World's leading property market attracts investors

Thousands of delegates from the real estate market will gather in Cannes in March to find out for themselves. Where are the investment opportunities in 2009? Stephen Neale reports

It is billed as the biggest event for the real estate sector in 20 years. Investors, developers, architects, hotel groups, public authorities and property associations from more than 80 countries arriving, in Cannes. They will come to assess new projects, size up market potential and consider the future.

But there will be one question on almost everyone’s lips at MIPIM in March. Does real estate still rank on the investment sector’s list of priorities? The amount of investors who will attend offer a clue. Two months before the world’s leading property market begun, and more than 1,170 delegates have already registered their attendance.

Major investors
Representatives from 400 major investment companies such as Deka Immobilien, CB Richard Ellis Investors, Evans Randall, GIC Real Estate, Goldman Sachs, Morgan Stanley, Pramerica RE Investors and Unibail Rodamco, are arriving in Cannes to signal that good opportunities still exist in 2009.

Senior investment executives confirmed that the property sector remained a valuable element of an overall portfolio. Robert Falzon, CEO at Pramerica Real Estate Investors Europe explained: “These are certainly challenging times. And it’s exactly at such times that information is crucial and it is important to meet, communicate and exchange views with fellow real estate investors and operators.

“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.” The message from MIPIM 2009 is unequivocal: international property trade is primed for growth.

But MIPIM is about more than sound bites in a recession. Since its launch in 1990, the importance of the event has grown each year. In 2004, the event attracted 15,157 participants from 67 countries. There was a six percent rise in the number of participants in 2005 and a 12 percent rise in the number of end-users and investors.
In 2008, at the 19th edition of MIPIM, the market will welcome 29,318 professionals from the real estate sector, representing a total of 89 countries.

Improved services
A 300-strong organisational team has worked throughout the year to improve the quality of services and facilities available for participants arriving for the 2009 event from March 10-13. Chris Morrish, managing director of GIC and regional head in Europe of GIC Real Estate, described how MIPIM’s success was based on its ability to provide an opportunity for investors to meet counterparts from around the world, in one place, over a few days. “This makes efficient use of my time,” he said. If visitors to MIPIM have increased, so too has the scale of the event’s actual floor size, which has consistently grown. Today it covers a net exhibition area of more than 27,000 sq m, divided into 17 halls in the Palais des Festivals, beside the sea, and along the entire length of the Harbour of Cannes. The area for meetings and events has grown too, spanning almost 10 hectares into the heart of the city.

Mike Evans, chairman and chief executive of Evans Randall, said the scale of the event offered a genuine opportunity to assess value levels within the market. “In the past, and at its best, MIPIM has encouraged and enabled the development of new financial techniques, structures and partnerships, taking advantage of the different characteristics of particular markets and territories,” he explained. “MIPIM can play a vital role, as it has done historically, in helping the sector address this very demanding but nevertheless exciting market.

“Our expectations are that the important players in the international investment and development community will use MIPIM to kick-start their activities.” With delegations from Moscow, Paris, London, Manchester, Berlin, Brussels, Madrid, Oslo and Toronto, city administrators remain firmly committed to promoting their cities on the international scene at MIPIM. They arrive to meet with international investors and hold top-level discussions on future urban policy.

Cities and sustainable development
To meet the concerns of local communities, MIPIM 2009 will lay on a series of events investigating whether cities can square business development with a sustainable development policy. A renewed agenda, with an official programme of 35 conferences, and four sessions of speed matching, offering quick, targeted presentations of some twenty real estate projects and investment funds.

The programme is to include the 'Mayor's Think Tank,' a debate of ideas for a panel of 80 mayors meeting in private, as well as two sessions in the conference programme. The MIPIM Mayor’s Summit will offer an opportunity to discuss policies to improve the urban environment. The presence of government officers had a particular significance due to the leading role of local authorities in supporting the property sector in the current downturn.

Many authorities are looking to advocate ambitious, long-term projects, which may help regenerate communities during the ongoing global downturn. Jackie Sadek, Chairman of the British Urban Regeneration Association, said the real estate sector could play a crucial role in maintaining cities’ economic future. Pointing to successful regeneration projects, he highlighted the World Financial Centre in New York, Canary Wharf and Paddington Central in London and the La Défense Paris suburb.

“All have their origins in enlightened decisions taken in conjunction with partners during depressed points in the economic cycle, when lower values enabled the gestation or initiation of long-term development planning,” he said.

“What is certain is that when you are trying to attract new real estate investment into your backyard, you aren’t going to do it by staying at home and hoping someone will knock on your door. All major international cities are competing for investment.”

Regis Baudoin, Managing Director of the Paris Ile-de-France Regional Development Agency, confirmed participation at MIPIM 2009 reflected a commitment to ‘energise Greater Paris’ in readiness for after the crisis. “We want to focus attention on the region’s tremendous real estate opportunities,” he said. “Everyone looks to the winner during difficult times. The region is preparing for the future and for the emerging economic cycle by boosting its presence and visibility at MIPIM.”

Fierce competition
Competition between major international cities to attract investors at MIPIM is fierce.
Many other local authorities, including London, Manchester, Moscow, Budapest, Berlin, Brussels, Madrid, Milan, Athens, Oslo and Toronto aim to appeal to new partners with their ambitious cash-backed projects. The City of Cologne aims to draw investment by focusing on the region’s business potential.

Dr. Norbert Walter-Borjans, Director of the Department for Economic Development and Real Property, in Cologne, said the group’s presentation was focused on the international appeal of the City to forge partnerships with the real estate sector.

Major cities are showcasing their urban development policies by highlighting long-term strategies.

The renovation of brown-field sites or historic neighbourhoods is on the development agenda in several European cities. Hamburg offers a joint port public-private investment renovation plan for 2020, known as HafenCity, which is one of the largest of its kind in Europe.

The Paris Region is exhibiting the development plan for the Ile Seguin, a development to urbanise the former Renault car-making plant. The proposed scheme will create a new neighbourhood offering a complete range of housing, offices, shops, cultural and education facilities. Budapest is revitalising its city centre by upgrading the tourism, culture and shopping real estate infrastructure.

London 2012
Other cities are using a cultural or sporting event as a springboard for urban development. London is promoting its infrastructure for the 2012 Olympic Games, while Milan has plans for the Universal Exhibition, which it will be hosting in 2015.

Others aim to upgrade their business parks. The GrandLyon urban community will be showcasing its office real estate programme for the Part-Dieu business area.

The Oxygen and Incity Towers are due to come on stream in 2010 and 2012 respectively, completely transforming the landscape of France’s second-largest city. The city of Montreal's plans to expand its Technoparc in the Ville St. Laurent area will also be on show. The park is designing and building office space to accommodate R&D companies specialised in the life sciences, aerospace, telecommunications and the environment.

Since its launch, MIPIM has encouraged corporate tenants – the companies who will eventually take possession of buildings – to take the opportunity to discuss their requirements with the international architects, developers and investors.

For Brice Marguet, Director of Development in France and North Africa at the InterContinental Hotels Group, MIPIM 2009’s importance is based on the need to maintain and develop key business contacts and as a forum for discussion of how best to prepare for the end of the economic crisis.

He said: “It’s exactly in a difficult context that it appears to me to be essential to reinforce our contacts with the professionals in the real estate industry in order to adapt, react quickly and move forward. The scale and global spread of economic events should be enough to make this year’s MIPIM a generator of new ideas.”

New markets
If innovation is welcome, so is the opportunity to reach new markets. MIPIM 2008 hosted 89 countries, 9,744 companies, 2,687 exhibiting companies, 1,953 development companies, 2,076 investment companies, 136 hotel companies, 626 local and public authorities and 613 journalists.

For its 20th edition, MIPIM developed a special area covering over 2,700 sq m dedicated to Russian exhibitors, located inside the Cannes marina. Among the major companies who had previously exhibited and who will be housed in the Russian village, the following confirmed their attendance several months before the event begun: the Ministry of Economic Development and Trade, the Krasnodar region, the Moscow region, the developers JSC Ugra Stroy and RussianLand, the executive committee of the Kazan municipality and the city of St Petersburg.

New exhibitors, such as the developers AFI Development and Terra Nova, Eurasia City LLC and the Foundation Gazpromipoteka, selected this venue for their first stand. Last year, 3,000 of the 30,000 participants at MIPIM came from Russia, representing more than 700 companies. Although distributed throughout the 17 exhibition halls, the actual surface area used by Russian exhibitors covered 3,831 sq m net - 10 percent of MIPIM’s total exhibition area.

The new Russian village concentrated most Russian stands in Port Side, and Harbour one to four halls, making it easier to access the property on show this year, and raising the visibility of this high potential market. Generating more new ideas is a unique gathering of six of the world’s leading architect as part of its 20th edition conference programme.

Leading architects
The internationally renowned Anglo-Iraqi architect Zaha Hadid was the first woman to win the Pritzker Prize in 2004. Recognised for her deconstructivist projects combining design, landscaping and cutting-edge technologies, she has designed a broad range of works in various countries.

Daniel Libeskind won the first Leone di Petra prize at the Venice Biennale in 1985. The designer of the Jewish Museum in Berlin, he has worked on urban and cultural projects in many countries, demonstrating a multidisciplinary commitment, especially to the duties of memory. His practice was chosen to rebuild the World Trade Centre in New York, a project carrying a high political and emotional charge.

Thom Mayne, co-founder of the influential Southern California Institute of Architecture, the Austrian architect and founder of the Coop Himmelb(l)au, Wolf Prix, and the Japanese architects and founders of the Sanaa collaborative practice, Kazuyo Sejima and Ryue Nishizawa make up the unique collaboration of experts expected to take to the stage on Wednesday, March 11 at 4.15 pm to discuss design and urban planning issues.

“Architecture has an absolutely critical role to play in the design of our future cities,” comments Thierry Renault, Deputy Managing Director of MIPIM organiser Reed MIDEM. “The debate on urban development can’t take place without the input of architects which is why we have brought some of the world’s best to Cannes.”
If sharing new ideas is part of MIPIM’s strength, developing and promoting best practice is crucial too.

The role of efficiency in both the supply chain and the real estate sector has never been more important as industries look towards making savings. Classic developments are increasingly dominated by green, environmental practices that appeal to both end users, industry accountants and consciences. Green is a theme that features strongly in the MIPIM Awards 2009.

MIPIM Awards
The jury - chaired by Peter Goodacre, President of the Royal Institution of Chartered Surveyors - met back in January to select the 15 nominated finalists. Although the aim is to honour real estate projects featuring architectural achievement and innovative techniques, those that addressed efficiency savings and environmental benefits were rated highly.

Judges praised buildings that successfully addressed energy efficiency, waste reduction and modest water consumption. Projects competed in five categories:  business centres; refurbished office buildings, residential developments, hotels & tourism resorts and green buildings. The award winners were to be chosen by the real estate professionals attending the event over the four days in March.

They will be disclosed during the much-awaited Awards Ceremony to be held in the Grand Auditorium of the Palais des Festivals de Cannes at 7pm on Thursday, March 12. Previous winners include Council of Europe – New General Office Building (France) – Business Centres; Unilever House (UK) – Refurbished Office Buildings and Projekt Hotel Wasserturm / Hamburg Sternschanze (Germany) – Hotels & Tourism Resorts.

For the 2009 winners, MIPIM represents a defining moment. Those delegates identifying new opportunities at MIPIM 2009 could herald the start of something even bigger.