After seven years of subdued sentiment, an unstable market and a lingering threat of redundancy, this year’s Top Agents survey results paint a very different picture. This time 12 months ago there were hints at signs of recovery. But still agents spoke in terms of “a modest revival”, “challenging times” and “a tough 12 months ahead” – not exactly comments to shout from the rooftops. What a difference a year makes. More than 70% of agents have reported an increase in turnover for 2012 and expectations for 2013/14 are even more upbeat, with nearly 90% predicting a rise in turnover for the current financial year, compared with 57% in 2012. Twinned with the fact that 78% are expecting a rise in profit this year, compared with just 49% in 2012, it looks like this really is the year that will mark the long-awaited turn in fortune. “At last,” says Knight Frank senior partner Alistair Elliott. “It seems that with improving sentiment across a range of economic measures there will be a positive impact on property.” Guy Grainger, UK chief executive at Jones Lang LaSalle, adds: “There have been more encouraging economic signs in 2013 and strains within the eurozone have eased over the recent months. In addition, the sun has come out and stayed out.” And it’s not just the big London-focused companies basking in the warm glow of positive news. Saul Western, partner at Bidwells, says: “Investors can currently buy prime offices in the regions at bargain secondary prices. With little or no new stock having been developed in these markets over the last five years, we believe there are now good prospects for real rental growth in this sector over the next five.” Of course, there is a flip side to all of this market activity. After such a dearth of good news for so many years, it seems a shame to delve into fresh challenges, but the lack of available stock was an issue that arose throughout the survey, in London and the UK regions. “Lack of stock could be a real issue,” says Savills UK chief executive Mark Ridley. “Greater take-up could increase competition and we need the development cycle to kick in faster. This is likely to be a short-term problem, but a problem nonetheless. Agents need stock to trade.” Estates Gazette delves into the state of play in the agent world: the fresh positivity, the resulting challenges and predictions for the current financial year. And, of course, those hotly anticipated league tables…
Top agents by UK turnover
Not much change at the top of the agents table, as the leading four retain their positions.
Savills has more than held its own at the pinnacle of the league with a 13% jump in UK turnover from £352.3m in 2012 to £399.1m. A great result after the firm overtook Jones Lang LaSalle in 2012 to take the top spot.
JLL came in at number two for a second year, with turnover at £325m. This is down 3% on last year, but still a significant lead on CBRE, which was third with a turnover of £252.4m – a 7.1% increase on last year. And no surprises that when it comes to global turnover, CBRE is streets ahead with £4.1bn, compared with JLL’s £2.8bn.
Agents mostly fared well, with 70% reporting increased turnover and just two dropping down the table – and then only by one spot each. But the fact there are four fewer entries this year should be taken into consideration. This meant some firms near the foot of the table shifted up by default despite drops in turnover.
With a couple of exceptions, the general pattern looks strong across the board. Savills UK chief executive Mark Ridley says: “Continued improvement is definitely the mood now. This is very significant in London and almost every sector of the business has seen huge improvement.”
Mark Rigby, chief executive of CVS – which saw a 40% increase in turnover and leapt six places up the table – says adapting to the changing market has been key. “We are different to a lot of agents in that we focus on one thing – business rates,” says Rigby. “We set out our stall on this about three years ago and we are now seeing the benefits. And we expect another significant step up next year.”
The upswing has bought fresh challenges as further consolidations, squeezed margins and a lack of stock were highlighted as potential pitfalls. “What we are seeing now is plenty of buyers and not many sellers,” says Savills’ Ridley. “Yields are hardening as there is now much greater demand and limited supply. There is more competition and this is something we will all need to keep a close eye on.”
£2.3bn – total turnover of the EG top agents this year
15 firms experienced a drop in turnover for this financial year
87.5% expect more consolidation across the agency sector
52.6% of firms are open to the idea of a merger or acquisition this year
69% of top agents say they expect the number of staff they employ to increase
0 firms are looking to refinance this year
4.2% of firms have changed business structure in the past year
9% of top agents are now stock market listed
Ranking by UK turnover per fee earner
The collective UK turnover by fee earner among this year’s top agents rose from £6.8m in 2012 to £7.2m in 2013. This is a particularly positive jump considering that this year’s league has four fewer entries than last year’s table.
Staff numbers are up by nearly 1,000 at 843 – a vast improvement on the 174-person increase for the same period last year. This pushes the total number of employees over the 20,000 mark to 20,112.
The number of fee earners hired increased to 319 from 160 over the same period last year. But looking at these figures as a percentage of increased staff numbers as a whole reveals that there has been a reduced focus on these roles.
In 2012, 92% of new staff hired fell into the fee earner category as agents concentrated on developing their core business and winning work. This percentage has dropped to 38% in 2013.
Staffing predictions for the coming year add to the positive outlook characterising this year’s survey.
Just under 95% expect the number of employees at their firm to either increase or stay the same and while 50% of top agents have made redundancies over the past 12 months, 87% do not expect to make any more cuts over the coming year.
When asked whether they were considering closing any offices over the next 12 months, 95% said that this was not part of their plan.
The Lorenz Consultancy topped the rankings based on UK turnover per fee earner this year, despite a fall from £468,000 in 2012 to £335,000 in 2013. This was still a healthy distance ahead of the next firm on the list as Robert Pinkus & Co reported a figure of £280,000 per fee earner.
Despite a mainly positive outlook in terms of staff numbers, 87% of top agents – particularly smaller firms – said that more consolidation should be expected.
One agent said: “We anticipate further consolidation at the top, with further niche practices forming as a result.”
Another added: “The market will remain very competitive with continued margin pressure. We expect to see continued corporate merger and acquisition activity, with an ongoing focus on back-office efficiencies.”
How the survey was conducted
Online entry for the EG Top Agents survey opened in June. We have relied on figures supplied by respondents. Firms had to provide a figure for gross UK turnover, a significant part of which had to come from commercial activities. Not all respondents provided all the information requested.
Emily.Wright@estatesgazette.com
