By J.C. Goldenstein, CEO, CREOpoint
After a long week of seminars, presenatations and, of course, plenty of networking, the 2012 MIPIM conference in Cannes, France, drew to a close. While an atmosphere of cautious optimism pervaded, regions and countries are thinking big again. Whether it be London’s Olympic Park, the Grand Paris project, Qatar’s Downtown Doha project, Russia’s Skolkovo Innovation City, Istanbul’s Zorlu Center or Rome’s Ostia waterfront, the scale of ambition and vision is widening. Ultimately, demographics rule: The world population is growing and so is the need for innovation and renewal.
The discussions ranged the entire gamut. Howard Roth, the global real estate leader for Ernst & Young, was “cautious but positive, even in Europe, thanks to the recent stimulus,” he said. “There’s plenty of equity looking for a home this year.” Jim Fetgatter, CEO at AFIRE, was pleased with the direction the market is taking, especially in America. “The mood of investors has improved dramatically since the dark days of 2008 and 2009,” he said. “With the problems of Europe and the uncertainty of the future there, the U.S. is perceived to have a certain optimistic prognosis, however slowly the recovery unfolds.”
Even the most optimistic attendees still expressed some caution, as obvious risks remain. Distressed assets are still weighing heavily on lenders’ balance sheets, and unwinding these assets could fuel more financial turbulence for banks and the market in general. Much of the conversations were about when, if and how banks will let go of assets and debt. It was clear that BNP Paribas, hurt by the euro-zone debt crisis, was preparing for more stringent Basel III banking rules.
It was announced during MIPIM that the French bank sold a 28.7 percent stake in Klépierre SA for $2 billion to U.S. shopping mall giant Simon Property Group. David Simon, chairman & CEO of Simon and the new chairman of Klépierre’s supervisory board, said his firm has long admired Klépierre’s pan-European footprint and strong growth potential. “The investment in Klépierre represents an attractive opportunity for SPG as we seek to broaden our global footprint,” he said.
Consolidation is also continuing in services. NAI Global, the largest network of independent commercial real estate firms worldwide, with an 80-strong attendance at MIPIM this year, was recently acquired by C-III Capital Partners L.L.C. to create a leading, fully integrated commercial property services company.
“Corporate and investment clients will now benefit from an even broader range of services in more locations worldwide,” Jeffrey Finn, president & CEO of NAI Global, said. “In particular, they will have access to a corporate solutions and capital markets offering with expanded asset/property management, project/facilities management and valuation services so they can get the most value from owning, managing or disposing of their assets.”
“Improved deal volume and confidence remain centered on core deals in major markets, but confidence is growing that it will spread to smaller markets,” Chris Ludeman, president of CBRE Capital Markets, said. “A major driver is the rapidly improving debt-capital markets. The unpredictability of the U.S. presidential election — and its possible impact on fiscal, monetary and regulatory policy — remains a wild card. However, chronic fiscal and political uncertainty may be the new normal, and one to which CRE investors will need to adapt years to come.”