Work and pay: the new normal

What a whirlwind of a year 2020 has been

It’s hard to believe that we’re just a few months shy of Christmas. Without harping on about the despairs that Australians have endured thus far, from the devastating natural disasters to the current coronavirus pandemic, we can only stand together as a united front and look forward to emerging stronger and more agile in its wake.

We are the ‘lucky country’, and relentless optimism and perseverance is in our blood, after all. Cheers to a glass half full! However, the disconcerting reality is that COVID-19 has been a monster that none of us could have prepared for. Leaving a devastating trail of toilet paper shortage, economic uncertainty and the threat of global recession in its path, it’s a force to be reckoned with.

Show me the money, let’s talk remuneration and reviews

With that said, it brings us to the main focus here at Avdiev Report. What’s happening with remuneration increases and reviews?

Our recent survey of Avdiev Report subscribers found that prior to COVID-19, from September 2019 to the end of January 2020, an average 2.9% remuneration increase across all property sectors was seen, higher than the 2.5% reported for the year to September 2019, reflecting solid performance in the overall property industry at that time.

During COVID-19, for those companies reviewing remuneration between February and July 2020, the average remuneration increase was 1.9%, a lower average percentage than the period before. However 25% of companies gave the usual full increase to employees.

Understandably, for those companies undergoing difficulties maintaining their usual level of operations, many are deferring remuneration increases until 2021 when they expect there will be more certainty in the economic outlook and an improvement in their company’s performance and profitability.

For an in depth look into current property related remuneration and incentives, our 2020 Avdiev Property Industry Remuneration Report with the August Update has remuneration data for over 360 positions with commentary on the state of the industry and forecasts for the 2021 remuneration policies. Click below for an order form.

So how are we faring in the property market?

Time and time again, the property industry has proven itself to be resilient and dynamic when faced with the ups and downs of the prevailing conditions. It was heartening to learn that for a significant 39% of companies recently surveyed, COVID-19 had little impact on their operations. Nonetheless, others in the property industry have not been immune to the turbulence and unpredictability of COVID-19. 47% of our pulse survey respondents have reported that their company is faring worse now than six months ago. The following chart gives the percentage of companies by property sector reporting that COVID-19 has had a very high impact on their business activities.

While the impacts are being felt right across the country, respondents with businesses in the Northern Territory and Tasmania reported suffering a very high impact from restrictions. Victoria’s recent move into stage 4 lockdown has brought on a second wave of gyration in the economy. The local construction sector is feeling the toll with many workers across high-rise projects now at risk, due to the newly enforced curfews and curtailed business activity.

Vacancy rates throughout the country have risen across commercial office and retail property markets and income and investment values have been hugely affected. A general slowdown to operations across the property development sector has been experienced, with projects being delayed, investors retreating and loan costs rising and harder to secure. Many in the real estate agency and property advisory sector are working from home, already accustomed to the ups and downs of their activities.

The aged care sector is going through challenging times as it struggles through the health crisis. The retirement living segment has seen a slowing in volume of sales leads. Shopping centre owners are battling with retailers as they both fight to minimise losses. Design and building consultants appear to be keeping busy with many working from home. Large government projects are continuing but some other new projects are on hold. Residential construction has been hit hard but thrown a lifeline from the HomeBuilder stimulus and Build to Rent concessions.

Working from home and job keeping

There’s no question that for some property industry sectors the ability of having a workforce continuing to work from home has helped with staff retention and business-as-usual activity. An average of 57% of the property industry’s employees are working from home, with the highest percentages seen across design and building consultants as well as property investment and funds management companies.

Some very good news, bolstered by the government’s efforts to keep the economy afloat with the roll out of stimulus packages and support, 58% of survey participants’ companies have retained the same headcount as of July when compared to the start of the year.

Onwards and upwards!

Colleagues and friends, we thank you again for your support and are immensely grateful for your invaluable insights into the property industry. Until next time, keep your distance, stay calm and stay well.