The Interview: Aubrey Adams, Chief Executive Of Savills

The gentleman of the real estate world
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The Independent Online

Aubrey Adams runs the most profitable estate agency business in the world, bar none.

Aubrey Adams runs the most profitable estate agency business in the world, bar none.

Savills is the country homes and high-end agent that will have a £60m bonus pool to share out among staff this year and where, last year, one agent earned a £800,000 bonus, taking his earnings to well over a £1m. A few months ago it sold a house in Kensington for a record £70m to Lakshmi Mittal, the steel tycoon.

However, to meet Mr Adams is not to enter the world of "sell, sell, sell" at all but to be enveloped in a sense of gentlemanly capitalism.

"I've never sold a home in my life," says Mr Adams, a courteous, articulate man, with a very reassuring manner. An accountant by background, he joined Savills 14 years ago, just at the point of the last crash, and became chief executive in 2000.

He does not mind the fact that some of his agents make far more than the £570,000 he took home last year.

"If we've got a fantastic producer, he should be jolly well paid. If he's paid twice what I am, then jolly good luck to him."

He points out that Savills is a "very" profitable business and that £800,000 bonuses would be a "pittance" in City terms.

"Is it right? That's not for me to judge. I'm running a business. We need to pay incentives to ensure we have the very best people ... If someone gets £1m but he's actually generated £4m or £5m in fees, is that wrong? No."

Though Mr Adams himself owns 1,000 acres in Oxfordshire, he fights hard against the "posh" tag often applied to the company's agents.

"I don't think they're posh at all. Even if they were what most people perceive as posh, they shouldn't appear as posh. To me, posh implies an arrogance and if they're arrogant, they're probably dead in the water."

He says Savills' agents need to be "reasonably" well educated and "have social graces" - they should "know how to talk to people and behave nicely".

"They've got to have social skills. That doesn't mean you've been to a particular school or talk with a particular accent."

Pressed though, he admits the company was unlikely to employ a front-line person with a cockney accent.

Mr Adams dismisses the prospect of any crash that may now hit the property market threatening Savills existence (as the last crash did).

"Savills would come out of it [a crash] better than anyone else," he says.

The company sells homes mostly in the £1m-plus bracket. Not only do buyers at this end of the market not bother with mortgages much - most of the purchase price is met with cash, so interest rate rises are not crucial - but as a business Savills would be able to ride it out, he says.

This goes back to that bonus pool, which would act as a "buffer" if things went bad, being used by the company, rather than paid out to staff.

Savills floated on the stock market just before the last property crash and its listed status is another reason why it should fare well, even in very testing times, according to Mr Adams.

Unlike most agencies, which are partnerships and pay out profits to the partners, Savills is able to set aside reserves and it has £50m in the bank. Investors appear to have bought the message. The shares have quadrupled since early 2003 and the company is now worth well over £250m, making it a future candidate for the FTSE 250. This week, the company announced a 54 per cent leap in half-year profits to £15.1m. Mr Adams insists that his agents have to work hard for their money.

"If it's a very strong market for the seller, then it's relatively easy to sell but you get lots of periods in the market where a lot of work is required."

Mr Adams says that unlike a partnership, Savills rewards the people who bring in the money.

"In a partnership, there is typically a fixed profit share, regardless of what they've earned. So there are a lot of partners or senior employees who rely on others to create the profits and they're creaming it off at the top."

Another major difference with rivals is that Savills agents get paid from a collective bonus pool, rather than commissions on individual transactions.

"The whole ethos of Savills is very much that of profit-sharing. We want to focus on how much profit we make rather than how much in fees we make. You can make good fees and still end up with zero profit."

Making the reward structure of the company dependent on collective achievement makes employees work in the interests of the company and is why Savills could not be a franchise operation like some other agencies, Mr Adams says.

"We've never had a query from a shareholder about the bonuses we've paid," he says.

If Mr Adams is not a fee-earner, what does he bring to the party? Management skills, corporate skills and making sure there's a proper business infrastructure, he answers.

The stock market quotation has been a key reason why Savills has "transformed from a second division player to number one in the UK and one of the top in the world".

The company is the most profitable agencies in the world (it is forecast to make £36m this year), while it is number four by revenues. Around a quarter of profits are actually provided by the residential sales that Savills is known for. The rest come from its commercial property agency and other real estate services.

Mr Adams is not interested in expanding Savills aggressively by acquisition or opening huge numbers of new offices. The company is now beginning to enter the mid-market (which starts at £600,000 in London and £400,000 outside the capital) but this will not be a big push and new offices will be added at a pretty cautious rate.

Now aged 55, he says he expects to retire by 60 and it seems he will see out that time at Savills.

"The business is doing well. Why should I leave? We have a very good atmosphere at Savills and we also want to have fun."

Accountant with a passion for music and farming

Age: 55

Lives: on 1,000-acre farm in Oxfordshire

Education: Sir William Borlase's School, Buckinghamshire (a selective state school), St John's College, Cambridge

Personal: Married with three daughters in their twenties. Enjoys farming and music (he is a trustee of London's Wigmore Hall)

Career: Started at Bank of America in 1970, then trained as an accountant at Price Waterhouse. Branched out into real estate in 1978, joining Peachey Property Corporation and becoming financial director. In 1990 he moved to Savills, as finance director, made managing director the following year. Appointed group chief executive in 2000

Earns: Last year £569,939, plus £200,000 paid into his pension pot