Sun, Saudis And Uncertainty: MIPIM 2024 Threw Up As Many Questions As Answers

As the industry poured into the French Riviera on a mission to figure out whether real estate is heading for recovery or recession, MIPIM in 2024 reflected the sector more widely: nervousness tempered by a little more hope for the future than last year, but very little in the way of consensus on how the next 12 months will play out. 

Bisnow weaved its way between the shades-wearing delegates as the sun eventually shone down on Cannes, the champagne corks popped and the super yachts glistened to capture the mood and pick out three top trends for 2024: living, Saudi Arabia and the drawn-out wait for interest rate reductions.

Of course, the big question among the nearly 27,000 attendees was about overall sentiment, with the European office sector largely in limbo with interest rates staying stubbornly high. Despite some optimism that things will improve, it was tough to call.

Meanwhile, there was no escaping the Saudi giga projects underway in the dramatically transforming Middle Eastern kingdom, as the country took not one but two huge outdoor pavilions to showcase some of its key projects. 

There was no doubt which sector was star of the show. This year the standout opportunity was all about living, with the need for new forms of housing a near-worldwide phenomenon and the market splintering into an ever-increasing number of niches, designed to cater to specific target markets and for changing demographics and life patterns.

Away from offices, industrial and logistics continue to perform strongly but not at the breakneck speed of previous years. Alternatives, from hotels to healthcare, have also grown their presence in Cannes yearly, and ESG and diversity were key themes – although suited and booted men still dominated the Cannes boulevards, demonstrating that the industry has a long way to go.

Not surprisingly, there was a lot of talk about the global economy. European investors were looking for signs about whether the high interest rate environment would ease and whether investors would come back to property this year. Did they get their answer?

Well, in truth, not really. This year’s MIPIM was inconclusive, although the mood among the big investors seemed a little more positive than last year. However, investors and commentators had mixed opinions on the outlook and the relative prospects of the European markets.

“We do not see interest rate cuts soon and therefore expect the financing environment to remain challenging," W.P. Carey Head of European Investments Christopher Mertlitz said. "In the eurozone and the U.S., we expect continued upward pressure on yields and downward pressure on real estate valuations. However, depending on the market and asset class, there are indications that prices are beginning to bottom out.” 

Newmark Executive Vice Chairman and Head of the International Capital Markets Group Alex Foshay agreed and said that he was not expecting U.S. rate cuts until later in 2024. “This inflationary persistence has made it clear that getting back to target will be more turbulent than some had predicted,” he said.

However, Barings Managing Director, Head of Value Add Investing Europe Valeria Falcone, said that she expected to see more movement in the market this year, most likely in the second half before a normalisation by 2025.

“The fundamentals of real estate are very good. MIPIM always sets the scene for the rest of the year. There is more positivity that we can see this year compared to last year,” she said.

PIMCO Prime Real Estate Europe Chief Executive Annette Kroger said that the company is looking to capitalise on increasing opportunities in the market, particularly within real estate debt and equity.

“In terms of equity, opportunistic and distressed markets are showing opportunities, though we also anticipate core and core-plus will become appealing for those with dry powder as we move into a new cycle,” she said.

Here Comes Saudi Arabia

Move over Dubai, the new kid on the block for extravagant and hugely ambitious projects is undoubtedly the Kingdom of Saudi Arabia. It’s not unusual for a specific market to make a big splash in Cannes. In the past, Russia (obviously no longer present) and the various countries that once made up the old Soviet Union, China and the Middle East have all gone large on the Croisette.

This time round a number of the most advanced Saudi projects were being promoted in Cannes.

Those included Neom, a four-region giga-project that includes Trojena and The Line. The latter will eventually comprise a city of nine million people that is 105 miles long but just 650F wide. It will feature no cars, will be run entirely on renewable energy and residents will be able to access day-to-day essentials within a five-minute walk. 

“We’re beyond inception," Trojena Marketing Director Clark Williams said of their presence in Cannes. "We're beyond masterplans and architectural designs. Now, we're signing contracts and we're actually building. We wanted to show to the world that it wasn't just fancy designs and renders.” 

Another project being showcased was King Salman Park in capital Riyadh, which Assistant Deputy Mayor of Urban Planning Saleh Al Saif described as the “largest garden in the world.”

When complete, the park will provide access to nature for Riyadh’s citizens, including a million trees, as well as sporting facilities, arts and cultural spaces, and entertainment venues.

Also in capital Riyadh, the redevelopment of a new city centre called New Murabba is underway, which will include 100,000 residential units, 9,000 hotel rooms, retail, offices, leisure and community facilities within a walkable downtown.

The centre point of the redevelopment will be the Makaab, a cube-shaped building sitting on a spiral base. This will be about the same height as the Empire State Building but five times as wide and four times as deep. It has been conceived as a mixed-use building, with about half of its 21.5M SF dedicated to retail, leisure and hotel space.

Meanwhile, during the show Diriyah Company unveiled the concept design for The Arena in Diriyah. Located on the outskirts of Riyadh, it has been designed by London-based HKS Architects and will have a 20,000-seat capacity to host sports, entertainment and cultural events.

The announcement is part of the $63.2B masterplan for Diriyah’s transformation and the venue will be capable of being reconfigured within hours, offering the flexibility to host various events in quick succession with an adjacent outdoor venue called Plaza. 

“The Arena in Diriyah is a cornerstone of our mission to blend tradition with innovation,” Diriyah Company Group CEO Jerry Inzerillo said at the MIPIM launch.

Living Large

One of the key themes at MIPIM this year was both the growth in the importance of the living sector but also the increasing number of specific and niche sub-sectors that are evolving. A few years ago residential hardly featured on the MIPIM roster. This year it took centrestage.

In fact, the residential theme actually kicked off a day ahead of the main event, opening with a summit entitled Housing Matters. Co-living advisory platform Artof.Co founder Gui Perdrix said that the increasing number of sub-sectors within the umbrella of ‘living real estate’ reflected how people are going to live in the future.

“We need solutions for the densification of cities, and what is encouraging is that we are seeing far more interest from the public sector in alternative concepts beyond traditional build-to-rent and operators in the sector moving into more specialist areas, such as single-family and senior living,” he said.

It was a view backed by Urban Land Institute Vice President of Research and Advisory Services Simon Chinn, who speculated that the alternative residential market could in fact grow to be larger than the traditional housing sector and said that “the appetite is still clear” as niches in the living sector become more established.

Concepts such as single-parent family homes, a trend towards smaller living spaces but more communal services, and a concept with 50% fully able and 50% disabled residents all emerged as further niches being developed, and Chinn said that changing demographics, especially as people live longer, were also reshaping life stages and therefore real estate.

Extended life means society is seeing life stages changing, with so-called ‘juevenescence’, where younger life from 18-30-years-old delays moving into full adulthood, he said. That is followed by a longer working life and an extended retirement. "There is also a ‘sandwich generation’ who are caring for their children and a parent of over 65 at the same time," Chinn said.

“More progressive residential real estate is demonstrating that there are more ways of approaching the sector and this is helping reshape the future of the living sector," Danish developer Living by Alfa CEO Jack Renteria added. "There are many drivers of change in the residential sector, but the challenge facing the industry is how we are going make a business out of it.”