As I write this report in May 2023, the recruitment market into property, real estate and construction is most definitely mixed. Certain volumes are down, there is a trend in hiring velocity and in larger corporates the hiring mood is generally muted. Whereas in independently owned, faster-growing organisations the appetite for recruiting premium talent remains fairly robust.
(Scroll further down the page for the UK Property Trends 2023 video)
We’re experiencing a buyer’s market for the first time since the pandemic. According to deverellsmith’s data, the average number of job applications in 2023 has increased by 196% compared to 2022, whereas job vacancies have remained the same. Therefore smart, bold, and well-capitalised organisations within our sector are absolutely taking advantage of those conditions in attracting the top 1% of the market to their businesses.
Although volumes of candidate activity have increased, a nervousness is still prevalent in those who are considering a job change compared to the early post-Covid months where we saw an extremely confident candidate marketplace. When times toughen up, candidates tend to hunker down and my advice to organisations would be to have a very compelling and clear strategy to be able to articulate a bright future within their business and certainly a stable environment where candidates can join a new employer.
We see in our executive search business a great desire to add strength in depth and to make strategic hires into generating new revenue streams. On some occasions, we see refreshment of certain leadership roles whether that’s in C-suite or executive leadership teams.
Diversity remains a very important topic on many of our client bases agendas regarding attracting a more diverse workforce. We see whilst motivation is high that consistency might be low in terms of hiring processes to attract the widest and most diverse candidate shortlist that may be available to our clients.
Another area of activity within our client base appears to be whereby clients are either internationally based focusing investment into the UK or overseas markets which appear to have a more positive GDP performance. Clearly, areas such as Saudi Arabia have seen huge growth in recent times attracting real estate talent from across the world to tackle some of their bigger projects and continue to look to acquire world-class talent in construction and real estate within the middle east.
The Office of National Statistics reported a 5.9% growth in average total pay (including bonuses) and growth in regular pay (excluding bonuses) was 6.6% among employees from December 2022 to February 2023.
In April 2023, I shared a poll asking: “How will your bonus change from last years?” with just under half (48%) of respondents answering ‘decrease' followed by 28% of respondents claiming their bonuses will remain the same and 24% answering ‘increase’.
Although bonuses may not have shown growth desired by employees over the past 18 months, the data detailed above highlights wage inflation which has been stimulated by the skills shortage and cost of living crisis, this has meant that basic salaries have increased and have provided greater stability to candidates, but increased pressures on employers.
We continue to see flexible working as a constant theme, although not to the same extremities compared to the months that followed Covid. However, flexibility remains very high up the necessities list in virtually all candidates in which we engage.
The UK employment rate was estimated at 75.8% in December 2022 to February 2023, 0.2 percentage points higher than September to November 2022. The increase in employment over the latest three-month period was driven by part-time employees and self-employed workers.
We think flexible working in one form or another is very much here to stay. We see many opportunities for clients to work in a more agile fashion, reduce their corporate overhead and access much of the very best talent in the market by creating advanced and modern mindsets when it comes to flexible working.
During Q1, the deverellsmith group acquired flexible working platform Daisy Chain, where professionals can match + connect with flexible employers to enhance their careers and work-life balance. The platform provides a cost-effective technological solution to the UK employment market in not just promoting diversification of talent but streamlining the attraction process.
The Office of National Statistics reported the main reason for ‘economic inactivity’ with individuals in society were due to sickness, caring, studying, retirement or that they felt discouraged.
The International Monetary Fund reported that the UK must address the record numbers of people not working, many of whom have long-term illnesses, to restore inflation rates and economic stability. Providing flexible options on a case-by-case basis can support those inactive workers returning to the workforce.
That being said, deverellsmith is without a doubt a huge supporter of in-person collaboration and we think the blend - which will be unique from company to company - is an important consideration when going to market to attract the best talent.
Looking forwards, I think the market will remain a mix of high and low activity. We have a general election coming which have historically stimulated apprehension towards hiring.
As I close this report, the International Monetary Fund reported that they expect the UK to avoid recession. It now expects the UK to grow by 0.4% in 2023, whereas last month it forecast the economy would contract by 0.3%. The IMF said its growth upgrade was helped by faster-than-usual pay growth, falling energy costs and the normalisation of global supply chains.
Whilst we forecast mixed conditions, we remain very optimistic that companies who are focused, determined, and funded can achieve significant growth under these conditions by attracting and retaining the best people in their organisations.
UK Property Market Trends 2023
At the end of the 22/23 Financial Year, we asked property leaders from across the sector to share their views on what we should expect for the future.
Watch the video to hear what they’re predicting or read on to learn more.
Mike Knowles, Senior Director – Residential - CBRE
I think the sales market will be impacted by the decision on interest rates and mortgage lenders. During the panel discussion (Banking on the Future) a stat was shared where 60,000 buyers had reduced to 40,000 in 2022. It's quite a fascinating piece of data and rental property prices are still quite high so it remains to be seen this year what will happen.
Mark Wells, Founder and CEO – Invisible Homes
I think for us, we're going to see different sectors of the market doing well and doing badly. I think it will be tough. It will be a slower year and obviously it's just a slower life going forward over the next ten years.
Richard Aves, Sales Manager – Foxtons
In the last two or three months, irrespective of a lot of the macro things going on in the economy Central London is starting to come back at the advent of help to buy having finished the lower end of the market, is working out how they can get deposits together and we're seeing that there hasn't been a huge drop in transactions because the help to buy Government scheme isn't here. So, I think it’s as optimistic and it's hard working as we possibly will.
Nick Hammond, Head of Build to Rent – deverellsmith
I'd love to believe that this boom in H2 is true. I personally think it's a bit ambitious, but I think Q1 next year is the one to watch.
Charlotte Russell, Lettings Director – JLL
I think this year we'll see our expectations from a letting’s perspective is that the supply isn't going to increase. So, heading into Q2, we'll see a slight dip in the market because it becomes less transient as we head into the summer months the supply is really going to significantly decrease, which in turn is probably going to keep the rents fairly high as we predicted in our forecast.
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