In like a lion, out like a lamb. The middle of March arrived and for the property industry this can only mean MIPIM; a chance for the UK delegates to leave behind the grey clouds of bad weather and political uncertainty and enjoy the warm hospitality of the French Riviera.
I have attended many-a-MIPIM but rarely with the political backdrop of the present day. Aside from the events in the UK, the Dutch went to the polls, kicking off a European election cycle that has been another source of concern for investors on the continent. Yet while the path ahead is unclear, there is plenty of reason to raise a glass to the UK and more specifically, London.
I am encouraged by the recent upgrade to economic forecasts for the UK suggesting growth of 2.0% in 2017, which can only be a good thing for the property market. But more pertinently, I am buoyed by the news that London has come up trumps and been ranked as the most attractive European city for real estate investment for the sixth consecutive year. This according to CBRE’s EMEA Investor Intentions Survey 2017 launched at our MIPIM flagship event.
Seventeen percent of respondents cited London as their preferred destination for real estate investment. Berlin has jumped to second place in 2017 from fourth in 2016.
The results also indicated that investors are also continuing to show a greater desire to acquire property than dispose of it. According to the survey, 85% of investors intended to spend at least as much in 2017 as in 2016 and 41% expected to spend more. Investment style is also shifting. There is now a lower preference for core stock with investors showing a greater propensity (41%) to invest in good secondary or value–add opportunities. While this differed between markets, it reflects a desire for assets where active management can be used to enhance returns in a growing economic environment where yields are compressed and interest rates are likely to rise.
So is there reason for cautious optimism for London? Almost certainly. Among other factors, the diversity of London is one of the paramount reasons that it will inevitably lessen the impact from Brexit. This diversity exists not just in culture but in the character of the real estate that London offers footloose occupiers. If there’s diversity in the type, location and price of real estate on offer, then there’s resilience.
So all things considered, and MIPIM is over for another year, I for one will be raising a glass – à la santé de Londres!
By Adam Hetherington, Managing Director, London, UK, CBRE.