4 Questions to Daniel Bauer

“Salaries are more than
respectable”
Frankfurter Allgemeine Zeitung, 17 June 2022

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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