International property fair MIPIM concluded on Friday, leaving attendees unsure whether to celebrate the post-pandemic recovery of key segments of the market or brace for bumpy times ahead in the global financial system.
MIPIM 2023, which took place March 14-17 in Cannes’ Palais des festivals under the theme “Better Places, Greater Impact, Stronger Business”, continued the event’s return to full form after the disruptions of Covid-19. More than 23,000 attendees consisting of developers, financiers, investors and occupiers as well as government authorities arrived in the French Riviera from some 90 countries.
The first and potentially most important read on investor sentiment at MIPIM is the RE-Invest Summit, a closed-door gathering which brings together around 100 of the world’s biggest real estate capital owners including sovereign wealth funds, pension funds and family offices to kick off the event. On day one they discussed as a group the question “What keeps you up at night/?” The insomnia-inducing list was lengthy: inflation, interest-rate rises, economic uncertainty and unclear valuations were among the top concerns cited.
ESG is seen as an opportunity but one that also brings thorny questions of practicalities such as reporting and measurement.
Despite the specter of the war in Ukraine, these high-level participants were sanguine about geopolitics, saying they cannot control it and simply have to find strategies to mitigate any such turmoil.
At the MIPIM event more generally, delegates were in a largely buoyant mood, expressing relief over the rebound of key real estate sectors such as hospitality, retail and office, continued interest in the still-popular industrial sector and bullishness over the fast growing areas of data centers and life sciences.
Champagne corks were popping and the sun was shining, but there was also a feeling of distant storm clouds gathering. The stunning collapse of Silicon Valley Bank has sparked fears of possible contagion and particularly unnerved US attendees, many of whom said they were bracing for a wave of new regulations targeting small and mid-sized US banks which could hit lending and spook real estate finance markets.
“The fear is there will be an overreach in terms of regulatory action,” said Kwasi Benneh, managing director and head of North America commercial real estate lending for Morgan Stanley, during a panel on US real estate trends. “Regional banks play a very large role especially in real estate markets and so anything that happens that restricts lending by the regional banking sector is going to affect all of us collectively.”
Meanwhile, the emergency rescue of Credit Suisse added to worries over the health of the global banking system and the 50 bps base rate rise by the European Central Bank during the week added to the feeling of unease.