The five issues that matter most to real estate in the 21st century… and how the industry is adapting

Every year Estates Gazette surveys the UK consultancy market in a bid to rank the biggest players in the sector by turnover, profit, fees per partner etc. But this year, as the consultancy market continues to consolidate and differentiate, we take a closer look at the other elements that show just how well – or not – the industry is adapting to the issues that matter most for real estate in the 21st century. Technology EG’s tech sage Antony Slumbers says technology is not a bolt-on to property, it is property. “If you are in business,” he says, “you are in the technology business.” And the results of our survey show that some 58.3% of UK agencies have cottoned on to that fact. They now have divisions within their businesses dedicated to improving and investigating new technologies that enable staff to do their jobs better, faster and more profitably. A further 16.7% of firms surveyed said they were working on setting up such a division. Encouragingly, some three-quarters of firms surveyed said that they budgeted for spend on technology. Combined, the 14 firms that provided detailed figures spent more than £12.4m on tech, an average of 3.6% of turnover. Extrapolating that figure across all of the 44 agents that responded to the survey, this would equal a technology spend last year of more than £290m. Mark Granger, chief executive of Carter Jonas, which budgets one of the highest percentages of turnover on tech, says: “We view investing in technology as a critical success factor in service delivery to clients, as well as in providing an efficient working environment for staff. Over the last 12 months we have significantly enhanced our online dashboard reporting tool, upgraded our internal document management system and improved access to information we provide to mobile devices. “There can be little doubt that most agency markets in particular increasingly rely on the use of technology to create deal flow. As a result we have initiatives under way to further upgrade our website as well as working with external data providers to give insight into local markets at granular level.” And spend on tech looks set to continue this year as it plays an increasingly vital role in the sector. Just last month, the world’s biggest agent, CBRE, acquired New York-based Floored, a commercial real estate software company that provides interactive 3D imaging. Although no acquisition price was disclosed, Floored is understood to be valued at around $30m (£24m). TECH TURNOVER IN PROPERTY Firm % turnover on tech Gross UK turnover £m Roger Hannah & Co 2% 2.4 Mason Owen 5% 6 Trust Property Management 5% 3.7 Dacre Son & Hartley 3.5% 6.8 Rapleys 3.5% 12.3 Sanderson Weatherall 2.5% 15.7 Caxtons 3.7% 4.6 Alder King 2% 13.1 Gerald Eve 4% 54.3 Barker Storey Matthews 3.5% 3 Allsop 2.5% 46.7 Carter Jonas 3% 51.6 BNP Paribas Real Estate 5% 98 Aitchson Raffety 5% 10.5 But what exactly is the agency world spending its money for tech on? The survey showed that much was based on data storage, sharing, and collection tools and management packages. IT systems that enabled mobile and remote working were both also identified as areas of tech on which the industry was investing. AGENCY TECH TOOLS BigHand Speech, task delegation, document creation and workflow tool provider that aims to help people get things done Kel Valuation and development analysis software Argus Software solution for valuations, cash flow analysis, asset and investment management, budgeting and planning Propex Commercial real estate investment opportunities listing Reapit An estate agency software application for the sale and marketing of property Salesforce A customer relationship management tool Forum Analytics A location planning tool Diversity At MIPIM 2016 the open courting of Cannes’ working girls reached such levels that it forced EG to write an op-ed entitled Not the industry’s finest hour; in June Graeme Eadie, senior managing director at Canada Pension Plan Investment Board, caused outrage after saying women in real estate were “less comfortable in confrontational situations”; and in November, our American cousins voted a man who believes women can just be grabbed, groped and kissed to be their next president. Within a day of his inauguration last month, president Donald Trump had already started to dismantle the good work done to ensure equal rights for the LGBT community and women globally. Never before has a united effort to keep the diversity movement strong been more vital. So how is the consultancy industry faring? Our survey says…  Just 25% of firms said that they ran a formal diversity monitoring programme, with just 16.7% saying they were considering setting one up. However, the nine firms that do have formal programmes in place are fully invested in promoting diversity in their businesses (see box) and, encouragingly, almost 42% of agents have introduced policies that promote the rights of lesbian, gay, transgender and bisexual employees within their businesses with a further 11.1% considering setting a policy up. Gender A lack of women in high-profile positions and an overwhelming number of them in support positions continues to be the reality in the industry despite a much-lauded rhetoric about diversity. Across the industry, men dominate in partner/director positions, making up 87.8% of that workforce. Moving down a level to other fee-earners the market it becoming more equal with men holding 59.7% of positions. Women dominate in administration, however, making up some three-quarters of the workforce. Cushman & Wakefield was the only firm from the 44 that responded to our survey that employed more men in administrative positions than women. And this year a number of agencies refused to divulge data about the gender breakdown within different positions in their businesses, including Capita Real Estate,Colliers International, JLL and Knight Frank. Knight Frank only provided data for administrative positions, while JLL gave an overall workforce breakdown of 1,383 men in the business and 1,203 women. Encouragingly, some 70% of firms said they were ready for mandatory gender pay gap reporting from April this year, with 96.7% of those who answered the question claiming it would have no impact on salaries. From April businesses with 250 or more employees will have to start recording their overall mean and median pay gaps between genders and make this publicly available by April 2018. GENDER BREAKDOWN ACROSS THE REAL ESTATE INDUSTRY Firm Male partners Female partners Male fee earner (other) Female fee earner (other) Male admin Female admin Mason Partners 23 0 5 0 2 12 Roger Hannah & Co 8 0 11 1 15 5 Mason Owen 25 3 13 16 4 19 Trust Property Management 8 0 4 9 6 15 Strettons 12 1 46 8 4 33 M J Mapp 10 2  –  – 0 8 Underwoods 3 0 3 1 2 7 Dacre Son & Hartley 15 0 20 8 59 101 Rapleys 37 2 35 19 13 28 Sanderson Weatherall 47 2 44 62 11 6 Goadsby 16 2 88 67 8 56 Cluttons 65 8 84 73 18 58 Knight Frank* 0 0 0 0 235 781 Caxtons 6 0 26 36 1 22 Beauchamp Estates 1 1 0 0 0 0 Alder King 41 2 27 15 8 40 Gerald Eve 27 2 179 95 29 56 Ryden 34  – 46 20 3 29 Barker Storey Matthews 16 1 6 1 1 15 Strutt & Parker 51 1 405 232 41 254 Dron & Wright 5  – 8 9 1 3 Robert Pinkus & Co 4 0 0 0 2 4 Savills 669 89 929 737 250 1,040 Colliers International  –  –  –  –  –  – Allsop 51 7 92 74 21 53 Carter Jonas 101 12 231 213 4 117 Deloitte Real Estate 158 28 347 163 5 57 BNP Paribas Real Estate 140 26 103 77 69 113 GVA 275 31 424 203 178 381 Capita Real Esate and Infrastructure**  –  –  –  –  –  – CVS 3 0 58 6 117 70 JLL*  –  –  –  –  –  – Fisher Hargreaves Proctor 3  – 22 6 6 25 Kemsley 7  – 18 0 3 13 Montagu Evans 83 7 96 95 11 54 CBRE 610 136 676 429 170 442 Davis Coffer Lyons 6 1 11 10 0 14 Aitchison Raffety 22 2 46 16 4 70 The Lorenz Consultancy 1 3 4 Cushman & Wakefield 348 50 635 588 89 70 Bidwells 43 3 190 115 14 122 LSH 284 30 232 77 228 386 Total 3,258 449 5,163 3,481 1,632 4,583 Percentage 88% 12% 60% 40% 26% 74% •Declined to give full breakdown ••Declined to give breakdown Next generation Investing in the next generation continues to be a priority for the agency community, with two thirds of respondents planning to take on graduates this year and more than a fifth increasing the number year-on-year. The 44 firms that completed EG’s survey took on a total of 526 graduates last year, an average of 12 each. Graduates can expect to earn an average of £22,620 on starting at one of the UK’s top agents, a figure that compared well with the legal sector – where starting graduate salaries average £18,000 in London and £16,000 outside the capital – and less well with the accountancy world. Here, starting graduate salaries average £25,750 – more at the Big Four – and quickly rise to an average of £45,000 on qualification. More than half (56.8%) of agency firms are now also running apprenticeship programmes with 13.5% considering setting one up. Between them, they expect to take on more than 80 apprentices in 2017. The future health of the industry While the terms of the UK’s extraction from the EU and just what impact Donald Trump’s US presidency will have on the market remains unknown, the agency community is typically upbeat about the future. Some 51.4% expect turnover to increase, with just less than a quarter predicting a decline in income. Almost half predict profits to rise, with the same quarter expecting a decline. Brexit was outlined as the single biggest challenge to business over the coming year, followed by pressure on margins (around half of respondents said they had been asked to cut fees), UK political uncertainty, a lack of stock in the market and global political change. “Last year was tumultuous, politically,” says BNP Paribas Real Estate chief executive John Slade. “While the fallout from these events is likely to continue to impact sentiment in the market place, we should not forget that the UK remains attractive, with London representing good value against comparable cities.” Gerry Hughes, chief executive of GVA, adds: “The EU Referendum vote presented a significant market change that will have a last effect on how business moves forward, not just in 2017 but over the decades that follow. “Across UK industry we will see some negative impact on trade volumes, foreign direct investment levels, exchange rates and potentially borrowing costs as markets react to exit negotiations. Those frictional losses will have a direct effect on commercial real estate. How our industry performs over the coming 12 months will be dependent on how decisively government is able to draw negotiations to a conclusion.” Despite these obvious pressures on business, more than 80% of agents are not expecting to make redundancies over the coming 12 months with 44.7% planning to increase staff numbers. • To send feedback, e-mail Samantha.McClary@estatesgazette.com or tweet @Samanthamcclary or @estatesgazette