Like children nervously returning to school after the long summer break, property professionals went back to the office this week with a sense of trepidation.
There is plenty to be worried about – lack of occupiers, lack of debt, and a shrinking public sector; where do you start?
For those in charge of the 60 largest UK property agencies, who volunteered their numbers and opinions for the 14th annual EG Top Agents survey (p68), the uncertainty continues to be daunting.
They have weathered two years of poor trading and are noticeably leaner, having shed many hundreds of bodies over two years, leaving a collective workforce of around 22,700.
The good news to draw from the survey results is that income is no longer dwindling at the terrifying rate seen in 2008-2009: the collective turnover of the top agents fell 7% to £2.11bn, compared with a 17% drop the year before.
But opinions vary wildly on when things will get significantly better (or if they will get worse). As one managing partner put it, “I don’t think anybody who answers this question will get it right.”
More than a third of firms expect their turnover this year to be no better than last and 7% say their turnover is falling. Slightly less than half of firms say their turnover is on the up.
Against this backdrop, further consolidation seems inevitable: 70% of the senior partners, chairmen and chief executives surveyed share this view.
Nick Shepherd, who merged Drivers Jonas into the empire of accounting firm Deloitte at the beginning of the year, was, of course, one of them.
Some closer study of the firms a few layers below DJD – which have long been regarded as vulnerable – explains why: the further down you go in size, the harder income is being squeezed.
Taken as a group, the top 10 saw its turnover drop 6.5% (pulled down to a large extent by DTZ – surely ripe for a takeover itself); but when you take each group of 10 below that, you’re talking falls of 7-10%.
For generalist businesses with perhaps 150-200 staff to keep busy and no overseas offices to look to for fees, that becomes problematic.
The question is whether those that are finding things particularly tough will be able to claw that business back as the market recovers.
Further below that level, many of the independent niche firms continue to prove that small specialists still have a place in the property world. Indeed, Andrew Gould – chief executive of the rather larger English business of Jones Lang LaSalle – says he expects to see some of the smaller niche and start-up agencies do very well as the market picks up.
But a few more of those firms who find themselves sandwiched between the niche players and the healthier members of the top tier are likely to be looking for their own version of the DJ Deloitte solution – whether things get better or worse.
• While the headline figures revealed by the Top Agents survey may be less than stellar, there is plenty of good news out there. Much of it was highlighted this week, as the judges of the Estates Gazette Awards sat down to shortlist this year’s best performers. Jones Lang LaSalle and CBRE emerged with four nominations apiece, closely followed by King Sturge with three. In the company categories, SEGRO leads the field with three nominations, followed by British Land with two. The full list is on page 135 and the winners will be revealed at the EG Awards at the Hilton on London’s Park Lane on 22 November.
julia.cahill@estatesgazette.com
