MIPIM 2013: Early signs of positivity

As the doors swing open on the world’s biggest property jamboree, real estate professionals attending the week-long event already are talking up positive market sentiment.

MIPIM, the world’s biggest real estate conference held each year in Cannes, France, got under way today amid a renewed sense of optimism for the sector.

The week-long event, widely regarded as a barometer for sentiment among real estate professionals, is anticipated to attract 20,000 participants, a slight increase on last year’s total.  While that total encompasses a wide array of real estate-facing professions, within it is expected to be 4,300 participants considered by MIPIM as ‘investors’.

Peter Rhodes, managing director of Reed Midem, the organiser of the event, said despite recent tough years, MIPIM continued to be a “barometer for the industry”, providing “a concentrated environment in which to network”.

The early deluge of company research and announcements stored for release during the conference has offered indications of improving market sentiment as well. In one example, property services firm Cushman & Wakefield found that lending to European real estate should increase by 22 percent in 2013 following an increase of 29 percent over the past 12 months, thanks in part to an increase of debt funds being raised and new entrants to the market outside of traditional bank lenders.

In a survey of 109 lenders, Cushman & Wakefield said increased liquidity levels should be felt widely, albeit with a retained focus on core assets and within lenders’ own markets. The firm’s findings mark a stark contrast to its announcement on finance at last year’s MIPIM, when it said a debt shortage was stifling the European real estate recovery.

Michael Lindsay, partner and head of capital markets for Europe at Cushman & Wakefield, said: “Since the fourth quarter of 2012, we have witnessed a significant improvement in lending conditions across Europe. For the right assets, healthy competition exists amongst lenders, which is often delivering pricing not seen since the financial crisis.”

Sentiment also was on the up from US-focused delegates at the conference. Chris Ludeman, president of capital markets at CBRE, the world’s biggest property services firm, reiterated that there remained an emphasis on low-risk assets, but he added: “We expect to see market conditions normalize in 2013 as systemic fears recede, the labor market improves and global growth picks up.”

Ludeman continued: “Improving market conditions in the US will create a positive environment for riskier property assets, though we have not yet seen materially greater bidder interest in large value-add deals in secondary markets. Stabilized assets that are viewed as a commodity—meaning the asset attracts tenants primarily through rate—continue to be priced at value-add returns and remain one of the best risk-adjusted return opportunities in today’s market.”

While the conference’s location in France means Europe is always the best represented region, MIPIM is expected to attract more participants from Asia, with this year’s event predicted to house more than 70 companies keen to either explore investment opportunities in the region or to entice foreign capital back home. Robert Lie, managing director at CITIC Capital, the Hong Kong-based private equity real estate firm, said: “It is encouraging to see a strong interest in Asia at MIPIM. This will lead to a better understanding of the increasingly prominent position of Asia in the global property markets.”

MIPIM traditionally is located in and around Cannes’ famous Palais des Festivals exhibition hall on the beach-facing Boulevard de la Croisette, also known for housing other industry events like the Cannes Film Festival. While there is a conference program in the Palais, much of the focus is on networking in various hotels, restaurants and bars along the Croisette itself or on the yachts moored at the nearby Jetée Albert-Edouard harbour.

Indeed, while MIPIM expects approximately 20,000 delegates to walk through its turnstiles, at least that figure again typically turn up in an unofficial capacity.