Bonuses bonanza for property agents

COMMERCIAL property agents are set for their biggest bonus payouts in at least a decade as employers try to hold on to key staff in a recovering market.

Scores of high-flying agents who deal in trophy office blocks and hotels are expected to pick up bonuses approaching £1m in the next couple of months, outpacing bonus growth among the City's merchant bankers.

Poaching of key teams in the commercial property sector has picked up over the last year, as firms anticipate no let-up in private investors and pension funds' demand for key property, coupled with a revival in their lettings' business.

In response, property agency giant Jones Lang LaSalle is shaking up its bonus system this year for UK staff. This should make it as competitive as Savills, known in the industry for giving the highest rewards among the big agencies.

LaSalle will allow its local teams to take a cut of between 40% and 50% of the profits they generate. This will enable agents in the firm's West End and City investment arms to have a more direct share in their success.

Dozens of agents are expected to bag bonuses of between £500,000 and more than £m million next month and April, coinciding with publication of 2004 figures from Savills and LaSalle and bumper results out earlier this month from CB Richard Elllis. Others are expected to get similar amounts later this year at BH2, Cushman & Wakefield and niche firm Franc Warwick.

Savills chief executive Aubrey Adams said this year's bonus pool will be 'considerably more' than the near £55m pot of bonus money it doled out last year and the year before.

Head of investment Simon Hope and German funds specialist John Rigg are expected to earn more than £1m, insiders said. Last year was probably the 'best for the last 10,' Adams said, and noted there had been 'a lot of movement' of agents between firms over the past year.

CB Richard Ellis European chairman Mike Strong said his firm had no plans to change its bonus plan. But the firm has upped its revenue guidance for 2005 after a 45.1% rise last year to $2.4bn(£1.3bn) helped by an 'exceptionally strong performance in the UK' during the fourth quarter.

Commercial property agents can earn 1% commission on sales worth up to £100m and between 0.25% and 0.75% on larger deals. Investment bankers are lucky to earn 0.25% on the value of corporate takeovers.

Last year's blockbusters included the £750m sale of the Savoy hotels group by Blackstone to Irish consortium Quinlan Private. Taylor Woodrow sold St Katharine's Dock for £283m to Leo Noe's REIT Asset Management while an Aidan Brooks-led Irish group paid £177m for Unilever's head office in Blackfriars.

With Canary Wharf starting an estimated £800m-plus disposal programme, 2005 promises rich pickings.