6 Key Takeaways From MIPIM 2019

This month saw Cannes play host to the 30th annual MIPIM (Le marché international des professionnels de l’immobilier); a key date in the calendar of anyone involved in the buying and selling of European property.

Those of you who were in attendance will no doubt remember that it was a fantastic event with a great turnout. In fact, all told there were around 26,000 real estate professionals from all corners of the property market.

Many left thinking about how the property market has changed throughout the EU and UK recently whilst wondering what the future holds.

Nonetheless, if you didn’t get to attend, have no fear. We’ve distilled the various speeches, presentations and conversations over those four portentous days to bring you these 6 takeaways from the event.

Brexit is what you make of it

We may as well address the white, red and blue elephant in the room. Many were hoping to leave the event with a greater understanding of what the implications of Brexit might represent for the European property market. Indeed, Brexit cast a long shadow over much of the event. There was a sober yet tangible sense of frustration at the uncertainty of how Brexit will play out.

Nonetheless, the UK property market has weathered the storms well in the past. Indeed, buyer confidence in Britain appears to be taking a few tentative steps forward as the number of UK first time buyers reached a 12 year high last year with an increase of 1.9% compared to 2017 (the highest since 2006). Over the course of the year there was £62 billion of new lending in the private mortgage sector, representing an increase of 4.9% compared to 2017.

While new legislative restrictions have stymied buy-to-let mortgages slightly, it seems that buyers are becoming more bullish even in a time of economic uncertainty.

Opinions are divided on how to react to Brexit. Some are adopting a “wait and see” approach, while many investors are choosing to take advantage of the current state of low liquidity levels.

The millennial generation will likely transform the property market forever

The buying habits and preferences of the millennial generation have already affected change in a wide array of industries. Millennial buyer profiles are, by and large, ethically focused, digitally native and socially conscious.

This may have a lasting effect on everything from more sustainable construction techniques to gentrification.

New consumer habits could irrevocably change the commercial real estate trade

The world of high street retail is also another potential casualty as a new generation of consumers leads retail buying trends. Recent years have seen climbing levels of high street retail insolvencies with even long-established household names in retail either disappearing altogether or massively reducing their High Street footprint.

For the High Street retail market (and the buying and leasing of retail premises) to thrive, it needs to seek new innovations to provide meaningful customer experiences that cannot be replicated by ecommerce.

Offices are changing, too!

Consumer habits aren’t the only thing subject to massive change in an increasingly digital era. Office and working spaces are changing, too. And this can have far-reaching implications for those who buy, sell or lease commercial properties and office spaces.

As more and more businesses digitise their operations, office developments will need to seriously consider their digital infrastructure. As 5G internet rolls out and more and more operations entrust their data to the cloud, it’s safe to say that the needs of today’s businesses are changing.

Investors and occupiers are likely to need to work closer together to ensure that workspaces are up to requirements.

We can expect, as the years go by, for occupiers to become more discerning and demanding in terms of what they expect from their office spaces. Digital infrastructure is likely to become as important (if not more important) than physical space and layout. Likewise, investors will need to think about how they can bear the cost of inevitable alterations and upgrades while also remaining competitive in an increasingly busy market.

Knowing local markets could be the key to investor success

Major conurbations have always been a good place to look for investments that generate value. That said, as residential and commercial property prices in major cities like London, Birmingham, Manchester etc. continue to rise, deploying the necessary capital and finding decent yields is becoming more and more of a challenge.

Finding value has always been a core tenet of real estate investment but it is an increasingly common concern among this year’s attendees. For many, the search for value lies not in thematic investing but in city-based investment. Of course, for this to be profitable, a little local knowledge goes a long way.

London and other capitals will always be of interest to investors but learning more about developing housing, regeneration, commercial and infrastructure projects can give investors a vital inside-track. For example, in the UK The Mayor of the West Midlands recently launched £10bn worth of investment in local residential and commercial infrastructure. The better you know your areas, the more chance you have of getting in on the ground floor.

Asian investment and currency concerns

Finally, assets across Europe are growing increasingly appealing to investors from Japan, Singapore and Korea. London has long been a desirable target for Asian real estate investment, but the uncertainty of Brexit has caused many investors to look further afield.

France, Germany and Belgium are increasingly appealing to Asian investors with Euro exchange rates making European investment a more confident bet than investment in the US or elsewhere in Asia. However, as the acquisition of European properties grows more attractive in Asia, this drives competition which has caused some Asian investors to look at more developing property markets like Poland.

These are potentially challenging times… But there remains a permeable sense of excitement and optimism. Hopefully these 6 takeaways from this key event can help to inform your ongoing strategy.