A Golden Age For Real Estate Salary Hikes Is On The Wane
Those who didn’t get a pay rise in 2021 were in the minority and may now be out of luck: One of the best moments on record for real estate salary increases is already receding into the rear-view mirror for much of the industry.
Data from Macdonald & Company’s annual salary survey, which polls more than 7,000 real estate professionals around the world, found that last year was one of the best years for pay rises on record — particularly if you’re White.
But the uncertainty created by rising inflation, interest rates and the war in Ukraine has taken the steam out of salary rises in recent weeks, even as real estate is still experiencing a long-term shortage of good candidates to fill roles.
“In London, we are seeing employees recognise the implications of a possible cooling of market activity,” Macdonald & Company Head of Regional Recruitment Nathan Wakelam said. “Their phones may be ringing less, however there remains to be a high baseline of activity, which will always keep salaries high for the most talented individuals and skill base. Those involved in the hottest markets, including single-family residential and life sciences, may continue to experience double-digit salary inflation.”
Last year's data regarding UK pay rises is striking. In 2021, the median UK real estate salary rose £7,500, or 15%, one of the largest percentage increases in the survey's two-decade history.
As annual pay reviews and promotions over the previous two years — at the height of the pandemic — were put on hold by cautious employers, it came as no surprise more were rewarded with long-awaited raises as the market got back on its feet, the company said.
The best tactic for getting a pay rise in 2021? Resigning or threatening to resign. Candidates who did that got an average 20% pay rise, Macdonald & Company said, a third higher than the average increase. If the market does soften, then it expects such rises to be reserved for the most sought-after skills.
There is an important caveat here: The stats only apply if you are White. The gender pay gap decreased in 2021 — in this case as measured by the gap between the average salary of men and women.
But non-White professionals received, on average, a salary increase of £4K, only about half that of their White counterparts. As a result, the UK's real estate industry's ethnicity pay gap increased: The average salary for White professionals was £77,500, compared to £52,750 for non-White professionals.
Though today's salary picture is not as rosy as last year, it has not totally fallen off a cliff. New vacancy instructions taken by Macdonald & Company in H1 of 2022 are down on the same period last year, but by just 6.5% compared to unprecedented activity in 2021.
“Real estate is a broad church and it is an industry which prides itself on weathering the storms,” Macdonald and Company Director Nicholas Carman said. “The largest employers are the advisory market, and particularly these global businesses will be first to cut their cloth accordingly to suit local market conditions.”
The company has seen a reduction in activity of the investment advisory markets; however, countercyclical markets such as asset management, property management and receivership will remain active, it said.
“Similarly in development, as has been seen in earlier economic waves in 2020 and 2008-10 when the prospect of sales or leasing values have been depressed, those organisations invest most heavily in maximising scheme potential values, meaning a desire for planning and traditional value-add development skills will be most highly valued,” Carman said.
