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A global real estate conference in an era of anti-globalism

People & Companies / Latest News


Mar 01 2017

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Peter Grant, The Wall Street Journal

In two weeks, more than 20,000 real-estate executives from around the world will converge on Cannes, France, for an annual commercial real-estate conference amid one of the most uncertain political climates Europe has faced in decades.

Yet few participants expect that to put a damper on deal making at the event, named MIPIM for the French Marché International des Professionnels de L’Immobilier, and considered the Davos of the real-estate world.

Some, in fact, expect the rising tide of anti-globalism fueling the Brexit vote in the U.K., Donald Trump ’s election in the U.S. and other events could create new investment possibilities.

“With elections due in France, the Netherlands and Germany, short-term volatility in markets will open up some attractive investment opportunities,” said Andrew Sim, head of European investments for Knight Frank in a pre-MIPIM analysis sent to clients.

Some participants are suggesting investors take advantage of currency fluctuations sparked by political upheaval. For example, the decline of the British pound may make London office property look cheap to foreign investors, they say.

Many MIPIM participants are citing the U.K. vote last year to leave the European Union as a textbook case of how to make fast profits from political change.

Immediately after the June vote’s surprise results, commercial real-estate values fell and some funds were forced to sell properties to return money to anxious investors. But values of many properties bounced back quickly, enriching gutsy investors who purchased when values fell.

“London actually became, on a relative basis, more attractive than it was before,” said Martin Samworth, head of Europe for CBRE Group Inc.

Real-estate developers, brokers and others in the industry have a reputation for bullishness. Past conferences have been known for optimistic tones—even in 2009, when attendance was down 40% from its peak year in 2008 due to the global financial crisis.

This year, some of the bulls acknowledge certain political scenarios being discussed aren’t pretty, like France’s possible departure from the Euro Zone. Financial dangers hanging over the global real-estate industry—like a possible spike in interest rates—could do greater damage than political events, experts say.

Still, many MIPIM participants say there are plenty of ways to take advantage of volatility, especially for investors willing to assume big risk. “If you’re an opportunist investor you should be all over the market, watching for these things to happen,” said Rasheed Hassan, Savills ’s head of cross-border investing.

MIPIM organizers expect hundreds of cities and about 90 countries to be represented at the conference, including, for the first time, Armenia, Paraguay and Uzbekistan. Representatives of these government bodies, like the private-equity firms, sovereign-wealth funds, brokers, developers and other attendees, can also be expected to put the best spin possible on political changes.

For example, Sir Howard Bernstein, chief executive of the Manchester City Council, said in a pre-MIPIM interview some of the concerns about the Brexit vote could be overblown.

“We’re not leaving Europe. That’s point number one,” he said. “Point number two is, I don’t think there’s any real clarity about the basis upon which we’ll be exiting from the European Union.”

Montenegro representatives say they plan to put a positive spin at MIPIM on their country’s efforts to join the NATO alliance, although others say uncertainties about relations between Russia and the new Trump administration could add obstacles to that effort.

“We expect to soon formalize the membership,” said Pavle Radulovic, Montenegro’s minister of sustainable development and tourism, in an email.

Mr. Radulovic also predicted that NATO membership for Montenegro would lead to further foreign investment in the country’s real estate.

“We expect economic benefit from the [NATO] membership since states that are part of the alliance are perceived as stable and safe for their investments and businesses,” he said.

SOURCE: The Wall Street Journal


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