Fancy some sun, sea and parties…alongside deep debate of property yields and cap rates? You're not alone as around 23,500 real estate professionals descend on the French resort of Cannes for the 27th annual real estate trade fair, MIPIM, which starts Tuesday.
We caught up with the conference's director, Filippo Rean, to hear about the three hottest themes at this year's conference:
Housing supply
Housing supply has become a big issue for stakeholders from a wide variety of vantage points. From governments and local authorities tinkering with policies to first-time buyers struggling to step on to the property ladder, the acute housing shortage in capital and gateway cities is a real and worsening problem. Surging levels of refugees have intensified the pressure for solutions.
From an investor perspective, residential property was once considered niche in Europe with its own dynamics and rules. Now, it is considered much more mainstream, partly given the increasing overlap with commercial real estate as the search for more viable urban planning proposals escalates. This can be seen in the the rising popularity of mixed use developments in Europe follows this well-established trend in the US and Asia.
According to Rean, "It is essential that public and private actors work together to forge holistic solutions to pressing housing crises. MIPIM provides a global forum where participants battling similar dynamics around the world can brainstorm and share innovative ideas."
Flexible working
Trends towards user flexibility and heightened convenience that have already been seen in many sectors are now shaking up real estate. Businesses now expect more tailored working spaces - and commercial developers are responding to those demands.
This trend particularly benefits smaller and more dynamic companies who can adjust their real estate commitments as their operations and staffing levels change. While businesses appreciate the flexibility, commercial property owners can make the new paradigm work for them too. Tenants are often willing to pay a yield premium in exchange for terms under which they can be more certain of maximising the utilisation of their work spaces.
Global investing
The globalisation and broadening appeal of real estate investing continues to gain pace. The adoption of Real Estate Investment Trusts (REITs) or REIT-like structures in over 30 markets has made it easier for those without the scale for direct investing to participate.
According to Rean, "Twenty years ago, real estate investing was still a very local endeavor. Now capital flows emanate from all over the world to cross into assets located in all global regions."
Over the years, the make-up of MIPIM's delegates has changed to reflect this investment trend. Visitors from 89 countries will be attending the conference with participant numbers from the U.S. and Asia continuing to rise. While the bulk of 4,800 investors attending are from private equity players or specialist units within larger funds, the conference is now also attracting more institutional investors such as pension funds and sovereign wealth funds, according to MPIM.
However, the industry still has to contend with market volatility and asset class illiquidity, weak bank lending and tightening regulatory standards. Developers will be hoping that this week's other backdrop – of Cannes' glamorous croisette and shimmering Mediterranean waters – will help keep sentiment bright.