Sentiment at international property fair MIPIM, held every March in the French Riviera, serves as a useful annual barometer of the global real estate market. Expect a mixed mood at this year’s gathering.
The crowd of more than 20,000 consists of developers, financiers, investors and occupiers as well as government authorities, coming from more than 80 countries. Representation from the Americas, Asia and Middle East has increased over the years, but the delegate profile is still heavily European.
This year’s gathering, taking place March 14-17 in Cannes’ Palais des festivals under the theme “Better Places, Greater Impact, Stronger Business”, continues the event’s return to full form after the disruptions of Covid-19 and the post-pandemic future of the office will remain a major discussion point.
European commercial property markets have fared better than their American counterparts due to a larger-scale return to the office and therefore higher occupancy rates. But war on the eastern flank of Europe combined with supply chain disruptions, rising inflation, interest rate volatility and slowing economic growth has created unease.
“Uncertainty is encouraging caution in occupiers, leading to slower decision-making and more defensive strategies. In the capital markets, investors are facing a challenging climate in which to underwrite and value assets,” reads a report from real estate advisory firm JLL, Global Real Estate Perspective March 2023.
Global leasing volumes were 19% lower in Q4 2022 than in Q4 2021, according to the report. Additionally, net absorption turned negative during Q4 for the first time in 2022. The global vacancy rate jumped 40bps to 14.9% in Q4, with the largest rise recorded in the US. In the logistics sector demand remains strong but has slowed from record levels, with limited available space.
At MIPIM, for the second year in a row, the war in Ukraine casts a substantial cloud over the famously champagne-fuelled proceedings. Ukraine’s formerly large and high-level delegation has decreased substantially, though mayor of the Western Ukrainian city of Lviv, Andriy Sadovyi, is slated to attend and city leaders from neighboring Eastern European countries have been vocal and passionate about their support for Ukraine. The absence of the once-ubiquitous Russia pavilion is notable.
Turkey is another country that is typically very visible and active at MIPIM but due to the devastating earthquakes that took place last month will have a more muted presence this year.
A heightened feeling of risk — and talk of elevated premiums attached to it —will no doubt pervade the Palais showroom and panel sessions during MIPIM. Palpable relief over inflation easing and an improved outlook for the second half of 2023, however, should lighten the mood somewhat.
