The real estate market saw a surge from 2010 to 2012 and is currently experiencing a slow down owing to the various geopolitical factors at play. The ones most frequently cited are the slow down of the Chinese economy, the turmoil in the Middle East, Brexit (the UK potential exit from the EU) and the “Trump factor” in the US.
One of the most striking aspects of this year’s MIPIM was the plethora of senior politicians in Cannes, including French Economy Minister Emmanuel Macron who inaugurated the event. Bringing together the largest single gathering of international investors (over 4,800), alongside developers, end-users, architects, hotel groups, public authorities, tech specialists, startups and property associations, MIPIM is perceived as a unique opportunity to conduct business, network and discuss the major issues facing both urban and real estate leaders. MIPIM 2016 attendance rose 10% compared to 2015, up to 23,500.
Robert White, founder and president of Real Capital Analytics reported that commercial property transactions in 2015 totaled $1.3 trillion, up 5% on 2014. Interestingly, research shows that international real estate investors are diversifying their portfolios to include such ‘alternative’ investments as healthcare, student housing, hotels, residential rental and retirement homes.
Cross border capital flows totalled $298bn during 2015, up 28% on 2014 levels. While the US remains the number one source of cross border capital it recorded flat growth compared to 2014, at $64,4bn,up just 1%. Middle East investors from Qatar and the UAE saw the biggest increases -129% and 345% respectively- this could be seen as a surprise given falling oil prices, however, clearly real estate offers an attractive investment alternative to volatile commodity markets. Cross border capital from Qatar totaled $10,7bn,from the UAE $9,1bn and rest of the Middle East combined recorded $5,9bn.
On the architectural and design side, much of the focus was on integrated living spaces where, in the future, residents will be able to work, live and play. The aim is also to design “intelligent” eco- friendly buildings, which will include high levels of digital innovations enabling, for example, the buildings to react to the prevailing weather conditions. Many of these new hi-tech innovations are the brainchild’s of small Tech start-ups, a sector which is attracting considerable attention as well as investment. In 2014 small start-ups in this sector received $1bn, reaching $2bn in 2016.
Despite some threatening grey economic clouds the general mood at Mipim was upbeat with over 60% of attendees expecting 2016 to be better year in real estate terms than 2014.