MIPIM 2012

MIPIM's mood of cautious optimism

2012-03-09T11:15:30Z

Guest Blogger: Bruce Dear, Head of London Real Estate, Eversheds LLP.

"The Sick Man of Europe", Turkey's tag line in the Nineteenth Century. I remember mugging that up for A Level. Well, rather like Benjamin Button, Turkey has got healthier and younger, as the rest of Europe has got older.

Istanbul shopping centres and logistics look very interesting for real estate investors. Turkey has a young and growing population, with money to spend. The biggest mall in the world is in Istanbul.

As the meeting point of the Bosphorus, Balkans and Middle East there is an obvious logistics and light industrial play. Competition is also not as fierce as in the Far East. UK real estate players should take a closer look at Turkey. The Sick Man has become a Healthy Adolescent.

]]> The Turkish stands were genuinely some of the most interesting at MIPIM with no gimmicks-just information and models of the developments.

We held our signature dinner for sixty at Casa Mia last night, with some fascinating guests including the CEO of a major Scandanavian Pension Fund and (the ever ebullient) Steve Norris, now Chairman of Soho Estates.

Steve told tales of running a luxury car business with Sir Ronnie Hoare in the '70s, driving Ferraris and Lambourghini's back from an older, more charming Cannes. Those were the days before the Angry Gods of Architecture hurled the Bunker on to the Croisette. Bardot's Croisette beach pout had made Cannes one big jet set party. Has there even been a better first job than Steves'?

More seriously, where did the guests think the market was going?

Residential was one consensus. The recently published UK Residential Index shows residential outperforming each of the retail, industrial and office sectors over the last ten years.

Particularly powerful is the coming growth of nursing home and healthcare assets. The need for old people to be housed properly, in safe and secure environments, is going to become overwhelming. My partner, William Naunton, is building a strong practice in the area.

Quality and situation of building and stable income are going to be key. Don't expect massive capital growth, the yield compression wave has subsided to a ripple. Don't expect raging rental growth. Just be satisfied with reliable income. The Governor of the Bank of England's watch word for the economy of the next ten years? PATIENCE. (Maybe add a little prayer!).

Bank de-leveraging. OK their lack of lending to the sector will slow recovery, but the unwinding of their loan books will present opportunities. Look at Loan Star's Project Royal Portfolio or Grainger's residential JV with Lloyds (Nick On of Grainger was one of our dinner guests).

My partner Gurj Atwal had been talking to David Atkins, CEO of Hammerson. He is in no doubt that HUK's shares have been bought partly on HUK's sustainability credentials and sees huge value (moral and financial) in sustainability as an integrated part of the properties of the future.

The death of regeneration may have been exaggerated. Especially where entrepreneurial councils meet a flexible private sector. My partner Stephen Sorrell is involved in the First Street Project, a 20 acre mixed use scheme in Manchester anchored by a 50,000 square foot cultural signature building.

It has been a brilliant MIPIM and it's not just the excellent food and wine of Casa Mia that generated a mood of cautious optimism.

A tale of two MIPIMs

2012-03-08T09:47:45Z

Guest Blogger: Nicky Richmond, managing partner, Brecher

I suspect there's another, altogether different MIPIM to the one that I do. One where I go to some of conference events and actually learn something about the industry in a slightly more formal way. Today, for example, I'd like to go to Estates Gazette's Editor's Business Breakfast, which is on the London Stand at 9 am. I haven't been invited, as it happens, although I suspect that the fact that I'm doing this blog might help. Problem is I have a breakfast with a representative of some family wealth offices, so I just can't.

And then later whilst I can take or leave "Dancing with the devil, creating a new model of place leadership with the private sector: the Coventry story" which I file under "special interest," I would really like to go to City of London Corporation - Global Capital Flows into the City of London" at 11 am and then to the "Commercial Real Estate Finance Markets - Recovery or Retreat" (at 4 pm in the Le Corbusier Room if you're interested) where there are speakers from Pramerica, Oaktree Capital and the Global Head of Real Estate at HSBC. Now that's got to be interesting.

]]> But I won't actually get there, because I have a series of meetings set up with investors and funders which will take me out of circulation until the three competing cocktail parties which I've agreed to go to, start at 5 pm.

Which is a shame really, because I think the talks are becoming more important and I would definitely learn something from them.

Up until a few years ago, it seemed to me that no one even looked at the talks. In fact, some people didn't even know that there were any. Attending them was a sign of failure, a sign that you didn't have enough meetings or that you weren't interesting or important enough to be at one of the keynote cocktail parties/long lunch on the beach with bankers/the King Sturge "do" or other similar iconic event. Or a sign that you were in fact, not English. Not having a badge was a badge of honour.

Now, I feel like I'm missing out because in this time of rapid change, information is power and when people of stature are happy to share, I'm happy to listen. So next year, I'm going to actually look at the MIPIM Tough Guide before I actually get here and incorporate some of those talks into my busy schedule. Who knows, I might even see you there.

The excitement of ideas

2012-03-08T09:09:52Z

Guest Blogger: Bruce Dear, Head of London Real Estate, Eversheds LLP.

Well done to Michael Buchanan and Lara Cole, who have completed the cycle2cannes event. Particular congratulations to Michael, who cycled every centimetre of the 1500 kilometre stage event. As I get giddy going upstairs, I am hugely impressed. Unsurprisingly, Michael looks very skinny and red faced (sadly, I can only do the red face!).

I'm delighted to have been invited to the SEGRO lunch at the Radission Blu with 360-spectacular panoramic views of the aqua marine sea.

SEGRO have a strong focus on the German logistics and light industrial market and one of their key investment agent's explains why: "We had our crisis ten years ago and we timed it well! The rest of the world was still booming, which made it easier for us. We could continue to export through our downturn. That gave us a platform to reform our labour laws, to make them flexible and fit for growth, and to repair our distressed property funds without being mired in an international downturn."

Germany's powerful mixed economy makes it a property hot zone-for retail, offices and logistics. Whereas some national property markets are arguably only one city, so in global market terms UK=London, France=Paris and Italy= Milan and so on.

]]> By contrast, Germany has perhaps twenty major hubs: e.g. Frankfurt for offices, Berlin for government, Munich, and the Ruhr Gebiet for industrial. It's a richer and deeper market. Germany is Europe's one super power; driving the European economy and re-moulding the Eurozone. Even allowing for its patriotism, Germany is a major magnetic pole in the global market, offering vital investment options.

I also chat to a Lebanese banker who believes, "oil is the new Greece" and that the world must work hard to democratise the Middle East and reduce Sunni v. Shia tension-particularly between Iran and Saudi-to avoid regional conflict and a $200 barrel. Older readers will remember the "Oil Shock" of 1973/4. I can remember playing with my little soldiers by candle light (fun for me, depressing times for Mum and Dad). Oil will become ever more vital. By 2035, China will absorb annually the same amount of oil as the world produced in 2010. Imagine the consequences.

We are holding our own thought leadership event at 4:00 pm, which I'm chairing, so I'm long on water and serious conversation at lunch, and short on wine.

I start to amble to our event in good time and see people using Cannes properly: playing petanque, skate-boarding, sun bathing and smoking and listening to music in the square. As I walk, I'm going over my opening speech in my mind, and narrowly avoid falling down a man hole; the skate-boarders are not impressed.

Our panel is (frankly) stellar: Bill Hughes, Managing Director of LGP, Peter Cole CIO, Hammerson, Sir Julian Berney, Swedish National Pension Fund and Philip Barrett, Managing Director, Pramerica and I must thank them for creating a fantastic discussion.

Out of respect, I won't attribute views to any individual, but the ideas deserve a wider audience:

1. The ECB may have taken its "big bazooka" of LTRO and blasted €530 billion of liquidity into the European Banks, but there is still fragility, for example, will private creditors buy into a Greek write off deal?

2. The pessimism of Christmas, which imagined a disorderly Greek default about now, and the dawn of a Lord of the Ring's World, were probably over played (but see 1 above, 'You Never Can Tell', as George Bernard Shaw used to say).

3. "I'm bearish about the market, but bullish about the opportunities: new funds, geared and un-geared, PAIFs, the swathe of reluctant owners, such as banks and governments needing partners with equity and public private partnerships. It's also a superb time for new players to come into the debt market, unburdened by historic balance sheet issues."

4. "Optimistic, it's going to be a tough time, but those with good capital and strong management skills will flourish. We are seeing the strongest demand in prime London and Paris real estate that I have ever experienced, fuelled by sovereign wealth and high net worth individuals."

5."Residential is the forgotten sector. It is one the Europe's best performing. In most major European countries, except the UK, the institutions and major players have large residential holdings. They recognise that its high and stable returns make it worth putting up with the regulation and the intense management (partnering with the right manager is key). The UK's big property players should grow their presence in residential. Look at demographics, more single households, and people living longer. These pressures mean the UK, France and Germany need five million new homes in the next five years. They won't get built without new investment structures moving into that market."

6. "It's going to be a stock pickers market. Look for the opportunities and try to have some fun! It's a wealth preservation game, driven by security of income, rooted in prime assets and markets."

7. "Good regulation is necessary, but too much could drown economic activity. We need a more balanced approach from regulators and intelligent preparation and reaction from the industry."

Joan Bakewell says talking about ideas is more exciting than anything else and (though M People and Heather Graham lifting the roof off Cannes' sky tonight run ideas a close second), I know what she means.

And finally (as they used to say on News at Ten), a cracker (as Frank Carson used to say) from Sir Julian Berney talking about people never learning the lessons of Boom and Bust and quoting Mark Twain, "As soon as you realise everyone is mad, the rest falls into place."

More MIPIM anon..

Birmingham's key projects for 2012

2012-03-07T15:35:37Z

Regional editor Stacey Meadwell:

I caught up with Birmingham city council's strategic director of development Mark Barrow yesterday, fresh from arriving in Cannes. He talked about his first impressions of MIPIM this year and the key projects the city is promoting at this years event.

I also asked him about competition from other UK cities here at MIPIM this year.

For more read the Focus Blog

Crime, decline and property

2012-03-07T15:24:15Z

Mipim 2012: Building a Better Britain breakfast talks Crime, Decline and Property

At the VPS and Estates Gazette breakfast held at Mipim this morning a panel of experts discussed Crime, Decline and Property.

EG's regional editor Stacey Meadwell talked to Mike Kiely, director of planning at Croydon council; John Jones, head of Property Management at GVA and VPS' head of sales Gavin Pringle, to get their views on how securing assets also means securing a future and delivering regeneration in the UK

For more read the Focus Blog

MIPIM's positive mindset

2012-03-07T15:16:24Z

Guest blogger: Stuart Fraser, Policy Chairman, City of London Corporation

It's clear that this year's MIPIM has been marked by a far more positive mindset than the recent past. And thankfully this sunnier disposition amongst delegates, firms and cities has finally translated into a change in the weather for the better.

So as I prepare to return to London tomorrow morning it is clear to me that confidence in the global economy is gradually improving. This comes after massive injections of liquidity into the financial system by central banks across the world, which will ultimately impact upon asset prices.

Of course, the London property market has been resilient since the crisis. We've seen a 'flight to quality' in the City that reflects the fact London remains the leading international financial centre.

Indeed, research just completed for the City of London Corporation by Jones Lang LaSalle supports this by showing the high levels of global capital flows going into London's property market. Whether it is Russian, Chinese, or other investors there is a huge appetite to get into the London market.

The completion later this year of the Shard of Glass, the tallest building in London and the European Union, will help to reshape the capital's skyline and showcase how global capital flows - Qatari in this case - can benefit both sides through shared expertise and job creation.

And whilst in the City we have rigorous conservation policies to preserve the unique heritage of the Square Mile, we work hard with developers to make major developments happen.

So I look forward to seeing what comes from our discussions in MIPIM as we strive to ensure London remains fit for purpose when it comes to serving businesses, residents, shoppers, tourists and others. We are the most international city in the world and this week has provided the perfect platform to sell the best we have to offer to influential figures from all corners of the globe.

The market needs to be much braver

2012-03-07T11:17:13Z

Guest blogger: Bruce Dear, Head of London Real Estate, Eversheds LLP.

"Looks more like Clacton than the Cote d'Azur." I'm on the TGV rolling into Cannes and the sky is (well) English coloured and (feel it!) the air is thermal vest cold.

But by the time of my first morning coffee with an institutional client (new funds and investments) at Le Claridge, off the Croisette (don't be fooled by the name-more Le Greasy Cuillere than cordon bleu), the sky is an uplifting Mediterranean blue.

The air is thick with Hang Over Busting fried food and humming conversations at crammed tables: I over hear ideas for hotels in receivership on the Liffey and HQ offices in the Thames Valley. This week the market is made by these hundreds of individual encounters.

What does the market feel like in Cannes? Optimism first. The European banks have just filled their liquidity buckets at the European Central Bank's fire hydrant. They took €530 billion in the ECB's last round of LTRO (long term refinancing operation). They have used the money to pay off their debts, buy government stock and a narrow range of corporate bonds and to improve their capital position. For the moment, the possibility of a European banking failure has been hugely reduced and the Eurozone has a breathing space to make the necessary political and structural reforms.

]]> Quantitative easing has done a similar job in the UK. Without QE, (per Paul Tucker, Head of Financial Stability at the Bank of England), "the UK economy would have been destroyed" (think of that next time you moan about QE causing low interest rates on your savings).

So, (surprisingly given the current reputation of all bankers), Central Bankers have actually saved us from the economic abyss. We now have a stable (mildly recessionary) economic platform, subject to some material risks (especially Greek default), but not about to sink. It's always dangerous to make predictions, but I think that this slow stability will now obtain throughout this year and next (write to me care of EG when we have Lehmans Mark II in October!).

How should the Property Market use these days of relative calm?

Well, now a dash of pessimism in your Cappuccino. We are living through a long deleveraging. Banks aren't lending and governments aren't spending. This means that the two main engines of the real estate market are not just slowing, but have been put, quite deliberately, into reverse.

OK you say, pessimism's easy, but what should we do? Well, here are two possibilities and I will post many more this afternoon, once we have held our major Future of the Market Seminar (over a hundred key attendees and panellists from L and G, Swedish National Pension Fund and Hammerson)

1. Look to new products. Turning your property units trusts and life fund family holdings into PAIFs must make eminent sense. I expect an avalanche of PAIFs in the first three quarters of next year. PAIFs widen your market of investors, taking away the tax disadvantages suffered by pension funds investing into vehicles and opening the ISA and SIPP market. They and other new funds products, such as FAIFs, offer one weapon in a debt and investment constrained market.

2. Try to bring the private and public sector together. The private sector (particularly the major institutions) has the equity and the public sector the assets. The upfront capital value boost, (initially at least), lower than PSBR costs and potential rent share benefits of partnering with the private sector should be highly attractive to the public sector. In my view, the market needs to be much braver and move faster on this. Everyone will get the best partners by dancing early.

We are involved on both sides of this: my senior real estate partner Stephen Sorrell is involved in the ground breaking regeneration partnership between Nottingham Council, Barclays and Waites, my partner Steve Manson and I have been involved in some major structured institutional deals to release large tranches of capital to government and quasi-government entities(universities, social housing bodies etc) and in Birmingham (the UK's only City enterprise zone) my partners Gurj Atwal and David Jones are driving forward a number of major public/private regeneration schemes.

The NAO has just published a report wanting to see better and more adventurous use of the government covenant and there is much that local authority CEOs and HM Treasury (by removing internal barriers) can do to promote the private sector into the public so as to fill the gap left by de-leveraging banks and austerity policies.

There is a chance to speed this process up here at MIPIM. The local authorities are here in force talking to the private sector and there is a sense of urgency in the southern air. Time for the next coffee...

MIPIM day 2: where's my jumper?

2012-03-07T10:35:02Z

Guest blogger: Nicky Richmond, managing partner, Brecher

Again, Manchester. I actually come from Manchester and I wasn't expecting so much of my home town to come to me, in Cannes. First off, the Manchester-sponsored "Funding the Future" lunch debate with keynote speaker Jim O'Neill, chairman of Goldman Sachs, billed as "the man who gave BRICS to the world". I really wanted to hear this. I tried, I honestly did, but there were no seats, it was lunchtime and we hadn't eaten.

Wandering into the Bunker, it was still fairly quiet and the lunchtime exodus meant that you could have a good look at the stands. Obviously, we were going to end up at the London Pavilion but, out of a sense of duty and not least to justify the unbelievable cost of the MIPIM pass, we walked round the rest of it, or at least the central aisles, trying to work out how much people had spent.

]]> You can generally gauge how well a company is doing by the size of their stand. Big is good, although a couple of the less, shall we say profitable firms, appeared to be going for broke, looking for suitors perhaps?

One of the more surreal stands was that of AFIRE. With a bizarre display of large photo portraits of George Bush, Gordon Brown and Colin Powell, I wondered what they were actually selling. Have a look- www.afire.org. I suspect that whatever else happens at the talks given by this not-for-profit organisation, there is quite a lot of "not my fault" as well.

I picked up some of the EG lunchtime debate where David Marks, of client Brockton Capital, described London as a city state - interesting. I wonder whether he was thinking of the mediaeval Italian version. It didn't end well for them and I'm not sure I'm going to be bandying about that description any time soon. I think it's an interesting concept though. And he is spot on: London, certainly on investing terms, is becoming ever more distinct and separate from the rest of the UK.

Standout events : cocktails with BDO. Bearing no traces of its former life as the location for the Lloyds bank party, this was mobbed. Helped by the fact that nobody wanted to be standing in the Arctic gale, it seemed like everyone who was everyone (or at least everyone in my corner of Central London) was there. Sad to leave, I was escorted by one of my favourite bankers to the Colliers cocktail party, on their boat, then off to joint dinner with GVA. My client Chris Lanitis of Amazon Properties, whose car has just been written off (not his fault), was quite happy to find himself sitting next to Neil Dobson of Aviva, his insurers. Handy.

The MIPIM conversation? Who's lending, who's not, but more importantly, where can I buy a pullover.

London - an award winning city

2012-03-06T15:09:13Z

Guest Blogger: Stuart Fraser, Policy Chairman, City of London Corporation

Tomorrow morning I will be picking up an award that recognises London is the city to be in - not just in 2012 but for the foreseeable future.
This is an exciting time for the capital as the eyes of the world turn to us with the Diamond Jubilee looming. That's before I even mention the small matter of the 2012 Olympic and Paralympic Games.
It's fitting therefore that London has achieved record status at the prestigious fDI Intelligence awards, securing eight of the top places including the European Cities of the Future category. I look forward to picking this up on behalf of London & Partners.

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For example, take transport infrastructure. We are seeing £16 billion spent on Crossrail, £5 billion on the Tube upgrade, major Thameslink rail improvements and a new station at Blackfriars. These will all add much needed capacity as demand to operate in London continues to grow.

Large sums are also being spent on improving utility infrastructure as well as retail and hotel provision in the City. This is all vital to ensure London remains a world leading destination for highly skilled individuals from across the globe to live, work and do business.

We've still got work to do and I certainly want to see action from the Government to increase our aviation capacity, particularly with those growing centres in the East, which are only going to increase in importance.

But we're starting from a strong base and it is clear that London continues to be viewed - rightly - as the city of the future.

We mean business this year

2012-03-06T10:01:37Z

Guest Blogger: Nicky Richmond, managing partner, Brecher

At least it's stopped raining. No one likes the rain at MIPIM. It means you have to go into the Exhibition Hall, universally known as the Bunker, and that just wouldn't do. Ah, the Bunker. You can tell who's up and who's down by what is plastered to the front of it. I'm looking at a combination of Cushman & Wakefield, The Future Starts in Skolkovo (your guess is as good as mine) and the Qatar Urban Forum. I can also see a tiny little bit of Manchester and a little corner of Stockholm. You see, it's very international here.

Reading the MIPIM NEWS with my coffee this morning, it looks like the Russians are getting all the coverage. They've certainly spent the money. The headline is "Success story in Russia - overcoming Stereotypes" - with all the news coming out of the Russian elections, I expect they have their work cut out for them.

You have to look quite hard in the magazine for anything about the UK, notwithstanding that it is still one of the most active and established property markets.

When I first came to MIPIM, 16 years ago, I'd say that it was 80 percent British. It may actually have been more than that. A reflection of the - as then- fairly sleepy European property market, the Brits dominated. So did the banks. I regularly used to host lunches (I use the term loosely - they often drifted into dinners) for representatives of 20 or so banks. They were fairly raucous affairs and no business was actually done - it was all about the networking. Even if bankers are allowed to come to MIPIM these days (and few are) they will be keeping a fairly low profile and certainly won't be hosting any large parties on the beach, or hiring any yachts. It wouldn't look good in the Daily Mail.

But there is money here, and I'm here to talk to it. You may have heard many people say that MIPIM is better now; that the people down here actually want to do business and that it's more serious. I'd agree with that. After my various meetings with the money during the day, I'm jointly hosting a dinner with GVA, at which there will be represented borrower, lender, credit, mezz provider, lawyer and valuer. All of us want to know who else is there because time is precious and this year, we mean business.

EG's long road to MIPIM

2012-03-05T17:42:55Z

EG's regional editor Stacey Meadwell:

Those who opted to take the train to MIPIM have almost challenged the Cycle to Cannes lot for speed in getting to the south of France.
This year's two hour leg to Paris turned into four and a half hours as a trackside fire halted Eurostar services then pushed trains on to slow local routes.
Still passengers got plenty of time to admire the snowy countryside then sleet and rain en route.
Once in Paris it was a mad dash to across the city to get seats on the few southbound train left.
As I write team EG is Toulon-bound where a connecting train is expected to drop us in Cannes at 10pm. But we are the lucky ones some, I read on Twitter, will only make it as far as Marseille tonight and have to bunker down there until the morning.
Let's just hope the sun is shining in the morning to put all the travel troubles in the shade

Stormy start to MIPIM

2012-03-05T16:41:41Z

Guest blogger: Stuart Fraser, Policy Chairman, City of London Corporation

I hear the weather in Cannes took a turn decidedly for the worse yesterday as sunshine gave way to thunderstorms. Let's hope it's not a sign of things to come as I prepare to leave London later today for my fourth and final appearance at MIPIM as policy chairman at the City of London Corporation.

The outlook for the property market and economy remains decidedly mixed but London - and particularly the Square Mile - continues to be resilient even in these tough times. I'm looking forward to hearing the views of Sir Edward Lister, Deputy Mayor of London, during his keynote speech at the London Stand this afternoon - although he has a tough act to follow after Boris Johnson last year!

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Both decisions are a useful reminder about who London is actually competing against. We are a Global City - and that means New York, Hong Kong, Singapore and increasingly Shanghai are our peers.

This means we need to go out to sell our offer to the world - and where better to do so than MIPIM. Delegates and stands from all corners of the globe provide the perfect platform to network with important players across all cross sections of the real estate industry - from architects to investors, developers to lawyers. I look forward to meeting as many of these individuals as possible.

Now let's just hope the weather improves.

Stuart Fraser is Policy Chairman at the City of London Corporation