of December.
Shares in the firm rose nearly five per cent after it revealed full-year results would be ahead of expectations.
Savills said sales of UK houses worth more than £2 million were on the increase, helped in part by interest from City workers armed with big bonuses.
"At the top end, and certainly in London, it's been very strong, especially last month. A lot of deals were closed just before Christmas," said chief executive Aubrey Adams.
He added that City workers' bonuses, some of which run into seven figures, were probably a factor.
The average price of a London home bought through Savills is around £1.5 million, with top-tier ones changing hands at £2 million and higher.
Savills also said prime residential markets were proving considerably more robust than mainstream ones and, while financial markets remained active, it expected this trend to continue.
The residential market accounts for around 20 per cent of Savills' business, with the commercial sector, property management, consultancy and financial operations making up much of the rest.
British staff at Savills can also look forward to big bonuses this year.
It handed out £70 million last year, but this year it expects to spend at least £10 million more.
The company, which expanded its Asian business last month by buying into two Korean property firms, said further expansion in the area would be a key priority this year.
"Asia is very, very important. We see more growth coming out of Asia than almost anywhere else, partly because of the underlying growth in the region, notably China," Mr Adams said.
Savills also has a network of offices and associates throughout Europe, the Americas and Africa.
The company said commercial markets were very active last year, driven by strong investment demand.
"Driven by the expectation of a recovery in the office leasing market for 2006, we have seen an intensification of investor demand for this sector," the firm added. "There is also a growing interest in development projects."
The average City worker is set to receive a £23,000 bonus for the past year, with some people in line for payouts of more than £1 million.
The Centre for Economics and Business Research estimates a record £7.5 billion will be paid out to staff during the 2005/2006 bonus season, 16 per cent more than the previous record of £6.4 billion that workers received last year.
The group predicted a huge variation in payouts, with some reports estimating 3,000 people could receive bonuses of £1 million or more.
It said the main reason for the rise was a ten per cent increase in stock market activity during the past year, coupled with a 20 per cent jump in merger and acquisition activity.
Previous research carried out by the group found that around half of City bonuses end up being invested in the higher end of the property market.
People also spend their bonuses on cars, shopping and even plastic surgery.
CEBR said the recent rise in activity had not just boosted bonus levels, but had also impacted on the number of jobs in the City.
It estimates that 9,500 additional jobs were created in the City during 2005, bringing the total to 325,500 - the first time numbers have recovered beyond their previous peak of 324,200 reached in 2000 before the dot.com crash.
It is predicting the creation of a further 6,300 jobs during 2006 on the back of another increase in City activity, accompanied by another double digit jump in bonus levels.
