Mar 18, 2020 – 12.00am
Soaring residential and commercial asset prices delivered above inflation pay rises to most people working in the property sector in the last six months.
But according to a new report, that could all change in the coming months as the coronavirus hits the bottom lines of fund managers, shopping centre landlords. hotels, real estate agents and other participants in the sector.
Job advertisements in the construction industry are down 15 per cent on a year ago. Erin Jonasson
The March Avdiev Property Industry Remuneration Report – a survey of property companies across the industry spectrum – recorded a 2.5 per cent average pay increase, beating both the Wage Price Index (2.2 per cent) and CPI (1.8 per cent)
According to the survey, which was carried out in February, younger employees with high levels of technology, project management and construction skills were still highly sought after and getting bigger pay rises, as were those working in sectors where shortages of competent people exist, such as capital transactions and project delivery-related roles.
“Property prices have been doing well, especially residential, always a feel-good factor in the property markets. Commercial property has also had a good year,” said Rita Avdiev, managing director of the Avdiev Group.
“When property prices are steady, remuneration follows.”
But she said future remuneration increases were likely to be modest, and would fluctuate with business conditions.
Calling 2020 “the year of the virus”, Ms Avdiev said some companies would have to review their business expectations in light of the rapidly evolving crisis.
In one example, she said, a fund manager said the coronavirus would likely have a “big, short-term impact” – an unlikely scenario now.
“All strategies developed in the last six months will need to be modified now to deal with the challenging conditions” Ms Avdiev said.
“But property people are resilient and used to rapid and drastic changes in conditions.”
Other market indicators such as job advertisements are also pointing to a slowdown in property work and pay.
According to the February employment report from recruitment portal SEEK, job ads for design and architecture roles are down 16 per cent on a year ago, while those in construction are down 15 per cent.
Some chief executives, including Event Hospitality & Entertainment boss Jane Hastings, are already taking big pay cuts as hotel and cinema earnings crumble.
Subscribers to the latest Avdiev survey reported challenging economic and global conditions, the effects of the RBA’s rapid and progressive rate cuts, as well as government and bureaucratic regulation stifling productivity and profitability.
Top issues facing property companies in the survey included winning work, and maintaining business income, especially cash flow, in consulting firms.
But according to Ms Avdiev, they have strategies in place for increasing business through diversification, consumer focus, acquisition and development of existing and new asset classes.
“Major assets have been traded, property portfolios have been remixed and refocused,” she said.