Lower Numbers, Less Partying, But MIPIM Sees Real Estate Shrug Off Hazards

CANNES, France — In the naïve, innocent days just before the coronavirus was declared a pandemic in March 2020, one of the biggest questions for the European real estate world was whether the annual MIPIM property jamboree in Cannes would take place. 

This week, for the first time in three years, MIPIM was back on. With the pandemic still a present reality and a hot war raging on the European continent, the spring fixture of the real estate calendar occupied an uneasy space this year. Known for its lavish parties and associated debauched behaviour, many questioned what the vibe would be like in a world very different from when it was last held.

What would the conference, a bellwether for sentiment in real estate as well as an excuse for a trip to the south of France, reveal about the market at a febrile moment in time? 

Some things never seem to change with MIPIM. The gaudy, over-the-top glitz of Cannes was never far away, from the meetings in rented apartments with Fendi diamanté cushions to the €1M Ferraris in the forecourt of the Majestic Barrière hotel. It is hard to think of many other places in the world where you will see a small dog being pushed around in a leopard print pram by an octogenarian man in a blood-red tracksuit. 

But the atmosphere of MIPIM 2022 was decidedly different. Numbers were lower than in previous years, for one thing. Organiser RX said that as of the week before the event, 20,000 people had registered for the event compared to 27,000 in 2019.

“It is definitely quieter,” Tristan Capital Senior Partner and Head Of Investment Ali Otmar said. “It feels more like 2011 or 2012,” when the market was still recovering from the Global Financial Crisis and numbers at trade fairs were subdued.

Stands in the main conference centre taken by big global fund managers had a buzz about them, and plenty of people chatting over tiny cups of coffee and slightly stale macarons. But the London pavilion, normally heaving, was sedate, the crowd perhaps more dispersed because the large model of the city that usually dominated the marquee was this year absent. 

Restaurants along the seafront and beach of the Promenade de la Croisette were busy at lunchtime and in the evenings, but not rammed like in 2019, before the pandemic. Caffé Roma, occupying a corner spot opposite the main conference hall and a popular haunt of English attendees in particular, was busy at midnight on Wednesday, but building works next door stopped the crowd of drinkers from spilling onto the other side of the road. At least it wasn’t shut, as had been the rumour before the event.

Delegates were certainly drinking long into the night, but there was a less raucous atmosphere than in the pre-pandemic years. Normally by 9pm, the monotonous boom of European house music emanated from apartments and restaurants along the beach as brokers, lawyers and investment managers hosted parties for clients. But this year, virtually nothing. 

“People are hosting dinners rather than parties this year,” CBRE Investment Management Chief Economist and Head of Insights & Intelligence Sabina Reeves said. “Normally by 11pm, there’s someone who’s got drunk and started buying Dom Perignon and throwing shapes on the tables. But this year it’s a lot more serious, given what’s going on in the world.”

The reality of the Russia-Ukraine War was never far away. The Russian delegates and exhibitors, who usually take large stands in the main conference centre promoting inward investment schemes, were this year blocked from exhibiting by the event organiser. But there was a stand giving delegates advice on how to "Stand With Ukraine" and a lone woman outside the conference protesting that Vladimir Putin should be arrested for war crimes. 

Yet next to the London marquee was a large Saudi Arabian pavilion, nearly empty, with various exhibitors promoting development projects in the country. Last weekend 81 men were executed in Saudi Arabia, and 377,000 people have died as a result of a Saudi-led military intervention in neighbouring Yemen, the United Nations has estimated.

One thing that has also not changed is the homogenous nature of conference delegates, a sea of white male faces.

“It’s a damning indictment of the real estate industry that I’m basically the only woman of colour on this packed-with-estate-agents flight to Nice for MIPIM,” Reeves wrote on her LinkedIn profile on the way to the event.

While the behaviour might this year have been tamer, MIPIM has been tarnished as a conference where delegates would openly procure sex workers, which hasn't exactly made it seem a safe space for women in the past. 

Overall, even if the atmosphere was less bombastic than in previous years, and numbers were down, the sense was that after three years, people were just happy to be able to get out and see friends. 

“People here are a bit like wild horses,” Commerz Real chief executive Henning Koch said. “It is crowded here, but not full, and the atmosphere has been positive. People are just happy to get back to some kind of normality."

In every conversation, the real estate market's relative insignificance in the face of the unfolding humanitarian tragedy in Ukraine was quickly acknowledged. But it was impossible not to consider its impact on the market that 20,000 people had gathered to discuss. 

The consensus was the war itself had not caused the kind of reduction in risk appetite that causes investors to hit the pause button, with the possible exception of deals in countries like Poland, which share a border with Ukraine. The implications of the war on macroeconomic factors like inflation and interest rates were weighing on people’s minds, but no one pointed to a slowdown yet. 

“There is a lot of money here, a lot of money in the world generally, and it still wants to invest in real estate,” Savills Head of Cross Border Investment Rasheed Hassan said. "People are saying, 'I’m concerned about the war, about inflation, about rates, but that doesn’t mean I don’t want to invest.'”

Vendors are still willing to put assets up for sale, he said, confident there are still plenty of buyers out there.

Inflation dominated most conversations — its impact on energy prices and how that might hit consumer confidence and commodity prices, thus striking development costs. Chat revolved around whether it could lead to rising rents for real estate and whether it would cause central banks to raise interest rates, which could have a knock-on effect on real estate yields.

During the conference both the Bank of England and the Federal Reserve raised interest rates, but the consensus was that in the UK and Europe at least, the fragile nature of economic recoveries would slow potential rate rises.

“It’s going to be a fine balance for central banks between controlling inflation and not killing the economic recovery or even creating the conditions for a recession,” CBRE IM’s Reeves said. 

Right now, the market faces more questions than answers. But while MIPIM had a more sober atmosphere, it certainly didn’t lack for confidence.