MIPIM 2011 - Real Estate Builds on Recovery Foundations

8 au 11 March 2011 - Palais des Festivals, Cannes

Mar 11, 2011, 10:05 ET from Reed MIDEM

CANNES, France, March 10, 2011 /PRNewswire/ -- From Sao Paulo to Chongqing, by way of Kigali and London, the international real estate community gathered in Cannes March 8-11, for a 22nd edition of MIPIM that saw an enlarged number of major projects unveiled to international investors and tour de force keynote presentations from Mayor of London Boris Johnson and international economist Nouriel Roubini.

And in a sign of the times, the consensus among international mayors and leading city administrators who met at MIPIM's third Mayors' Think Tank March 9, was that public and private partners will increasingly integrate quality of life considerations into their urban development projects.

"The underlying market stabilisation was evident at MIPIM 2011. The fact that we've welcomed over 18,400 delegates (+7% vs 2010), including nearly 4,000 investors (a 6% increase on 2010), reflects the mood of the market and the appetite to do business," noted MIPIM Director Filippo Rean. "What has been striking is that we have seen extremely ambitious projects being presented from a very diverse range of countries."

Among those projects, Sao Paulo and London, supported by their respective mayors Gilberto Kassab and Boris Johnson, promoted development plans linked to holding the Olympic Games and the FIFA World Cup. Rwanda's Prime Minister, Bernard Makuza, led his country's first delegation to attend MIPIM to present international investors with the euro 6.7 billion development programme for the capital Kigali and China's fourth largest city, Chongqing, made its debut appearance in Cannes to outline real estate possibilities linked to its programme to double in size by 2020.

From Azerbaijan, the Baku White City development, designed to regenerate the industrial Black City district of the country's capital, was unveiled to MIPIM delegates. From Russia, the Northern Caucasus Resorts Company's General Director, Alexey Nevskiy, lifted the curtain on the world's largest skiing development involving five separate resorts and an investment in excess of euro 10 billion. Russian President Dmitry Medvedev is following this project closely and the Russian Federal government is injecting euro 1.4 billion to develop primary infrastructure.

Turkish developer Zorlu Property, host of the MIPIM Opening Night Party, actively promoted two major projects, the mixed-use Zorlu Centre and the Zorlu Levent office project, both based in Istanbul. Already euro 1.7 billion has been invested in the Zorlu Centre, including euro 214 million in the performing arts facilities. And from Croatia, Profectus Grupa brought its ambitious Dubrovnik Pearl elite resort project to MIPIM. Set to break ground at the end of the year, the euro 1.5 billion coastal development includes a marina, luxury hotels, an airport, as well as residential and retail properties.

Market Reports Confirm 2010 Rebound But Prime Product Scarce

As MIPIM progressed, leading international real estate consultants, including CB Richard Ellis (CBRE), Jones Lang LaSalle and Cushman & Wakefield, released market reports confirming 2011 growth while predicting investment diversification as prime product in gateway locations remains in relatively short supply.

According to the results of a survey of almost 350 European real estate investors by global real estate adviser CBRE, investors have shown a clear strategic shift in their investment preferences in Europe in favour of Germany and Central and Eastern Europe (CEE) as the most attractive markets in which to purchase real estate in 2011. Approximately one-third of investors intend to target acquisitions in Germany in 2011 compared to 18% in 2010, and around a quarter of investors have CEE as their top investment target this year, up from 16% last year.

Peter Damesick, EMEA Chief Economist, CBRE, commented, "Whilst the majority of demand is focusing on core assets in 2011, we expect an increasing number of investors will start turning to more secondary assets in the second half of the year and into 2012 as a result of the intense competition for core assets. However, while some investors are starting to look for opportunities higher up the risk curve, the shortage of debt finance for investment in secondary property remains a significant constraint on activity in this part of the market.  There may need to be some further re-pricing before value-add and opportunistic investors become active in a big way."

In its International Investment Atlas, Cushman & Wakefield predicted that global investment, led by North America and emerging markets, will increase by 5%-10% in 2011 to reach euro 485 billion. The report suggested that investment in Latin America and Eastern Europe will rise by 40%. "Latin America's presence at MIPIM is on the increase. Obviously there is enormous interest in Brazil and particularly Sao Paolo, but we have also seen Colombia, Paraguay, Peru and Panama represented at MIPIM for the first time," commented MIPIM Director Filippo Rean.

Cushman & Wakefield reported investment in Asia last year reached euro 294 billion, over 50% of all global real estate investment. John Stinson, Managing Director, Capital Markets Asia Pacific noted, "With eight of the world's top 20 markets situated in Asia Pacific, this region will continue to dominate as investors are attracted to other gateway cities including Singapore, Hong Kong, Shanghai, Tokyo and Sydney. We will start to see some of this activity spill over into some attractive emerging markets this year including Malaysia, Indonesia, India and some 2nd and 3rd tier cities in China."

Speaking at a MIPIM conference dedicated to Asian capital and markets, Francois Trausch, CEO, GE Capital Real Estate, Asia Pacific said, "We are seeing recovery in both national and inter-regional capital flows." The conference speakers anticipated that Asian investors will diversify beyond domestic markets to mitigate risk and secure higher returns. "Asia is clearly a major market and we expect MIPIM Asia 2011 (Hong Kong, November 15-17) to be particularly active," said Filippo Rean.

In Europe, expectations are that direct investment in commercial real estate will rise by 30% compared to euro 102 billion in 2010, according to Jones Lang LaSalle's European Capital Markets Bulletin. Commenting on the situation, Richard Bloxham, Director EMEA Capital Markets at JLL said, "A shortage of available core product in major Western markets means we anticipate the investment momentum of 2010 in Central Europe and Nordics to accelerate in 2011.  Europe's two largest emerging markets Russia and Turkey will also witness increased investment transaction activity this year."

March 10 saw a first at MIPIM as internationally-renowned economist Dr. Nouriel Roubini addressed a packed conference to outline his analysis of the global economy. Noting a shift in global economic power towards the east, Dr. Roubini said that real estate companies should see opportunities in the emerging eastern markets as well as in Latin America and the Middle East.

"At MIPIM Asia in 2010 we welcomed Nobel Prize winning economist Joseph Stiglitz. This year, MIPIM provided delegates with access to another leading economic thinker, Nouriel Roubini. This is recognition of the fact that the real estate industry does not operate in an economic vacuum but is an essential part of the global economy and needs access to forward-thinking economists," commented Filippo Rean.

London Mayor Stars In UK Celebration

With the United Kingdom chosen as the MIPIM 2011 Country of Honour, over 1,100 British companies travelled to Cannes. Mayor of London, Boris Johnson, attending his third MIPIM and officially inaugurating this year's event, provided a tour de force presentation at a standing room only conference.

Using his trademark combination of humour and unbridled enthusiasm, Boris Johnson argued that the future of the world lies in cities as 50% of the global population is now urban-based. Referring to a recent CitiGroup study of international cities, which concluded that London is the world leader in terms of GDP growth potential through to 2025, the Mayor of London joked that he found the report "eminently believable."

Boris Johnson chose MIPIM to announce that developers now have the opportunity to create one of several new neighbourhoods in the Queen Elizabeth Olympic Park. Starting next month, developers can bid to build up to 800 homes situated between the VeloPark and the Olympic Village. The neighbourhood will be developed as of 2013. "My message to investors looking for long-term rewards is that this is just one of a myriad of similar opportunities that will arise in our great city," he enthused.

Underlining the growing trend among cities to share experiences and best practices in an effort to develop sustainable urban strategies, some 80 city mayors took part in the MIPIM Mayors' Think Tank roundtable discussions March 9. Among those cities represented were Sao Paulo, Moscow, Kigali, Manchester, Budapest, Montreal, Frankfurt and Bratislava.

"This was the most successful Think Tank held so far, with an amazingly powerful group of individuals showing a great spirit of solidarity and vision," commented Greg Clark, Chairman of the OECD LEED Forum of Development Agencies and Investment Strategies and lead Think Tank moderator. "There was unanimity that urban policy now has to include respect for the quality of life and liveability for citizens."

Greg Clark reported that as cities enter the post economic downturn cycle, public authorities are looking again at their working relationships with their private sector. "There have been incidents where masterplans have not been fulfilled or private financing has failed. I think that the mood amongst the mayors is that they are going into the next phase of the public/private relationship somewhat wiser."

MIPIM 2012 will take place in Cannes March 06 – 09.

Photos of MIPIM 2011 are available on the MIPIM Photobank site: www.reedmidemphotos.com

A selection of keynote videos is available on: http://blog.mipimworld.com/

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