Property brokers fear bank-style jobs cull

By Sinead Cruise - Analysis

LONDON (Reuters) - With much of the European real estate market on its knees, the painful death of job security is now haunting property brokers as well as investment bankers.

High-flying real estate dealers are leaving their favorite tables at expensive London restaurants vacant, awaiting a purge that will have much in common with the one that has rocked Britain's banking sector this year.

Property booms fed and were fed by the global credit boom that ended abruptly last year when U.S. mortgage defaults began to mount, and investment demand in the UK and U.S. property markets has crumbled in the credit crunch that followed. Now other European markets are wilting fast and job losses may not be confined to those frontline bear markets.

"Property is a cyclical business and contraction will be inevitable as firms look to be more streamlined," warned British Property Federation Chief Executive Liz Peace.

Rumors abound that some of the biggest employers in real estate are bracing for a phase of redundancies which could cost up to 5,000 property professionals their jobs across their European, Middle Eastern and African (EMEA) operations.

Not everyone agrees headcounts are under such strain.

"Markets like Eastern Europe, Russia, Ukraine, Turkey are still growing so it would be ludicrous to downsize European businesses anywhere near that figure," said Paul Bacon at property consultant Cushman & Wakefield, referring to the rumors of 5,000 job losses.

"We have absolutely no plans for wholesale redundancies in the UK," said Bacon, who is head of Europe, Middle East and Africa business.

Major emerging markets have so far escaped the worst of the credit crunch. However, the credit boom that preceded it fed foreign investors' appetite for property as well as other assets in emerging markets.

"There are a number of markets where (property) prices have risen very quickly," said Robert Maciejko, managing director for Central and Eastern Europe at global management consultancy Oliver Wyman. "The issue is when the Brits or the other foreign investors are no longer investing, or even looking to sell, and that's when prices can really go down."

According to data from Cushman & Wakefield, European property trading volumes have slumped 63 percent year-on-year to 25.6 billion euros, leaving many brokers in Spain, Ireland, Germany and France fearing redundancy.

CONSOLIDATION CRUNCH

One market analyst, who did not wish to be named, said a flurry of corporate takeovers executed in the twilight of the property cycle has left titans like CB Richard Ellis (CBRE) (CBG.N) and Jones Lang LaSalle (JLL.N) "thick around the middle" -- with too many support staff playing piggy-back on fewer high fee-earning brokers.

"We have grown market share considerably in recent years, partly due to organic growth and partly through acquisitions," said Alastair Hughes, head of EMEA at Jones Lang LaSalle.

"These acquisitions were either to expand our geographic coverage or to strengthen existing business areas. None were predicated on a continued capital markets boom," he said.