WFW at MIPIM 2017 – a post-script…
Ranjeev Kumar gives his thoughts on MIPIM 2017
Having spent a week in delightful Cannes, attending what is undoubtedly the highlight of the European real estate calendar, here are some brief observations of the WFW real estate team:
- MIPIM more than confirmed its position as the world’s largest real estate event. The sheer numbers were staggering: 28,000 participants, 2,600 exhibitors, 90 countries represented, 5,300 investors and over 100 conferences. It remains a masterclass in planning.
- The mood at MIPIM was generally positive (no doubt enhanced by the glorious sunshine) and a distinct “keep calm and carry on” attitude prevailed. Despite the obvious turbulence on the horizon, participants seemed relatively bullish about opportunities and prospects. At the moment, it seems like not even geopolitical concerns or fragile economic growth can dampen investor confidence in real estate.
- In broad terms, participants said that they remained keen on UK, Germany and France, but were now also looking at doing more in markets including Ireland, Spain, Italy, Greece, Portugal and the Netherlands.
- The UK and, in particular, London and Manchester, were very well represented. There was certainly a lot of buzz and excitement in and around the London marquee. Whilst London remains the most popular European city to invest in, there was also a lot of interest in UK regions and participants seemed very willing to search for attractive yields in the regions and to move up the risk curve generally. Germany has, however, taken over from the UK as Europe’s investment haven, according to recent market data.
- The UK real estate market continues to benefit from a weak pound, as regards inward investment, with overseas investors (including US funds) looking to invest increasing amounts in UK real estate as they chase yield in a relative safe haven. The flight to quality continues.
- Debt finance seems to be very much available, and the emergence of alternative finance providers such as non-bank financial institutions and specialist debt funds is contributing to an increase in overall supply. The broad consensus seemed to be that liquidity remains high. There appears to be no shortage of capital allocated to real estate, and there may even be excess liquidity for some parts, such as core.
- Participants seemed relatively relaxed about the potential for the return of inflation or a rise in interest rates (and, as regards the latter, many subscribed to the “lower for longer” mantra), possibly buoyed by strong market fundamentals, despite rate rises having the potential to cause a decline in capital values (perhaps less of a concern to long-term investors).
- A number of participants shared their views on the “hot” real estate sectors for 2017, with multi-family housing, logistics, student accommodation, co-working office accommodation, and data centres often cited. Offices in Central Eastern Europe were also mentioned, in line with the increasing requirement for back offices. There were also some very interesting discussions relating to the interface between real estate, energy and infrastructure, as well as some exciting news and developments in the areas of modular development, innovation and proptech, including in response to the demands and challenges of demographic changes, urbanisation and social change.
We retain a positive outlook and very much look forward to building on existing relationships and transactions across our 14 offices in 11 jurisdictions. We also look forward to meeting with clients, contacts and friends at MIPIM 2018. If you would like to discuss any of the issues discussed in this short note, please do not hesitate to contact Partner Ranjeev Kumar, on 020 7814 8413 or at email@example.com