Real estate

GUEST ARTICLE: ‘Safe optimism’ reveals a sense of hopefulness for the real estate sector

  • 12 Apr 2024

In many ways, MIPIM is the opposite of ‘Fight Club’. What happens at MIPIM definitely does not stay at MIPIM. These are the words of Tom Jansons, Development Director (pictured below) and Andy Jansons, MD and founder of Jansons Property, who write the following article…

In fact, what happens at MIPIM tends to set the scene for the real estate industry for the next twelve months. Which is why, as the dust settles on MIPIM 2024, this is the perfect moment to reflect on the themes, discussions, and trends we witnessed at the real estate industry’s largest global forum earlier this month – not just in the official talks and discussions, but in restaurants, around coffee tables and on the walkways of the prestigious Cannes event.

Real Estate

Nearly 27,000 attendees descended on the beautiful French seaside town this month to participate in the 34th annual property conference. This year there were even more stands and pavilions (340), taking up greater space and with new representations from the Middle East, Southeast Asia, North America and more. This increased popularity was one of the first signs of a key theme from this year’s conference – the idea that the real estate industry has finally turned a corner.

That’s not to say that there was dancing in the aisles. The industry is still, very clearly, just at the beginning of the healing process but the over-riding feeling we came away with was one of ‘safe optimism.’ The feeling is that people are not quite ready to take risks yet, but in safer waters there is a sense of returning hopefulness.

Concerns about geopolitical tensions, elections, inflation, and monetary policy had not gone away though. It’s clear that investors will take time to regain confidence in the stability of the market and that is an issue that isn’t going to disappear any time soon. There was, undoubtedly, still a sense of nervousness in the air. There is not a lot of movement in the market just yet, but there is a cautious expectation that things will pick up again by next year, or even at the end of this one. We are on the road to recovery, but we should expect it to be a bumpy ride.

The sentiment at MIPIM 2024 was, overall, a positive one though. Certainly, there was a greater sense of cheerfulness that the worst is over for the real estate industry. There was unquestionably more positivity this year than at last year’s event. In fact, I would say more than there has been since the pandemic in 2020, or since high inflation led to our elevated interest rates and the emptying of UK offices with the increase in hybrid working.

Hybrid working was on people’s minds at MIPIM, or rather the lack of security in office space. The change in how and where we work led to a lot of ‘beds and sheds’ talk among the delegates. There is an overriding sentiment that residential property, or warehouses that form part of the logistics chain are a safer bet this year than traditional workspaces.

The lack of faith in offices that was felt at the conference is, naturally, hard to quantify, but a survey from the global real estate services and investment firm CBRE released a few weeks prior to MIPIM was able to put numbers to the trend. For the first time this year, logistics and residential properties surpassed offices as the preferred asset class for oversees buyers, according to the survey. 34% expressed a preference for logistics and 28% for residential, compared with only 17% who favoured offices. This corresponds perfectly to the sentiments expressed at MIPIM.

Another key area of discussion was the question of where investment opportunities could be found in 2024. Views varied in different markets and asset classes, naturally, but there were suggestions that prices are beginning to bottom out. Even so, there was a clear shift in focus from capital appreciation to a different strategy of creating value in assets. But what really stood out was the feeling that it’s impossible to apply broad brushstrokes to such an uncertain industry.

With a strong feeling of risk-aversion, investors are focusing on ‘pockets of opportunity’ – a phrase that cropped up everywhere at the conference. Individual opportunities, focusing on what you know, falling back on ‘tried-and-tested’ areas were favoured rather than looking for trends or mass market movements. Understanding what’s working and grasping those pockets of opportunity seem to be the way forward.

Yet there was one, definite, area where confidence is growing namely, overseas investment in the UK. The UK was discussed frequently and seen as a key investment area for foreign investors. A deep market, convenient accessibility, and minimal local competition were some of the reasons given for the UK retaining its

status as the top European cross border real estate destination. Again, the CBRE survey concurs with this – European investors have the highest return expectations for the UK and London is the most attractive city for cross border investment. Similar sentiments were expressed from further afield as well. All in all, a vote of confidence for the UK and the anticipation of overseas investment coming our way.

MIPIM 2024 was, as always, a fascinating event and this year the 6000 British delegates seem to have come away with a refreshing feeling of cautious hopefulness. It is clear that the real estate industry isn’t quite out of the woods just yet, but with ‘pockets of opportunity’, inbound investment, and ‘safe optimism’, we do appear to be, finally, on the right track.

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