Real Estate Eyes Future At MIPIM 2009

Cannes | Some 18,000 delegates, spanning all sectors of the global real estate industry and representing 80 countries, leave Cannes today saying that MIPIM confirmed their belief that €15 trillion international property industry remains a solid long-term investment asset and that the industry is getting back to basics.

Summing up the mood in Cannes, senior executives suggested that the global financial downturn is encouraging real estate companies to focus their attention on property fundamentals rather than complex financial engineering. "The quality of underlying real estate will once again be the key to performance," says Michael Rodda, the partner in charge of cross-border retail investment at Cushman & Wakefield.

"This was a more intense MIPIM than I have seen in the past two or three years and I think the event was better for it. The major players from the key European and international markets were in Cannes. The financial climate has concentrated people's minds so people really came here to discuss business. I'm not really interested if there are 18,000 or 180,000 people at MIPIM. It's the quality of people that matters and we certainly saw the decision-makers here this week," adds Tony Brown, CEO of Investment Management at Lend Lease.

Despite the credit crunch, MIPIM continues to attract international investors en masse. Delegates from such industry heavyweights as Goldman Sachs, Deka Immobilien GmbH, Aviva Investors, Aberdeen Property Investors and SEB Investment were among some 3,500 investors and end-users who travelled to Cannes.

"For the medium to long-term, real estate remains an important asset class for investors. Even today, the declining value of property in certain sectors and in certain territories means there will be interesting investment opportunities for those with the foresight and courage to seize them," says Robert Falzon, CEO, Pramerica Real Estate Investors, Europe.

One region where opportunities appear to exist is in the Baltic States. Re&Solution, a provider of integral real estate, financial and investment management services in Lithuania, Latvia, Estonia, Ukraine and Denmark arrived in Cannes looking to attract inward investment into the Baltic countries. "A lot of cash-flow properties and those intended for development, including almost all prime properties, owned by developers, are now for sale in the Baltic," reports Re&Solution Group CEO, Ricardas Cepas. "The financial pressure and need to strengthen their short-term financial liquidity position has forced property owners to offer many attractive investment opportunities," he adds.

The more bullish amongst the investment community at MIPIM predict that real estate will bottom out in 2009, with Western Europe's 'Big Five' -- Germany, the UK, Spain, France and Italy -- returning to popularity as investors seek the security of mature markets in preference to the higher returns that have been offered in Eastern and Central Europe. France, the United Kingdom and Germany were the three most represented countries at MIPIM 2009.

Often referred to as the 'Davos' of international real estate, MIPIM 2009 brought together mayors and city administrators from some 200 cities and regions including Moscow, Paris, London, Budapest, Berlin, Madrid and Toronto. At the inaugural closed-door Mayors' Think Tank, discussions focused on policies to improve the urban environment and the challenges facing cities as they map out sustainable development strategies.

For MIPIM Director, Nadine Castagna, international cities are an integral part of MIPIM's DNA. "The fact that London, Moscow, Berlin and Madrid are among the top 10 largest MIPIM exhibitors, shows how cities are so often the catalysts for major real estate projects. And because they are at the heart of some of the world's most urgent economic, social and environmental issues, it is logical to provide administrators with a Think Tank forum to debate future urban strategies." Among the mayors attending MIPIM, Boris Johnson, Mayor of London, addressed delegates with a keynote speech highlighting the economic importance of the 2012 Olympic Games for the British capital.

High-profile projects from cities and regions were in abundance at MIPIM 2009. France's GrandLyon urban community showcased its office real estate programme for the Part-Dieu business area, while internationally-renowned architect, Lord Norman Foster of Thames Bank, unveiled his plans for the Hermitage tower in Paris' La Défense suburb and Montreal exhibited plans to expand its Technoparc in the Ville St. Laurent area. U.S. architects Gensler unveiled the 632m Shanghai Tower which is due for completion in 2014 and which aims to receive certificates from both the China Green Building Committee and the U.S. Green Building Council. From the Federation of Russia, the Federal Agency of Special Economic Zones Management (RusSEZ) actively promoted two new special economic zones of tourism and recreation - 'Anapa Nova' in the Krasnodar region and 'The Gateway of Baikal' in the Irkutsk region.

In an interesting development this year, the Italian Defence Ministry became a first time exhibitor at MIPIM, with the Deputy Defence Minister, Guido Crosetto, present on the exhibition floor. Defence ministries across Europe possess significant amounts of real estate and land and are now looking to maximise their value. Speaking at MIPIM, Mr Crosetto said "you have to remember that most of these buildings were either not built for military purposes at all, or were built for military requirements of different epochs, and are therefore not suited to military uses today. Many of them are city-centre sites, and many of them, such as the Arsenale in fact takes 15% of the cityscape of Venice, so it's a huge site." The Ministry noted that armed forces buildings have high potential for conversion into residential, office, logistical and tourism real estate projects.

The French armed forces were also present at MIPIM. The French Navy frigate Le Guépratte steamed into Cannes at the start of the week to host a VIP dinner for some 100 'pioneers' who have attended all 20 MIPIMs.

"It was very special to be able to honour the delegates who have remained loyal to MIPIM over the years," said Reed MIDEM Deputy Managing Director Thierry Renault. "This has been one of the most challenging years we have ever faced because our clients are under real financial pressure. At the same time, it has been one of the most dynamic events we have organized because everyone is looking at the future of the business and preparing for the future today, at MIPIM."

MIPIM 2010 will take place in Cannes from March 16 to 19, 2010.