UK real estate leaders at this year’s MIPIM conference were in relatively good spirits as the week-long event drew to an end. But even with several industry figures adamant that the country is at the start of the next cycle rather than the end of the last, some were still concerned that the Palais des Festivals et des Congrès acted as an “echo chamber” for those hearing what they wanted to hear.
“The mood at MIPIM this year was one of cautious optimism,” said James Sparrow, Savills’ UK and EMEA chief executive. “There are undoubtedly still challenges in the market, but the overall sentiment during the week was positive with signs that the market will continue to improve this year. This will inevitably bring opportunities and, since the new year, we have seen a growing wall of capital looking to deploy with rising confidence and interest from opportunistic investors looking to capture the bottom of the investment cycle.”
Rory Buck, managing director at Clarion Partners Europe, said the vibe was more upbeat than the past two years. “It feels like we’re seeing a light at the end of the tunnel,” Buck added. “I’m seeing people that wanted to sell stuff [who said in] the last year, ‘Actually, you know what? We’re going to hold and see what it looks like in six months’. So that’s positive.
“The one qualifier on that is, I generally meet with agents and other logistics investors, so could it be an echo chamber where everyone you know wants to hear – and is telling each other – the same thing? But I think there’s a consensus that we’re getting pretty close to the bottom, if we’re not there already.”
Paul Weston, regional head of Prologis UK, characterised the event as showing “quiet optimism against a challenging economic and political backdrop”.
If the conference felt quieter than usual, attendees nonetheless said they thought the slimmed down guest list was probably working harder than usual. Or, as Ross Freedman, owner of agency Lonic, put it, this year’s event was a case of “quality over quantity”.
Allan Lockhart, chief executive of NewRiver REIT, said: “MIPIM 2024 was of a markedly smaller scale and quantum, but quality prevailed over quantity. Notwithstanding the challenged macro-economic backdrop, there was a distinct sentiment of measured optimism and a quiet confidence for the outlook for real estate, specifically in our sub-sector of retail. I had the pleasure of meeting with various contacts to discuss opportunities we are exploring as we continue our growth, underpinned by a strong operational and financial position.”
The living sectors drew a good deal of attention. At Watkin Jones, chief executive Alex Pease said: “What you’re finding is that capital absolutely recognises the strengths of the UK residential market. So, what gives me really good confidence is that there is more capital to allocate than there are opportunities to. So, if you start at some point, you’ve got a fantastic operational demand for your product.”
Jamie Harris, head of student accommodation at Harris Associates, agreed that the living sector was “very much in the spotlight”, adding: “A growing cohort investors are now deploying capital throughout BTR, PBSA and co-living in the same funds.”
At KPMG, UK head of real estate Andy Pyle welcomed an improved mood from last year, when Silicon Valley Bank collapsed as attendees sipped rosé. But there are still problems ahead for the market, he added.
“You have a situation where lots of people have already got quite a lot of stuff in terms of offices,” Pyle said. “And there is still a bit of a gap in seller-buyer price expectations that might take a couple of months to work through. There are still sellers that want yesterday’s price. But it’s getting better. There’s going to be a number of opportunities where people are forced to transact because they have need to recapitalise structures.
“So I can’t think how the year is not at least a reasonable improvement upon 2023. I think that our exit trajectory from ‘24 into calendar year ‘25 will actually be really strong. I’ve heard the phrase “Survive until ‘25”. I don’t particularly like that. I think there’ll be interesting things to do this year, but it’s going to take a bit longer to work through.”
Reporting by Tim Burke, Evelina Grecenko, Pui-Guan Man and Akanksha Soni
Image © Loïc Thébaud
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