Brexit: Splitting Opinion, Not Dividing
In the course of our day to day recruitment activity, we’ve learned that property professionals have much to say about Brexit. Until now there hasn’t really been a forum for them to express their views – which is why we’ve included Brexit in this year’s RICS and Macdonald & Company Salary Survey. We wanted to answer the question, “How do property professionals in the UK think Brexit will affect them, their colleagues and the industry?”If you want to know the truth, bypass the politicians.
One of the criticisms levelled at politicians is that they are out of touch with reality; that they sit on their soft and cosy green leather seats in the commons (when the mood takes them), making decisions that are detached from the views, thoughts and experiences of those living and working in the world outside.The property sector is one of the biggest contributors to the UK economy, worth billions each year. We saw the devastation that a downturn in the sector can cause during the Financial Crisis and ensuing Great Depression. Falling property prices contribute to the collapse of consumer confidence. When jobs are lost in the property and construction sector, it has a massive knock-on impact to the wider economy. For these reasons and many more, we believe that the UK’s politicians should take notice of what people working in property really think about their future. Before we examine how people at the coalface really feel about Brexit, it’s worth considering the authority that the response to the 2019 RICS and Macdonald & Co. Rewards and Attitudes Survey provides.
Brexit: 2019 Opinion
Of the 3,481 responses to the survey, all property asset classes were represented, with a little more than half of respondents most commonly involved in commercial property, followed by:
• Residential open market 28%
• Mixed use 27%
• Industrial 27%
• Public sector 27%
• Retail 27%
• Hospitality/leisure 14%
• Infrastructure 14%
In terms of experience, all levels of experience were well represented, from those with less than two years of experience to those with more than 30 years in the industry and approaching retirement. The same type of spread exists with the qualifications of survey respondents, with degrees and MRICS approximately equally represented (54% and 49%). Other qualifications held include FRICS, BIFM, AssocRICS, and RICS part-qualified.If you consider this survey as a poll of property professionals, it outstrips any of the polls on which the media (and the mainstream political parties) place so much authority at times of elections and referendums. The 2019 RICS Macdonald & Company Rewards and Attitudes Survey had many times the number of responses of such polls, and those responses fully represent the entire diversity of the property industry – in terms of ages, experience, qualifications and sector.With such an authoritative study and given its timing – just a few weeks before the day the UK was due to leave the EU – this study provided an exceptional opportunity to test the real mood of property professionals toward Brexit.
Workplace Benefits in Property & Built Environment
• Employer pension scheme
(received by 74% of property professionals)
• Professional membership fees paid (66%)
• Working from home (46%)
• Car allowance (38%)
• Critical illness/Life cover (37%)
• Flexible hours (35%)
2019 Changes to Compensation for Professionals
- 64% of respondents received a base salary increase
- The average base salary was £55,799
- 58% of respondents reported receiving a bonus/commission
- The average bonus was £14,846When compared to our survey results in 2017, we see that in two years:
- The average salary has increased by £3,437, or 6.6%
- The average bonus has increased by £1,282, or 9.5%
- The percentage receiving a bonus/commission has increased from 45%
How 2018 Turned Out for Property Professionals
Clearly, since the EU referendum in June 2016, the property sector has been remarkably buoyant, especially when considered in the context of the economic assessments at the time. Remember that the Treasury, the Bank of England, the IMF and many others had forecast that a vote to leave (not the act of leaving) would put the UK economy into a tailspin in the two years immediately post the vote, and that property prices would crash by as much as 30%. Here, there’s no need to consider the other doom and gloom predictions: suffice to say, none have come to pass. The Bank of England and others have since said that their modelling was at fault. They have also said that their forecasts were based upon ‘actually leaving’ the EU, and not because of the vote (even though the wording of all forecasts at that time made it plain that the forecasts were made for the two years following a vote to leave).
In January 2019, the IMF’s latest economic forecast made an incredible U-turn from its May 2016 Brexit forecast. predicts that the UK economy will grow by around 1.5% per year in the two years following our exit from the EU.Enough about the ‘expert’ economic forecasts. Let’s turn our attention to those who really know: the people at the coalface, working in the real world daily.
The Future: How Could Brexit affect property professionals?
The survey asked professionals working in the built environment about their views for the next 12 months across several areas. Here are the highlights of the responses.What professionals think about the outlook generally
• 57% think their company’s revenue will increase, with 4% thinking the increase will be significant
• Only 12% believe that their company’s revenue will decrease, with just 1% believing a significant decrease is likely
• 40% believe there will be an increase in business opportunities
• While 62% believe there will be no change in the number of offices/locations in which their company operates, 23% believe there will be a decrease and 15% believe there will be an increase
Property professionals are more bullish about investment in technology and staff training and development, with a positive net figure of respondents believing there will be increases in both:
- +17% believe their company will increase in technology
- +7% believe their company will increase investment in staff training and development
- It also appears that professionals believe there will be a shift away from temporary staff and toward permanent staff:
- While 15% think their company will hire new temporary employees, 34% believe they will reduce hires
- Although 22% believe their company will reduce new permanent hires, 32% believe permanent hires will increase
- Interestingly, 37% of respondents said they are likely or very likely to move jobs in the next 12 months.
What Property Professionals Think When Asked about Brexit Specifically
The 20th RICS Macdonald & Company Rewards & Attitudes survey asked about the outlook and linked the questions to Brexit, there was a marked difference in response. The mood appears to be much darker when views are requested about the effect of Brexit on the outlook for people, employers and the property industry. Responses include the following: When asked about the effect of Brexit on them personally, most professionals (58%) think it will have no impact. However, at the extremes, only 8% feel that Brexit will impact them positively or very positively, while 24% feel it would be negative for them personally, and 10% think it will be very negative.
When asked about the effect on the employer, again more than half (53%) feel Brexit will have no effect.
- Only 9% feel that Brexit will have a positive effect.
- More than a third (39%) feel that Brexit will have a negative (31%) or very negative (8%) effect.
- Professionals are most negative about the prospects for their sector when the outlook is connected to Brexit.
- Almost half (49%) feel that Brexit is bad news for their sector, with 13% expecting a very negative effect.
- Only 9% feel that Brexit will be positive or very positive.
- Personal opinions about the effect of Brexit on the region of business were almost identical to sector prospects, with 9% feeling positive about the future, and 46% feeling negative (32%) or very negative (14%).
What's the Outlook for the Property sector?
On the face of it, the 2019 survey appears to contain several startling contradictions. On the one hand, property professionals expect their own companies to increase revenues, permanent hiring, and investment in technology and development of people. This bullish outlook is presumably predicated on the increase in business opportunities forecast by four in 10 property professionals.
On the other hand, property professionals lean toward the negative when quizzed about the future if the question is linked to Brexit. While around half expect Brexit to have no effect, there is a clear bias toward negativity when considering the effect on personal situations, employers, specific sectors and regions. Clearly, when the "B-word" or Brexit isn’t mentioned, property professionals appear mostly positive about the future. When the "B" word is mentioned, responses turn sour. There are two reasons this may be:
1. Professionals believe that Brexit will have a dampening effect on an otherwise robust and buoyant industry
2. Media headlines surrounding Brexit are clouding judgement, with Brexit now automatically linked to worsening prospects
Whichever it is, the conclusion to draw is that Brexit, (if or when it happens) is likely to be less negatively impactful on the property and construction industry than the gloomiest predictions – perhaps somewhere between the bullish non-Brexit views and bearish Brexit views of property professionals surveyed. Indeed, if Brexit should have less impact than forecast on the wider economy, then the property sector could produce even more positive results than the most positive views of property professionals as provided in the 2019 RICS and Macdonald & Company Rewards and Attitudes Survey.
What Should Employers be Watching Through Brexit?
It is natural that employers will be cautious as we approach and pass through the UK’s EU exit. Economic uncertainty dictates that it should be so. However, should the actual outcome of Brexit be less severe than anticipated by the economic experts (who don’t have a very successful track record), or, dare we say it, even positive for the economy in the medium to long term, then any hesitance in the market is likely to dissipate very quickly. The views of property professionals – that business opportunities will increase and lead to further investment and increasing revenues – may be more correct than the bearishness of those same professionals when Brexit is mentioned.In such a scenario, it is likely that companies will seek to hire talented staff to bolster their operations.
Could it be that the 37% of property professionals who say they are likely or very likely to find new jobs in the next 12 months will execute on this promise? Companies may be best advised to refocus their attention away from Brexit and toward what may become the big issue of 2019 in the property and construction industry: why is it that so many talented property professionals are considering a move away from you and to a competitor?
For the answers to this question and to discuss Brexit hiring strategies (whatever the outcome), contact Macdonald & Company today, and learn the reasons your best people told us they may be looking for a new job this year.