March 17, 2014

Renewed investor confidence evident at 25th MIPIM

Renewed investor confidence evident at 25th MIPIM

MIPIM celebrated its 25th anniversary in Cannes last week against a backdrop of largely positive industry results for 2013 and signs that post-2008 distressed territories, particularly in Southern Europe, are coming back into favour with investors.

20,500 delegates from 93 countries, including 4,500 investors, gathered in Cannes for a frenetic four days of business meetings and high-level industry talks, announced MIPIM’s organisers, REED Midem.

The traditional flurry of industry reports that are released during MIPIM highlighted that most markets are in strong recovery mode. JLL’s Office Investment Market Review noted 2013 investment in European offices reached €70 billion, a 7 percent rise on 2012. JLL predicted that 2014 will see continued growth in office investment, driven by Southern Europe and Ireland, an increase in portfolio sales, an increase in capital raised by private real estate funds and a 20 percent rise in the delivery of new offices.

Global property advisor CBRE’s European Capital Markets report confirmed that European countries that had been hardest hit by the 2008 economic downturn such as Italy, Spain, Portugal and Ireland, had bounced back more strongly than expected in 2013, with the total number of transactions in Ireland being three times higher in 2013 compared to 2012. International real estate advisor Savills predicts commercial real estate turnover will hit €3 billion in Ireland this year. Savills noted that retail investment volumes in Spain hit some €850 million in 2013 - three times the 2012 level - with Madrid and Barcelona drawing particular interest. This was reflected in Cannes by constant traffic to the stands of both cities.

One of the talking points on the MIPIM exhibition floor was the size of equity funds being raised in the United States that are destined to target Europe’s distressed assets. Among those funds, Starwood Capital is reported to be putting together some $2 billion. CBRE says that US investors account for the largest proportion of cross-border investment in Europe and that almost half of Spain’s commercial real estate transactions in 2013 involved US capital.

What became clear throughout the week is that Asian countries are taking an increasingly international approach to investing. Led by the Chinese, Asian investors carried out almost €7 billion worth of transactions in the second half of 2013, most of them targeting Britain.

According to John Forrester, DTZ’s Chief Executive, EMEA, investors are becoming increasingly precise in their investment choices. “It’s no longer simply a question of investing in Europe, or in an individual country, we are now in a situation where decisions are based on the attractiveness of individual villages and sectors in cities within countries. And we’re not just talking about the usual suspects such as London or Paris.”

The MIPIM Mayors’ Think Tank, where over 80 mayors and city leaders met for closed-door discussions on sustainable urban development and resource management, identified the fact that city administrators are now looking at buildings which produce energy that may help cities of the future become net energy suppliers rather than consumers.

European Commissioner for Energy, Günther Oettinger, attended MIPIM to discuss energy issues and innovation linked to creating smart cities, a project that is supported by a multi-million euro European Commission fund.

The innovation required to develop the smart buildings and cities of the future, alongside new transport infrastructure solutions, combined with a more long-term approach to holding investments, were all evident throughout MIPIM.

“In many markets, investors and owners are focusing more on asset management than has been the case at other times,” commented MIPIM Director, Filippo Rean. “Investors are holding assets longer, so they’re increasingly planning how to use and develop their properties. The building’s energy efficiency, its links to transportation hubs and its flexibility over time, have become more and more important. This is why innovation, infrastructure and sustainability are so central to MIPIM.”

On city stands and inside the Mayors’ Think Tank, there was considerable discussion about the increasing cost of residential housing and the dangers of pricing many city dwellers out of the market. Mayors from as far apart as Turin, Warsaw and Bristol all agreed that they need more residential construction, including ‘affordable’ housing.

True to form, the MIPIM exhibits included some major new building projects. Ghelamco Poland showcased their latest office development in Warsaw with its Warsaw Spire project, a tower adjoined by two adjacent office buildings creating a new vibrant area in the heart of the Polish capital.

A gigantic city of Moscow model drew huge attention from delegates at MIPIM, where Russia’s ambitious Skolkovo scheme – a Silicon Valley equivalent on the outskirts of Moscow – was heavily promoted.

From Brazil, the City of Maricá showcased Niemeyer Oceanarium, one of the last signature projects from Brazilian architect Oscar Niemeyer, who died last year.

And Turkey’s largest private real estate investment, the 1.6 million sqm mixed-use Tema Istanbul project in Istanbul, complete with a €288 million theme park, was presented to the international real estate community for the first time.

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