The party to celebrate the relaunch of the Sotheby’s London real estate franchise did not cost £2.5mn. George Azar would like to be clear about that.
The world of luxury London estate agents has been awash with rumours about Azar, and his ambition to disrupt the business of selling multimillion pound homes to the global super-rich.
The actual cost of the party was just £400,000, Azar told the Financial Times.
Sotheby’s Real Estate was spun off from the auction house — the venue for Azar’s launch party — in 1976.
Unlike rivals Savills and Knight Frank, which operate as a single firm, Sotheby’s Real Estate runs on a franchise system. Azar, owner of the Dubai franchise since 2013, bought the London branch early last year with plans to shake up the established model, mainly by demanding higher fees from clients and giving his agents a much larger share of the revenue they earn.
“He is bringing the whole Dubai model to London,” said one London luxury agent. “He’s going to be ruthless on fees.”
Wild tales circulate about the terms the new-look Sotheby’s has offered to lure top performers. Azar, reclining in a blue suit on a beige-leather sofa in his office above the Mayfair Sotheby’s real estate storefront, says talk of multiyear contracts paying more than £800,000 per year are absurd.
“It’s not true . . . They were throwing figure after figure, thinking these guys come from the Middle East, they are funded by somebody, they are throwing money right, left and centre and they don’t know what they are doing,” he said.
But Azar appears to enjoy how much his arrival has set the tight-knit world of London’s top estate agents abuzz. “I am a very calculated guy. I’m a banker . . . We’re not stupid and we want to succeed.”
Sotheby’s high-profile hires include Claire Reynolds, an 18-year veteran of Savills, Marcus O’Brien, right-hand man to Gary Hersham at the luxury specialist Beauchamp Estates. Becky Fatemi, another leading agent, has merged her agency Rokstone with Sotheby’s.
“People are making up stories about how they were approached,” the London luxury agent said. Not having received an offer to be poached by Azar is now seen as a slight.
Although London property commands some of the highest prices in the world, its luxury agents take some of the lowest fees.
Around £5.7bn of London properties worth more than £5mn changed hands last year, according to Savills. The most expensive public listings on Sotheby’s books currently include a £75mn 11-bedroom house in Portland Place, and a three-bedroom, 2,700 sq ft flat in Marylebone, listed for around £12mn. Sotheby’s said its agents have sold £500mn worth of properties so far this year, including sales exchanged and under offer.
Fees are opaque. But similar agents in New York commonly charge 6 per cent. In London, selling agents’ fees are typically quoted at 2 per cent, but are often bargained down closer to 1.5 per cent. Fees of 1 per cent are not unknown, and agencies may then have to give a cut of their fee to another agent to introduce a buyer.
Sotheby’s, which generally only deals with properties worth more than £2mn, has set a floor of 2 per cent on fees with ambitions to charge more.
“Since the market was so easy, people were pushing fees down,” said Azar. He emphasises that he does not want to talk any agency down, and acknowledges London prime property is a competitive market. But he adds: “They got it too easy, and they got too lazy. In the old days, you had the big fish eating the small fish. Today you have the fast fish eating the slow fish. We are the fast fish.”
Key to the reinvention of Sotheby’s is the fees the agents can charge and how the money is split. Azar plans to pay people according to the business they bring in. The agents will be colleagues, but also in competition.
“They have got a very good team. I hope there is cohesion among the team members,” said Hersham, adding that he’s “looking forward to working with Sotheby’s”.
The challenge to London’s historically dominant agencies is reminiscent of the disruption caused by US law firms that have poached talent from London’s magic circle because top-billing lawyers earn more under the American “eat what you kill” pay arrangements.
Agencies like Savills and Knight Frank typically do not give their agents a direct cut of sales. Bonuses are discretionary, reflecting the logic that team members across the companies contribute. Tim Hyatt of Knight Frank said the model aims to encourage performance for clients and also a “fulfilling and rewarding career for all of our people”.
At Sotheby’s, each agent has a bespoke deal. Some are fully employed and others are self-employed consultants. Employees keep 20-40 per cent of the fees they earn, while consultants’ percentage starts at 50 per cent.
Another senior agent likened the new model Sotheby’s to the ultra-competitive agents in hit Netflix show “Selling Orange County”.
“I think he is going to create probably the greatest hornets nest of all time, with all these very senior people competing with each other,” the senior agent said.
Azar acknowledges the challenge. “It’s like putting sharks in a fish tank . . . I am making sure no one eats each other,” he jokes.
Fatemi said early rivalry within the team has settled down. “The first month was like: ‘I need this and I need this,’” she said. “That’s where the rumour mill came from.”
Sotheby’s can pay its agents more, Azar said, in part because he has torn up the traditional system of neighbourhood offices, giving his agents geographic freedom and cutting layers of management.
Fees at Sotheby’s are then split 50-50 between the agent who brings the buyer, and the one who won the listing. “The client gets the benefit of two power brokers working who are incentivised,” Fatemi said. “The majority of clients don’t mind paying.”
But if the London property market has been booming for prime agents in recent years, it now faces new challenges. Savills data show sales of properties worth more than £5mn were down 13 per cent last year from the year before, as the post-Covid property boom came to an end.
Russian buyers have met intense scepticism and new restrictions in London since the invasion of Ukraine. Many wealthy Russians have turned elsewhere, including Dubai.
“For me, as long as you’re not sanctioned, I’ll deal with you. I’m not here to tell you who is right and who is wrong,” said Azar, who cut his teeth in the discreet world of Swiss private banking.
Rivals, naturally, are sceptical about the prospects of success for Sotheby’s new fees model in London.
Other agents are more optimistic about the potential benefits if Azar pulls off his Mayfair-based shake-up. “If Sotheby’s can manage to raise the fees, we’d all be happy. Good luck to them,” said Hersham.
