MIPIM round-up: Investors seek low risk (FR)

From Chongqing to Tokyo, via Downtown Doha, Paris, London and New York, delegations from 83 countries gathered in Cannes this week to attend a MIPIM which saw minds concentrated on quality, low risk investment opportunities, urban development and how the tight debt financing situation will impact the European market.

From Chongqing to Tokyo, via Downtown Doha, Paris, London and New York, delegations from 83 countries gathered in Cannes this week to attend a MIPIM which saw minds concentrated on quality, low risk investment opportunities, urban development and how the tight debt financing situation will impact the European market.

And at the end of the day, the general feeling among the 19,300 delegates, including 4,200 investors, was that despite uncertainty over the availability of bank financing, prime cities and locations will continue to attract strong investor interest, with many cities using their low-risk potential as a selling point.

Summing up the state of the European real estate market during a keynote address, Jean-Michel Six, Managing Director and Chief European Economist at Standard & Poor's and Bernhard Berg, Managing Director of IVG Institutional Funds GmbH, predicted that investors will continue to be drawn to prime property because of its attractive yields compared to bonds.

Berg told a packed auditorium that focus is likely to be on high-quality, core properties in excellent locations with long leases and good tenants. He added that as office prices rise, investors will increasingly turn to retail.

Among the star real estate markets of 2011 was MIPIM 2012 Country of Honour, Germany. Investment levels last year hit €23.5 billion, 20% up on 2010, with foreign investors accounting for 34% of commercial investment in Germany. Reflecting Bernhard Berg's predictions about investment targets, retail property in Germany made up 42% of total transactional volume last year.

During the course of MIPIM, international real estate advisor Savills said it sees a potential shopping center undersupply in Germany as providing potential investment opportunities, particularly in Südlicher Oberrhein, Münster and Munich. Savills identified 200 shopping centers in need of refurbishment and said retailer expansion into the German market will also drive business.

Meanwhile, Berlin's newly-appointed Senator for Urban Development and Environment, Michael Müller, used his time at MIPIM to promote two large residential schemes as well as the redevelopment of the Tempelhof and Tegel airports.

"Germany is seen as being either an 'attractive' or 'very attractive' investment opportunity by the vast majority of international investors. Its economy has weathered the Eurozone crisis well and the real estate sector has proved its national and international expertise time and again. Put all these factors together and you see why we felt it appropriate to pay tribute to Germany as our 2012 Country of Honor," commented MIPIM Director, Filippo Rean.

The impact of the Eurozone's rollercoaster ride was the focus of a packed MIPIM keynote address by former German Foreign Minister Joschka Fischer. Commenting on the likelihood of a widespread withdrawal from the euro, Josckha Fischer joked, "It's easy to make an omelet out of eggs. It's not easy to make eggs out of an omelet!"

With Germany re-assessing its policy toward nuclear power, the former Foreign Minister said that within Germany and beyond, the changes in energy use and sourcing "will have a tremendous impact on the real estate industry and offers huge opportunities."

Industry reports look to future
As MIPIM progressed, a series of industry reports and analyses was released to map out the state of play within the international real estate sector.
According to Cushman & Wakefield's Global Property Investment Outlook, "Despite the currently cautious mood in most global property investment markets, a stronger second half of the year is expected with a potential 20% hike in activity levels forecast, driven by increased confidence and a release of

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