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MIPIM 2014

    • Real estate
    • Real estate sector

    28-03-2014

    10 March 2014 - MIPIM is marmite in the French and English sense

     It is a big casserole (French marmite - check out your Marmite jar!) of a conference.  

    Investors, developers and funders are thrown together (with perhaps just a of splash wine) and simmered for a week. It also divides opinion like no other property conference. Several major UK players have stopped going, struggling to see tangible returns.

    But MIPIM is 25 years old and most of the property market will be there this week. This Cote d'Azur perennial continues to confound critics. Its perpetual popularity may (perhaps) come partly from the pellucid light, glimmering sea and champagne bubbled air. But there is also a serious side to MIPIM.

    You can make more contacts and see more important people in a week in Cannes than you can in six months in the UK. And this will be the most confident MIPIM since 2006 (the zenith of the early noughties real estate frenzy - when the Tchenguizes ruled the Croisette with 40 black-windowed jeeps and a flotilla of jet skis).

    Right now property is an exciting asset class. It still offers good pricing in the wider global context. Distressed debt and asset management opportunities abound. These are important. You can't refurbish and lease a share or a bond. The real estate market has lacked both money and focused expertise over the last five years, but with sources of funding now more available, there is much pent-up demand and potential deals.

    Barring an unexpected market shock, expect strong recovery for real estate over the next two to three years.

    What are the main trends that will be the buzz over cocktails on the Croisette?

    The banks are back! Bank lending is one of the two main engines of the UK economy (the other being government spending), and it drives the real estate market. For last five years, that engine has sat silent. Then, last year Lloyds Bank's lending to real estate rose 32%. Other banks are even more active: HSBC, Santander, the Canadian banks and Wells Fargo. Banks bouncing back should put optimism's olive in everyone's martini.

    Alternative assets are the future. The UK economy is wailing for a modern infrastructure of road, rail and ports. The government seems unable to provide it. Step forward the institutions under their leaders such as Nigel Wilson and Bill Hughes of Legal & General. They are promoting investment into this area with vigour and elan. MIPIM will be alive with new ideas from them.

    Residential is the new commercial. The UK should be building 300,000 houses a year (just as at the height of the Macmillan building boom). Instead it regularly manages only around a 100,000. The net result is unhappiness: a property ladder that is more property cliff, young people cluttering up parents' houses into their late thirties, and average house prices five or six times the average wage. It really can't go on.

    Eventually there will be social unrest and dislocation. All across the market investors, developers and institutions are moving in: Dandara forward-funding five private-rented sector developments, major sale and leasebacks being made into social housing, and much talk of New Towns and Garden Cities. Europe and the UK regions are also attracting renewed interest, all across the investment spectrum from US private equity to long-term sovereign wealth.

    Join me on the Eurostar to MIPIM to see these ideas discussed, developed and looked at through a chilled glass of Chablis. We may end up in some unusual places.

    I have the sense of direction of Christina Aguilera, who had to ask, "Where is the Cannes Film Festival this year?" See you on the Croisette!

    13 March 2014 - £300m and the yellow chicken onesies

    Gatwick 5:15am. White fog. You couldn’t see a hippo if it kissed you.

    I shuffle into the Terminal. Join the departures’ queue. In front of me are three ladies in yellow chicken onesies (I know). I am surrounded. Behind me, three men sport brick red T-Shirts: “Barry’s 40th - Benidorm 2014.”

    Somehow, I feel like a gooseberry; I edge to one side. On cue, Barry and the glowing chickens begin a lively chat.

    Normally I get the Eurostar to MIPIM. You know, living the Francophile dream: fields of lavender and sunflowers slipping by; training hard for MIPIM with a large glass of claret.

    But this year a deal drop-kicked these French fantasies. No way could I go to Cannes before I’d finished it for our clients.

    We worked till 2am Sunday night, checking the 150 completion documents, and completed last night at 9:00pm.

    Then we had the odd glass of champagne, just to remind ourselves that we had actually finished.

    But I’m not complaining: it’s a £300m signature transaction for the clients into a new sector.

    So that’s why I’m on the early Easyjet; which is tricky because, like Dennis Bergkamp, I’m a nervous flyer (there the similarities end, no-one, not even my Mum, would call me six foot, blond and elegant).

    But it’s worth it. Cannes beckons: land of Brigitte Bardot, bouillabaisse and crisp rose. As we fly, English deals and fog fade in the French air.

    Today I have a client lunch, a packed menu of meetings, and then our own Eversheds’ dinner.

    “Everything in France is a pretext for dinner,” as they say.

    14 March 2014 - £280,000 on footwear and the Carlton's splendid domes

    “That’s 70 pairs of bespoke Christian Louboutins at £4,000 each. That makes £280,000, and that’s not counting the Diors. I’ve lots of those, but they’re only £600 each.”

    I’m at our cocktail party at the Carlton, and am learning just how wealthy the Chinese upper middle class are. I am talking to a lady who grew up near the Shaolin temple in central China, was educated in Austria, and now works in London as a lawyer.

    Remember that you can still buy a substantial house in many UK cities for £280,000. Now you see the spending power China brings to Central London. Don’t expect residential prices to fall anytime soon.

    The Carlton is a charming fin de siècle creation; its twin towers topped with bronze spiked domes. Legend says they are modelled on the breasts of the architect’s mistress, La Grande Otero.

    She was the Lionel Messi of courtesans, “la grande horizontale”. Dancer, early film star, sophisticated and intelligent, there was no one like her. But unless she had a strange condition that made her breasts look like giant Prussian helmets with lightening conductors on, then the Carlton’s domes are no clue to her decolletage.

    Market’s back big time. I’m chatting to a 33 year old who’s doing 30 schemes in high end London residential (see Louboutins passim above), student housing and PRS. Importantly, they’re funded by debt (UK banks) and equity. They invest just a small stake, so they get maximum buck bang and a lot of schemes. I check my watch to see whether it’s 2005. It isn’t. So this must really be the recovery.

    Duck, ginger, saffron and apple canapés, and unfeasibly generous gin and tonics are lightening the mood. A key client talks me in doing a duathlon - that’s cycling, running and no swimming (I swim like a lead duck) in October. I’m definitely up for it - at least until tomorrow morning.

    I also discover my client owns a small olive grove in Kardamyli, a gorgeous Greek town, deep in the southern Peloponnese.

    Patrick Leigh Fermor retired there after writing his brilliant travel yarns, and (amongst much other derring do) kidnapping General Kreipe, the German WW2 governor of Crete. Amazingly, it turns out Leigh Fermor was my client’s neighbour. I am promised a jar of olive oil from Kardamyli’s next crop.

    That’s one of the great benefits of MIPIM - you have time to connect with your clients on a human and cultural level, rather than just banging on about deals and drachma. Or, indeed, Louboutins.

    Read Bruce's blogs online at Property Week and The Lawyer

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