Downturn makes Regus a rare success in battered property world

The office space provider Regus is one of the few real estate firms to buck the market gloom, reporting yesterday that its profits are up 25 per cent, thanks to new cost-saving services it has started offering cash-strapped clients.

Regus, which offers ready-to-use offices for rental periods that are as short as half a day, has introduced cheaper options for customers struggling in the economic downturn. This has allowed it to benefit from the credit crunch as firms seek to cut costs related to using premises. The company's 2008 pre-tax profit rose to £149.2m from £119.4m in the previous year.

"Our newly introduced portfolio of recession-busting products is attracting many new customers who are looking to reduce their office costs and gain flexibility in an increasingly challenging marketplace," the chief executive Mark Dixon said.

Among the products the firm has introduced is the "Business World" prepay card – which it compares to the Oyster card sold by Transport for London – whereby clients can swipe in or out of any of its 950 office centres globally.

The card can be used to buy time at an office or meeting rooms, helping companies to cut costs by using facilities only when they need them rather than paying the fixed costs associated with permanent office space.

The company, which rents the office space it provides its customers, is also seeing a rise in demand for the video-conferencing services it offers, as companies seek to cut travel costs.

Unlike many companies operating in the real estate space that have been so stretched by the fall in property values they have needed to resort to rights issues to raise funds, Regus has more than doubled its net cash position to £211.2m.

Regus has nevertheless focused on cutting costs as it also reacts to the economic downturn, and is on track to achieve £75m of cost savings this year.

The company, which operates in Europe, Asia and the US, said it had seen a slowdown in some of its markets in the last two months of 2008.

"It's going to be a tough year," Mr Dixon said. "We will make less money this year than last year."

Mr Dixon added, however, that he is comfortable with market forecasts for the company's performance.