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Forget Politics And The Rise Of The Robots, Fees Are The Big Worry For Brokers

Real estate brokers say clients are continually asking for lower fees.

Macro considerations like political uncertainty and the impact of artificial intelligence grab most of the headlines, but a big chunk of the real estate brokers in Europe are worried about something far more immediate: clients continuing to screw down fees

In the annual membership survey of the Society of Industrial & Office Realtors, 68% of European members said they expected revenues to increase in 2020, but also revealed that they are coming under increased pressure to reduce fees. 

Fee erosion was selected as the most immediate threat to their business by more than a third of members, ahead of issues such as global economic slowdown, AI or Brexit.

“While macro-economic factors tend to dominate the headlines, it is clear that the main issue concerning our members is much closer to home,” SIOR President for Europe Paul McDowell said.

“For the most part, the biggest challenge facing our profession, particularly in Europe, is educating clients that premium advice cannot be delivered against a backdrop of dwindling fee levels. With respondents to our survey ranging from sole practitioners to the leaders of large international consultancies, it was interesting to see this level of consensus on a single issue.”

UK respondents to the survey were largely positive about achieving some clarity at last on Brexit, though concerns still loom over its eventual impact.

Unsurprisingly the survey found that industrial brokers were more positive than their office counterparts, citing the continued growth of e-commerce through Continental Europe as a key driver for their market. 

All members expected to see increased levels of cross-border transactions among their network, SIOR said, with deal volumes per member currently averaging at 4.85 a year in total.

SIOR has 3,100 members in more than 630 cities in 34 countries.

Related Topics: SIOR, Real estate fees