The forecast from MIPIM: surprisingly sunny
The MIPIM property event in Cannes gives architects hope for the future, reports Chris Brown
MIPIM was oozing confidence this year. The banking chat was of a market moving fast as the German banks return to the UK (though only for the lowest-risk assets) and of margins and fees dropping as covenants stretch. The few UK banks that have been lending through the last year, and who were still sounding a bit holier-than-thou about the conservative lending policies that had saved them from taxpayer shareholdings, are now seeing their period of profitability come to an end.
This money is supplemented by the new funds flowing into real estate. As many vulture funds sit frustrated on the sidelines, with banks unwilling to sell at sale prices, the institutions are snapping up the assets they sold earlier in the crisis.
And so the commercial real estate market upswing is bouncing confidence back into the one-to-one meetings in Cannes. Even the double-dip talk was subdued.
Increasingly Bar Roma and Martinez are the refuges of those whose businesses didn’t make it, or those left behind to do the bankers’ bidding. Some people were at MIPIM to advertise their survival but even in this group the talk was of new directions.
There are still market gaps, of course. The construction chat was of tenders coming back at much lower figures than expected (20 per cent was typical) as the mid-market contractors desperately seek contracts to replace those that saw them through the recession.
The big gaps are rents and development finance. In some cities office rents have halved as a small number of recently completed buildings compete for an even smaller number of value-seeking occupiers. As a result, there is no money for speculative development and the public sector was talking about the clever ways in which some leading public regeneration agencies along with city councils such as Manchester and Nottingham were structuring transactions to make them privately fundable and keep regeneration moving.
So there is still some work around for architects. Many schemes won’t be built soon but it is not the complete devastation of the early 1990s. Though hard for small firms to access, parts of the Far and Middle East have held up strongly, as evidenced by the Riyadh-based chairman of Buro Happold, Rod Macdonald, ending lunch at La Colombe D’Or at 7pm, and Pipers’ talk of the importance of business in the Middle East after model orders declined in the UK (though 250 London Stand clients can’t be bad).
The public sector is busy committing schemes with the last of its money and these will drag a number of firms through the next stage of the economy. The lack of over-development gave us confidence that by the time those projects are complete, the private sector developers will be back building again.
Chris Brown is chief executive of sustainable investment partnership Igloo Regeneration