Illustrations by Tania Yakunova
The highest paying asset class in the real estate sector in 2023 is build to rent/multifamily, according to the latest Macdonald & Company Salary, Rewards and Attitudes Report.
The report heralded good news for much of the industry, as 70% of respondents’ pay increased in the last 12 months, which is up 26% on the previous year.
It is followed by self-storage and hospitality and leisure as the asset classes with the highest average salary globally. Self-storage is going through a resurgence, caused in part by high housing costs which is making it cheaper to invest in self-storage rather than move to a bigger home or extend your current home for extra space. Self-storage units are also cheap to build and operate, when compared to other building types.
“Multifamily or build to rent is a fast growing and evolving market,” says Nicholas Carman, partnerships director at Macdonald & Company. “As such, its popularity with major institutions and developers leaping to meet the demand has caused salary inflation, above other more traditional asset classes.”
Although seven in 10 respondents globally received a pay rise in the past year, a slightly lower 65.1% were awarded a rise in their basic salary (this excludes bonuses). The UK was the region where salary rises were most common (70.1%) and the Middle East was the region where they were least common (43.1%). South Africa was the region that saw the highest percentage of salary decreases, reported by 4.1% of respondents.
“The UK experienced significant salary inflation over the course of the last two years, with salaries jumping double digits in consecutive years,” says Peter Moore MRICS, managing director at Macdonald & Company.
“The demand for key skills remains high around the world. We asked the global real estate population if they expected a skills shortage to happen in their region and 61.7% said yes, this was ‘likely’ or ‘most likely’. In the Middle East and North Africa this figure was even higher at 73.3%. While there are often key influences to pay and rewards, including tax incentives, we can expect to see salaries continue rising as demand for talent outstrips supply.”
A huge gender pay gap persists in the sector with men earning on average 31.5% more than women. In some job types, such as UK estate agents, the gap is as wide as 47.4%.
When you also consider the report’s finding that men are, on average, given double the annual bonuses of women, it paints a picture of an industry with plenty of work to do on pay equality. On average, men receive bonuses of $14,000 compared to $7,000 for women. These headline numbers on salary and bonus aren’t broken down by job type and seniority, but a lack of women in directorial and board-level positions points to another set of issues.
“One of the reasons for the gender pay gap is that those earning the highest salaries in the most senior positions are usually male – 90% of the most senior positions are occupied by male respondents,” says Carman.
“Despite this stark contrast, there are positive steps happening. In the C-suite, the gap is shrinking. And in graduate hiring, the real estate industry is recognising it needs to do more – we have recorded female entrants to the sector being paid 8% higher than male respondents in the UK.”
On average, men earn 31.5% more than women in real estate
There are some significant regional variations in what respondents said were the most important factors in their current role. For example, while work/life balance was by far the most important factor in the US (51.9%) and UK (49.5%), it was markedly less so in Africa (28.2%) and Middle East & North Africa (30.4%). In those regions, the ‘ability to innovate/make a difference’ was valued more highly.
However, not everyone places the same importance on salary level. In Middle East & North Africa (MENA), 44.6% of respondents valued this highly while in Africa only 22.6% did.
In the UK, 44.1% said a flexible location was one of their most important perks, a long way ahead of Asia, where only 23.9% valued it. And in the US, it seems respondents don’t worry too much about appreciation from their line manager, as only 9.8% valued this compared to the global average of 23.3%.
“Work/life balance replaced salary as the most valued benefit of employment in 2020 and has stayed at number one in the US and UK for the last three years,” says Carman. “We have seen salary drop down to third in the UK behind flexible hours, showing the popularity of something that became more established during the pandemic.”
“We can expect to see salaries continue rising as demand for talent outstrips supply” Peter Moore MRICS, Macdonald & Company
Given a straight ‘you can only have A or B’ choice between flexible working or a 5% salary rise, most respondents globally (62.9%) said they’d take the pay rise, versus 37.1% who chose flexible working. Strangely, this majority was even stronger in the UK, where 67.9% chose the pay rise – yet the UK was also the region where flexible working was most highly valued in the previous chart.
Moore says: “We have been asking this question for four years – in 2021 during the peak of the pandemic respondents voted in a large majority for greater flexibility. In the UK, 74.3% opted for greater flexibility rather than a 5% salary increase. However, today this has almost completely reversed with the global average being 62.9% opting for a 5% salary increase.
“Our read is that many in the real estate industry today already have greater flexibility in when and where they are working.”
63% of real estate professionals would prefer a 5% pay rise to flexible working
RICS has produced a ‘Women in surveying: insight report’ that analyses the results of the flagship 2022 survey of women in the profession.
“This insight report is a first for RICS, and what we aim to make the first of many as we continue working to shape a more inclusive and equitable profession for all,” says Sybil Taunton, Head of Diversity, Equity and Inclusion at RICS.
“The more we understand about the makeup of the surveying profession through member data and feedback, the more we can do in terms of identifying pain points and setting strategies to remove barriers and drive meaningful change.”
The RICS UK Commercial Property Conference will take a deep dive into the economic challenges facing the commercial property sector, while celebrating new innovations. With interest rates continuing to rise and ESG remaining at the forefront of our minds, this conference will look into key trends and best practice case studies to support the commercial property sector as we move to 2024.
TUES 12 DEC 2023 | 08:30 - 17:30 GMT