MIPIM 2023 — Review:
Cautious in Stormy Times
Learn more in this brief summary about how we experienced this years's MPIM in Cannes.
On managers in the real estate business compared to other sectors
After a boom of a good 10 years, is the real estate business paying their managers disproportionally high salaries compared to other sectors?
In my 16+ active years as a consultant in the real estate sector, I experienced this boom from very close up. And yes, the situation today is that the sector continues to pay top executives, which is the segment we are active in and we are recruiting for, appropriately and in accordance with performance — you participate in the company’s success. Clearly, payments have generally been rising disproportionally, also with regard to inflation. Salaries in this sector are more than respectable compared to other industries. They range between 700,000 and more than 1 million euros, including profit bonuses. One point to consider in the context is that there are a lot of variables, and payment for the same position can vary substantially, depending on the type and size of company, especially when it comes to flexible components. The real estate sector has developed further in the period we are looking at, it has ‘grown up’ and become much more complex, which affected salaries and salary components as well. They have become more diversified and more competitive. Today, the sector is intertwined with other industries, such as Finance, IT and the pharmaceutical industry, with salaries above the traditional real estate sector as we know it from the past.
Which areas in your industry pay the highest and which the lowest salaries?
Within the real estate industry, just like any other industry, salaries depend on economic cycles and need to be seen in the context of supply and demand. At the same time, we can of course see differences depending on asset class and the present economic situation of a company. What we observe is that positions with executive responsibility in technical areas have made up ground with regard to salaries. In parts, they have reached the same level as positions of similar seniority in operative commercial areas or in Finance.
Will top-level executives be facing losses if and when the economic situation in the real estate industry reaches a tipping point?
At first and second management level, decision-makers are essential for the company’s success. This shows in their salaries, which are normally based on long-term contractual agreements. These top managers have often been through multiple crises, such as the 2008 financial crisis and the 2011 debt crisis. They are much better than others in dealing with such situations, sturdy and crisis-tested, as it were. This safety and security as well as their know-how are of immense importance to corporations, and even more so in times like these. So we will see no adjustments here. Short-term effects may occur at middle-management level and for positions with performance-based payment like sales and distribution.
How does the situation compare internationally: Are salaries for German top-level real estate people lagging behind?
We collabroate with many international companies on a daily basis, thus gaining insight into the relevant salary structures. And we can say this: There is good reason to be satisfied, since Germany is doing quite well internationally. In addition to very good salaries, Germany is far ahead in terms of social components such as parental leave payment and job protection, but also remote work, flexibility and healthcare. Employers here have come to appreciate the importance of soft factors for top executives as well. The corresponding corporate culture, reflecting the change in society towards work-life balance, has gained in relevance. Salaries in the US certainly are still exceeding salaries here. However, the culture and attitude towards payment and other factors regarding job security, for instance, are very different there.
Interview conducted by Michael Psotta.
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