Europe: MIPIM 2008

Storm Clouds, Not Just in Credit Markets

We all expected the credit crunch to cast a shadow across the start of this year's MIPIM real-estate conference starting in Cannes tomorrow.

In fact, it was a much more literal storm that kept the CNBC crew, and hundreds of other travelers, stranded at London City airport amid 80 mile an hour winds and lashing rain.

Happily, last-minute Eurostar tickets are much easier to come across than debt financing these days, so after a round of emergency bacon sandwiches and a travel update for our Squawk Box Europe viewers live from the airport, we're finally bound for Cannes (via Paris by plane, train and automobile -- don't even get me started.)

And it's worth the effort. At last year's MIPIM the credit crunch was beginning to take hold and real-estate investors were hoping that a niche problem involving subprime residential mortgages Stateside wouldn't spoil the party for the booming European commercial property sector.

That hope was in vain. In the past 12 months it has become perfectly clear that the impact of what started as a US subprime issue has spread further than we even know. On Friday, a survey by the Investment Property Forum of UK property fund managers and analysts indicated that they think total returns - combining rental income and capital growth -- is expected to drop by 2.6 percent this year, dragged down by an expected 7.8 percent fall in capital values.

Party over? Not for everyone. Don't forget wherever there's turbulence there are always specific value opportunities for savvy investors. And once the clouds have cleared (quite literally today!) by luck or by smarts some investors fly out of the storm in a better relative position than before.

So, this year's MIPIM is all about winners and losers. What are the value opportunities and who was quick enough to spot them in time? Are there still any smart palys left? Most believe London was at the heart of a European property value bubble and is now furthest along in terms of revaluation. Many also believe that much of Western Europe isn't far behind.

And with the obvious markets crossed off the list, attention is turning to central and Eastern Europe. Russia appears to be particularly interesting to investors keen to find the best capital growth. And doubtless Russian projects easily dominate the events and sponsorship program at this year's MIPIM -- from the Krasnodar region's "Pearl of Russia" to the Nizhny Novgorod region, which proclaims that "opportunity flows on the Volga" -- it's a beauty pageant of new opportunities looking for investors who are increasingly looking for a safe haven from the turbulence in Western Eeurope.

Our series of live guests from brokers to listed real estate CEOs and investors will help us figure out what next for property investments. If any of them actually make it to Cannes through winter's last hurrah!