The pick-up in European real estate investment activity over the past year is spurring inflationary salary increases for senior directors with solid experience in deal origination and execution, new research from executive search firm Bohill Partners shows.

'Competition for the best talent is heating up and so there is inevitable inflation in salaries, particularly in the real estate private equity sector,' said Emily Bohill, managing partner at Bohill Partners. 'We're also seeing an increasing churn in positions as confident and capable managing directors and directors seek the right platform for the next market cycle.'

While there were robust salary increases this year for real estate private equity managing directors and directors, there were more moderate rises for vice presidents, and it saw little evidence of upward pressure on salaries for associates or analysts.

The reports also point to the on-going divergence between some private equity and real estate banking investment platforms. Bonuses at captive real estate funds have been severely depressed over the past few years and salaries for those working in this investment vehicle category have been increased at all levels. Salaries at private equity houses are now substantially lower and make up the difference with the bonus and carried interest.

With bonuses in real estate finance depressed again this year, salaries at the senior end for structured finance bankers have risen in an attempt to try and preserve total compensation figures. The salary increases started with London-based US investment banks towards the end of 2010 and this trend was followed by the majority of institutions as they moved to retain key staff.

'It's clear we're seeing a resurgence in activity across the European real estate investment market, which is being reflected in compensation levels and people's willingness to seek new positions,' said Emily Bohill. 'It should be an interesting autumn in the executive search business and certainly within the senior levels of the industry.'