GLOBAL - An increase in transaction volumes is driving up senior management salaries - and the likelihood of defections.

A report published this week by Bohill Partners, a recruitment firm, suggests top managers are evaluating their next move as their salaries scale higher. 

Yet it found property managers' salaries at private equity houses were substantially lower than their investment bank counterparts, with bonuses and carried interest making up the difference.

The findings on salaries applied only to senior managers. The increase was significantly smaller for senior vice-presidents and negligible for analysts.

Managing partner Emily Bohill said: "Managing directors by their nature pay for themselves. They have existing relationships, they've originated products and they pay their way. Analysts are a much cheaper resource."

Some fund management houses identify clear criteria for bonuses, basing them not only performance but on alignment with investors' interests.

Will Anderson, property finance director at Henderson Global Investors, said: "It is true bonuses are important, but these are only really significant when exceptional investment performance has been delivered.

"Even then, a significant percentage is deferred for a number of years. Investors are alert to compensation packages that are not aligned with their interest."

Despite salary increases, managers who left to set up on their own in the wake of the financial crisis are now considering the next move, according to the report.

Bohill said: "As the market moves toward the next cycle, people are wondering whether they're in the right platform - including people you might think were entrenched. But if you're a CEO or a managing director, your options are fewer because there aren't that many top spots."

She forecast more consolidation in the real estate private equity market.

"Larger firms with long track records and good assets under management will survive," she said. "Smaller ones trying to raise follow-up funds will be looking at where they can plug and play their business plans.

"If you have good ideas, a solid business plan and access to capital, you'll have options in the market. People who don't have a track record will struggle."