MIPIM Preview Magazine

February 2011

MIPIM Preview Magazine

www.mipim.com

KEYNOTE SPEAKER Visionary economist Nouriel Roubini looks into property’s future

Inside, page 38

T H E

O F F I C I A L

FINANCING THE FUTURE Cities and conurbations

Inside, page 60

M I P I M

ALSO INSIDE ■ UK in the hot seat

MIPIM 2011 Country Of Honour ■ Investment Rethinking risk and reward ■ Sustainable architecture Cities take the lead ■ Hotel, Tourism and Leisure Opportunities for owners and operators

M A G A Z I N E advertisement

••• EDITORIAL

Dear Friends, Welcome to the MIPIM Preview Magazine, your introduction to the 22nd edition of the world’s leading real estate conference, networking and business event.

After two challenging years for the major world economies and the real estate industry, MIPIM 2011 aims, more than ever, to provide our customers with the right opportunities to acquire and renew professional contacts, and do business, and to keep you informed about the latest real estate trends.

This year we are offering more than 40 conferences on real estate subjects featuring international experts from the industry, new formats to facilitate contacts and special events to bring together the key industry players.

Filippo Rean

Part of identifying where to invest requires an understanding of the global economic market and the short- to mid-term economic prospects. In 2006, the economist Dr Nouriel Roubini was one of the few people to warn the international financial community of an upcoming crisis. At MIPIM 2011, Dr Roubini will give a keynote address on the outlook for the world economy and the implications for the international real estate industry.

The British real estate community was one of the first to embrace the MIPIM concept when the event was launched in 1990 and remains one of the most dynamic real estate markets in Europe. This year, we have chosen the United Kingdom as the MIPIM Country Of Honour. As part of the programme, we’ll be looking at the state of the UK market, regeneration in the British property sector and introducing a new investment ‘competition’, (called Investor Quest) based on the popular television show Dragon’s Den, and involving UK-based developers pitching their projects to a jury of potential investors. On the exhibition floor, you will also discover a new initiative, Place UK, a dedicated stand bringing together local UK authorities and private sector entities working in the regeneration sector.

As you are no doubt aware, MIPIM has a younger sister in the form of MIPIM Asia, which takes place in Hong Kong in November. In Cannes March 8 will be Asia Day at MIPIM, with conferences devoted to the Asian market, covering most of the region, with a focus on China, and a chance to listen to and meet the major Asian institutional funds that are looking to develop their international footprint through direct and indirect investments.

This year we are launching the Investments Labs, a series of six learning and networking sessions devoted to investment in such high-potential markets as Turkey, Latin America (with a dedicated session on Brazil) and Africa (with two sessions targeting Egypt and South Africa). These new Investments Labs will consist of 45-minute presentations and discussions of territory-related data, followed by networking sessions with industry experts from each region.

Finally, we are honoured to welcome mayors from around the world for the third edition of the Mayors’ Think Tank. Urban populations are growing fast and quality of life and sustainable issues are at the top of urban development strategies. We are proud that MIPIM contributes to the urban debate.

It only remains for me to thank you for your support for MIPIM. I hope this magazine is an instructive read, I encourage you to prepare your trip to MIPIM by using www.mipim.com to access our online community and the updated event programme, and I look forward to seeing you in Cannes in March.

Best regards Filippo Rean – MIPIM & MIPIM Asia Director

Mayland Real Estate Mayland Real Estate has become the leading developer of dominant shopping centres in Poland: 130.000 sq m GLA completed shopping centres, 240.000 sq m GLA projects in pipeline.

Mayland Real Estate acts as a developer, designer, builder, leaser and manager of its shopping centres, combining all the competences required to supervise every single stage of the development, introducing innovative and tailored concepts and creating higher value to its clients. Also, because Mayland has a view towards the

Bella Dolina

Serenada

end-consumer both in terms of concept and design, Mayland’s shopping centres satisfy first each and every consumer, attracting the best retailers and creating for all a sustainable and highly profitable investment in local markets.

Mayland Real Estate opened 3 dominant retail shopping centres delivering 130.000 sq m GLA of prime retail products to the Polish market in 2008, which accounted for 25% of prime shopping centres delivered in Poland that year. The sale of 3 shopping

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– an eye for detail centres (Karolinka in Opole and Pogoria in Dabrowa Gornicza end of 2009 and Jantar in Slupsk end of 2010) reflects Mayland’s winning development formula which attracts international retailers and top financial institutions. Mayland Real Estate will provide ongoing property management services for all of its completed projects.

Do you know what MMI is?

Following the clients and their needs, Mayland Real Estate creates new places of exchange for urban communities, new retail experiences, proofed by the special design and unique atmosphere, adapting all the competences to the market requirements. Critical mass, sustainability and diversity are the main keys you can discover in Mayland’s 1 million sq m of retail space created during the last15 years of experience in Poland.

Mayland Market Intelligence is a fully integrated system of market intelligence, allowing a permanent analysis of local consumer markets, retail sectors and urban planning evolution.

5 regional malls starting from this year in Poland The depth and breadth or retail competence is reflected in the prime retail products Mayland continues to develop: creating regional shopping centres and/or turning existing retail locations into regional shopping destinations.

Mayland’s retail development pipeline already started the construction of the first dominant regional shopping centre from the 5 projects to open in the next 3 years in Poland. The 5 projects Mayland has under development will offer to Polish market 240.000 sqm GLA and will be located both in top 5 cities and secondary agglomerations.

In Gdansk region, the development of the extension of Wzgorze shopping centre will create the 3-in-1 largest retail destination in the Tri-City area, 3 times bigger than the existing shopping centre (68.000 sq m GLA).

Wzgorze In Cracow, Mayland Real Estate is developing Serenada Shopping Centre located next to the existing 60.000 sq m GLA, to create the regional shopping destination in the area. The new beating heart of the city with 42.000 sq m GLA of fashion and leisure, will offer a total capacity of 100.000 sq m GLA, the retail destination no. 1 in Northern Cracow.

In the fastest developing residential districts of Szczecin, the 7th largest city in Poland, Mayland is to open Aleja Slonca close to an existing retail scheme of 36.000 sq m GLA. Aleja Slonca, with 38.000 sq m GLA, will be the future dominant retail and leisure destination in Western Szczecin, with 70.000 sq m GLA.

If you want to know how we transform this in added value for our projects,

VISIT US at MIPIM Lerins Space, Stand LR3.02 Right in the middle of the future 100% high-tech districts of Rzeszow Mayland offers an impressive 3-in-1 retail scheme for the whole region. Attracting 4 times more customers than the city population, Bella Dolina, will offer the largest regional mall up to 55.000 sq m GLA + retail park up to 35.000 sq m GLA. In Slupsk, after the successful completion of Jantar shopping centre, Mayland Real Estate will develop an extension to create the dominant regional mall, totaling 46.000 sq m GLA. Together with multiplex cinema, existing hypermarket, high profile fashion brands, specialty stores and a large food court, Jantar will become the first and only dominant retail destination in the region with 40% market share.

Mayland Real Estate continues to satisfy its customers, creating shopping malls best tailored to local markets and to develop places with the ambience of a friendly home, to perfectly coordinate a thousand and one details to guarantee the comfort to its visitors.

www.mayland.pl

Full Sail to Cannes!

Visit us at MIPIM in Cannes, 8 - 11 March 2011, Stand H4.30

Our Schedule of Events Tuesday, 8 March, 12:00 noon 4 European Cities in Debate: Amsterdam, Barcelona, Hamburg and Manchester Hotel Majestic Barriére

Wednesday, 9 March, 11:00 am Hamburg / HafenCity Reception Minister Dr. Herlind Gundelach Prof. Jörn Walter, Chief Urban Planner

Tuesday, 8 March, 4:30 pm Official Opening, Hamburg Stand Minister Dr. Herlind Gundelach

Wednesday, 9 March, 5:00 pm Hamburg – Berlin Reception

Tuesday, 8 March, 4:45 pm Wilhelmsburg Mitte – Plans and Projects Uli Hellweg, CEO, IBA Hamburg GmbH followed by IBA Cocktail Reception

Thursday, 10 March, 11:00 am Conversion – prospects in big cities and the real estate business Albrecht Sonnenschein, Director of Real Estate Management, Hamburg Ministry of Finance Regula Lüscher, Director of Urban Development Berlin Moderated by Andreas Auth, CEO, Auth Real Estate Advisors GmbH & Co. KG

Thursday, 10 March, 12:00 noon Living in Hamburg: Strategies and Projects for New Housing Construction Panel Discussion with: Prof. Jörn Walter, Chief Urban Planner Uli Hellweg, CEO, IBA Hamburg GmbH Achim Nagel, CEO, Primus Developments GmbH Moderated by Andreas Auth, CEO, Auth Real Estate Advisors GmbH & Co. KG Thursday, 10 March, 3:00 pm E-Bike Prize Drawing

••• CONTENTS

NEWS

9

MIPIM AWARDS

35

CONFERENCES

20

FEATURES MIPIM Preview magazine February 2011 Director of Publications: Paul Zilk Editorial Department Editor in Chief: Paul Strohm — Technical Editor in Chief: Herve Traisnel — Deputy Technical Editor in Chief: Frederic Beauseigneur — Graphic Designer: Carole Peres — Sub Editors: Phil Sommerich, Joanna Stephens — Proof Reader: Debbie Lincoln — Contributors: Brian Baker, Katherine Doggrell, Steve Killick, Steve Macvicar, Mark Moore, Doug Morrison, Graham Parker, Bert-Erik ten Cate, Emma Vandore Editorial Management: Boutique Editions Production Department Content Director: Jean-Marc Andre — Publications Production and Development Manager: Martin Screpel — Publishing Product Manager: Chealsy Choquette — Publishing Co-ordinators: Amrane Lamiri, Bruno Piauger — Production Assistants: Emilie Lambert, David Le Chapelain, Veronica Pirim — Production Assistant, Cannes Office: Eric Laurent — Printer: Riccobono Imprimeurs, Le Muy (France).

Published by Reed MIDEM BP 572 — 11, rue du Colonel Pierre Avia — 75726 Paris Cedex 15, France Contents © 2011, Reed MIDEM Market Publications — Publication registered 1st quarter 2011 ISSN 1962-9974

Printed on 100% recycled paper

www.mipim.com

KEYNOTE SPEAKER INTERVIEW The man who saw it coming Nouriel Roubini

38

INVESTMENT Mind the funding gap Investment, banking and finance

40

Moving in on quality Occupier hotspots

43

Room for inventive incentives Attracting tenants in hard times

46

The quest for cross-border cash Capital sources

51

Rethinking the risk-reward ratio Investment targets

54

CITIES AND CONURBATIONS Paying for growth with growth Financing public projects

60

Blazing a green trail Architecture and sustainability

68

Do host cities really win?

Hosting major events

74

HOTELS, TOURISM, LEISURE Staying power required Brand profitability

79

Hotspots in a cold climate Investment targets

83

MIPIM 2011 — USEFUL TIPS

89

MIPIM 2011 events agenda Wednesday 9 March ■ UK BREAKFAST

8.00 – 9.30 Carlton Hotel by invitation only in partnership with British Property Federation

■ MAYORS’ LUNCH:

Tuesday 8 March ■ INVESTING IN JAPAN

BREAKFAST 8.30 – 9.30 Majestic Hotel by invitation only

■ ASIA LUNCH

13.00 – 14.00 Majestic Hotel Beach Restaurant

Political Leaders meet End-Users 13.15 – 14.30 Majestic Hotel by invitation only sponsored by

Thursday 10 March ■ MIPIM LEADERS’

BREAKFAST: Private talks with Nouriel Roubini 8.30 – 10.00 Majestic Hotel by invitation only

■ HOTEL & TOURISM

LUNCH 13.00 – 14.15 Palais Stéphanie by invitation only

&

sponsored by

by invitation only

■ MIPIM AWARDS

in partnership with

19.00 – 20.00 Grand Auditorium

■ OPENING

COCKTAIL PARTY 19.30 Carlton Hotel sponsored by

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sponsored by

••• NEWS

UK is MIPIM Country Of Honour SENIOR British politicians are expected to join the host of leading figures from the UK property business in Cannes in March, along with top executives from cities up and down the British Isles, following the UK’s nomination as MIPIM Country Of Honour for 2011.

“The nomination of the UK as MIPIM Country Of Honour is in recognition of the contribution that the country has made to the global real estate market during the event’s 21-year history,” said MIPIM's UK managing director, Peter Rhodes.

Britain’s property professionals have been strongly represented at MIPIM from the very first show and by 2009 the UK fielded more exhibiting companies than any other country, with 1,109 participating in the event overall. In 2010 that figure increased to 1,142.

Andrew Fraser, former CEO of inward investment agency Invest UK, is co-chair of the steering commit-

London’s mayor Boris Johnson addresses a packed London stand (MIPIM 2010)

tee formed to maximise the benefits of MIPIM this year. He said: “Not only is this year the countdown to the 2012 London Olympics, but in terms of the return of confidence, the timing of the nomination could not be better. If developers are optimistic, that makes a big statement about the climate for business in the UK as a whole.”

Fraser said the UK has a number of competitive advantages, one of which is the combination of strength, depth and creativity in the

property sector. “Although this is sometimes underrated, it does come across very powerfully at MIPIM.” He added that another major advantage the UK has is the strength of its architecture profession, which is evident at MIPIM because of the number of overseas projects which have been conceived

by British architects.

Making regeneration happen in the UK Wednesday 9 March — 14.30-15.30

Hoban room level 3

Rwanda to unveil capital master plan KIGALI City and the Rwandan Development Board will unveil a major urban master plan at MIPIM 2011. The plan is designed to make Rwanda’s capital a world-class city and gateway to East Africa.

Senior representatives from the Rwandan government and the City of Kigali are also expected to visit Cannes as Rwanda exhibits at MIPIM for the first time.

The Kigali master plan is a blueprint for meeting the increased demand for modern commercial, retail, residential and leisure accommodation generated by

City Leaders has top urban tips

Rwanda’s emerging economy and increases in foreign direct investment.

Recent planning reforms have allowed regeneration to proceed at an accelerated pace, with what aims to be an efficient business environment that offers developers a conducive and supportive framework. Benefits include a simple taxation system, a freetrade zone, and stable inflation and exchange rates. Rwanda also has the highest growth rate in the region, with GDP climbing more than 7% a year.

The Conceptual Master Plan of Kigali was developed by OZ Architecture. Surbana has developed the detailed master plan for the Kigali CBD.

Kigali’s new master plan is to be unveiled at MIPIM

MIPIM has again joined forces with pan-European real estate information provider Property EU to publish City Leaders, an annual guide to top cities in Europe.

The partnership was launched last year and provides an overview of Europe’s leading cities in terms of their qualities as investment locations. Each analysis includes real estate profiles, and the views and visions of city leaders.

“MIPIM attracts large numbers of urban administrations and is a highly effective interface between the public and private sectors, so City Leaders, which adds Property EU’s informationgathering capability to the mix, extends this capacity to provide a year-round source book,” said MIPIM’s sales director, Beatrice Gravier.

The City Leaders team will be present during MIPIM both on the stand and around the exhibition and conference areas ready to discuss opportunities for cities, investors and anyone interested in publicprivate partnerships to gain a presence in the second edition of City Leaders, now in production.

For more details see www.cityleaders.info.

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

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••• NEWS

European vacancy levels stabilise

seems to be slowly gaining momentum. Emerging markets, however, face inflationary pressures and will have to tighten policy still further.

Inflation will remain low in the OECD countries èat least until 2012.

The Irish bail-out represents the start of a process engineered by the European Central Bank (ECB) to extricate itself from the provision of liquidity to the commercial

WITH the US slowly gathering speed and China tightening its monetary policy, the OECD countries will deliver a greater share of world growth in 2011 relative to emerging markets, according to Grosvenor’s Global Outlook - December 2010.

While risk levels remain high, and bond-holders will ultimately have to take a haircut, the global economy

banks of Ireland, Portugal, Spain and Greece. By recapitalising the commercial banks of these countries, the ECB hopes the interbank market will revive.

If the Irish bail-out succeeds, as Grosvenor’s report expects it will, Portugal will be next to recapitalise, followed by Spain. Finally, in 2012, Greece and possibly Ireland will reschedule their national debts.

WORLD OVERVIEW

Growth

Inflation rate

Short interest rate

US

Stable

Easing

Stable

Euro zone

Stable

Easing

Stable

UK

Easing

Rising

Stable

Japan

Stalled

Falling

Stable

Canada

Growing

Rising

Increasing

China

Stable

Rising

Increasing

Australia

Growing

Easing

Increasing Source: Grosvenor

Frankfurt has seen major acquisitions leading to a boost in leasing figures

Take-up across the European office markets is reported as significantly higher than the 2009 levels, with an increase of 30%, CBRE reveals. The improvement reflects the continuing ability of corporates to rationalise and consolidate space on favourable terms.

London and Frankfurt are among the markets that have seen major acquisitions, which has led to a boost in leasing figures.

Hotel investment volumes set to soar GLOBAL hotel investment volumes recovered strongly in 2010 after reaching the lowest level of the decade in 2009.

Following this bounce back, consultant Jones Lang LaSalle (JLL) forecasts that global hotel transaction volume will increase a further 30%-40% in 2011.

The rebound in operating fundamentals and the broad cross-section of equity capital in the market is motivating both buyers and sellers, according to JLL’s Hotel Investment Outlook 2011 report. Having gathered pace in 2010, volumes are expected to continue to rise substantially in 2011, reaching $28bn-$30bn.

Among the active buyers, JLL predicts that REITs, institutional investors, and private and high networth investors with opportunistic

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capital will be key players. But the report cautions: “While hotels have become a more mainstream asset class over the past decade, the combination of property and business risk makes them inherently complex. Investors who have a strong track record in the sector will be most successful.”

Photo courtesy Mandarin Oriental

Photo courtesy PIA Stadt Frankfurt am Main, © Tanja Schafer

THE THIRD quarter of 2010 saw the aggregate vacancy rate of offices in Europe level off at 10.1%, according to research

by CB Richard Ellis (CBRE) in its Q3 2010 EMEA Office Occupier MarketView.

In some key office markets, such as London and Munich, the available supply is shrinking, the report found. However, variations exist within many cities, with vacancy rates for prime CBD space typically lower, even in places where aggregate vacancy remains high.

World growth to pick up in 2011

Hotel investment is bouncing back

Arthur de Haast, global CEO of JLL Hotels, said: “With more stock hitting the market in 2011, there will be an increased depth and breadth of opportunities for investors. The most acquisitive hotel investors will likely be those that make all-equity purchases or structure acquisitions with low leverage levels.”

Discover excellence in all its facets.

13th International Trade Show for Property Professionals in Cannes: March 8–11, 2011

Düsseldorf is the flourishing, highly versatile destination for foreign investors, global corporations and thriving new businesses from all industry and service sectors – and a great place to live.

Visit Düsseldorf and its Real Estate Partners at the 2011 MIPIM in Cannes, France, Riviera Hall • Stand R33.10 • www.duesseldorf-realestate.com

••• NEWS

Gateway Netherlands opens doors DUTCH companies will come under the spotlight at MIPIM 2011 with the inauguration of the Gateway Netherlands pavilion. The pavilion will not only provide a networking focal point for international exhibitors and participants wanting to make contact with Dutch companies, cities and other Dutch real estate professionals, but also features a dedicated conference programme.

“Holland punches well above its weight in the real estate and investment world. It is a small country with global significance, expertise and ambitions, and we are pleased that we will have the opportunity to emphasise this and to demonstrate what a significant force the Dutch are at MIPIM,” said Marcia Schless, manager, international marketing and communication, at Goudabased Multi Corporation. Schless also chairs the association Dutch Women in Real Estate (DWIRE), which is also participating in the pavilion.

A number of other prominent organisations have announced their

participation in Gateway Netherlands, such as investor ING REIM Europe, and cities such as The Hague, Zuid-As, and Utrecht, and property brokers’ organisations NVM and Funda. Through DWIRE, Redevco, Ans de Wijn Real Estate Agency, C Hoen dzn as well as law firms Fort, Brick and Boot will also participate.

The Gateway Netherlands conference programme is being co-organised by leading Dutch property publishers Property EU/NL, VastGoedMarkt (VGM) and Real Estate Publishers (REP).

Among the sessions planned is one on Architecture and Real Estate Development. One question that the programme will address is whether hiring a famous architect is a good investment for the value of real estate. The session will also examine whether architecture can make the key difference in difficult times.

Other sessions will focus on retail property and how cities can most effectively exchange knowledge of best practices.

Multi Corporation’s Marcia Schless: “Holland punches well above its weight in the real estate and investment world”

“The Netherlands has been a significant force from the very first MIPIM and this is something that we shall emphasise and celebrate with the establishment of the Gateway Netherlands pavilion,”

said MIPIM director Filippo Rean.

Gateway Netherlands conference programme available on www.mipim.com, Programme section

Dijon shows how it can cut the mustard DIJON, capital of the Burgundy region, will be in Cannes to tell MIPIM participants about the progress that the dynamic French city is making.

Dijon’s promotional material implores readers to leave the cliches behind and look beneath the surface at the facts about Dijon — Greater Dijon is going to invest €400m in the construction of two tramway lines and altogether €1bn is being devoted to infrastructurebased projects between now and 2015, including modernising its road, rail and air networks, and improving housing.

The Dijon agglomeration has more than 250,000 inhabitants and the city says it is ambitious to be in-

Dijon’s trams are on the right track

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cluded among France’s major metropolitan centres.

The city government says that Di-

jon has three key assets which are particularly appreciated by entrepreneurs and investors. It is at the heart of the Paris-Lyon-Strasbourg triangle; it is located at the intersection of Europe’s northsouth and east-west train, motorway, and airport networks; and it is an accessible, active and human-size city.

There are 121,000 jobs in Dijon and employers include companies in sectors ranging from pharmaceuticals and biotechnology to casting and metalworking, and to textiles and clothing.

BEST PRACTICES

Bahrain Bay is committed to world leading best practice in construction delivery, urban design and environmental management.

0%

Global investment: developers from the USA, France, India, Singapore, Kuwait, Saudi Arabia, the United Arab Emirates and Bahrain are committed to the project.

100%

Over 70% of the land parcels have been sold within the $2.5 billion Bahrain Bay Development.

Arcapita Bank Headquarters completed and handed over in Q4 2010, with several other Third Party Developments underway.

55% RESIDENTIAL

18% RETAIL 27% COMMERCIAL

A fully integrated mixed-use community designed to offer a wide variety of investment opportunities.

Bahrain has shown genuine economic resilience in a turbulent world economy and remains a leading performer in the region.

ON TR ACK

••• NEWS

Landmark for Masdar City

Nigel Young/Foster + Partners

MASDAR City, the experimental energy-self-sufficient urban environment being created in Abu Dhabi, continues apace with the opening of the Masdar Institute.

Devoted to researching sustainability, the Institute is the first building to be fully operational within Masdar City.

It will be used as a pilot for the sustainable technologies that will be explored for implementation in future Masdar City buildings.

Masdar Institute will be used as a pilot for sustainable technologies

A 10 MW solar field within the masterplanned site provides 60% more energy than is consumed by the Masdar Institute, allowing the surplus energy to be fed back into the Abu Dhabi grid. The institute and its facilities are fully powered by solar energy and use 54% less potable water and 51% less electricity than average buildings in the UAE. The Masdar Institute was inaugurated in November by crown prince of Abu Dhabi, His Highness General Sheikh Mohamed bin Zayed Al Nahyan, and the UAE’s deputy prime minister, Mansour bin Zayed Al Nahyan. The masterplan designer, Norman Foster, was also present at the ceremony.

SAPOA opens door to South Africa’s potential MIPIM 2011 sees the debut of a South African pavilion, underlining the country’s rapidly developing economy and its growing role as a gateway to the African continent.

Exhibiting under the pavilion’s banner is the South African Property Owners Association (SAPOA), which will be setting out the advantages of investing in South Africa — and promoting itself as the prime conduit through which to do it.

With its members controlling or owning 90% of the commercial property in South Africa, SAPOA can connect investors with key players throughout the territory. This is achieved through an extensive database and by regular communication with SAPOA’s 1,075-company members via publications, newsletters, e-mails, personal contacts and industry conventions.

SAPOA’s members fall into several categories, with property owners

Cape Town: SAPOA members control or own at least 90% of the commercial property in South Africa

comprising the biggest grouping.

Property loan stock companies, shopping-centre owners and office-park owners are also represented, alongside property managers and professionals, ar-

chitects, town planners, attorneys, valuers and asset managers.

Investment Lab: South Africa The case of emerging markets Thursday 10 March — 11.30-12.30

Gaudi room — level 01

Baku designs its future in Black and White Cities BAKU White City is a regeneration project in the industrial Black City area of the Azerbaijan capital Baku, located on the western shore of the Caspian Sea The 221 ha White City site offers a wide range of residential and commercial buildings. Investors will be able to select suitable units for investment and construction, from small villas to large-scale urban projects.

An international project team has been put together to plan the site, with Atkins acting as lead consultant. Architects include Foster + Partners and F+A Architects.

Preliminary work has been undertaken to move the industrial areas away to the edge of the city, decontaminate the land and make improvements to the coastal

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boulevard.

White City is heralded as the likeliest target for outside investment into the fast-growing city of Baku, which is benefitting from the Caspian oil rush.

Black City comprises the oil-based

industrial heartland on the eastern side of Baku, which describes itself as the world’s oldest oil town.

Baku, which has a population of two million, claims that oil has been drilled and exploited in the region since ancient times.

Baku White City offers a range of opportunities

CIT Y OF THE FUTURE CZECH REPUBLIC 1st position FDI Strategy

INVITATION MIPIM 2011 THE CITY OF BRNO has the pleasure of inviting you to the City of Brno stand # 04.24 – 06.23 at MIPIM 2011, Palais des Festivals, Cannes (March 8 -11, 2011).

You are cordially invited to a reception hosted by the City of Brno and its partners on Wednesday, March 9, at 3 p.m. The reception is organised under the auspices of Lord Mayor Roman Onderka.

Spie Sp elb lber ber e k Of O f fice e Cen e tr t re

Come and taste genuine Moravian wine at the City of Brno stand!

www.brno.cz

General partners

Partners

••• NEWS

DIRECT investment into commercial real estate in Europe is likely to reach €100bn in 2010, according to research by consultant Jones Lang LaSalle (JLL). This represents an increase of over 40% on volumes recorded for the full year of 2009.

Investment activity in the first three quarters of 2010 was already substantially ahead of the previous year’s levels and, at press time, a strong fourth quarter was expected. JLL estimates that direct real-estate transactions will reach €31bn in Europe in the fourth quarter — traditionally the strongest of the year — which would be 35% higher than the third-quarter volumes.

Photo: Micha Kratwasser

Commercial volumes to grow by 40%

Stockholm: Investment volumes have seen a pronounced rise in Scandinavia

The trend of rising investment volumes has been most pronounced in Germany and Scandinavia. Volumes are forecast to almost double in the former and increase more than twofold in the latter compared to 2009, to reach around €33.5bn across the two markets.

Central and Eastern Europe (CEE) maintained its 6% overall share of total European transaction volumes in 2010, with transactions in the region increasing by 42%.

Cross-border investment remained at the 50% mark throughout 2010.

JLL expects this share to rise as equity rather than debt buyers, especially from Asia and the Middle East, continue to target trophy assets in European markets.

Atrium invests €170m in Warsaw centre ATRIUM European Real Estate, active in shopping-centre investment, management and development in Central and Eastern Europe (CEE), has bought the Promenada Shopping Centre in Warsaw from Carpathian for €169.5m.

An additional €1.5m will be paid to Carpathian upon the successful recovery of VAT. Atrium, which will finance the acquisition through a mixture of equity and debt, was advised by consultant Cushman & Wakefield’s Polish office.

Promenada, the fourth largest shopping centre in Warsaw, is located in the Praga Poludnie district. Its acquisition increases Atrium’s exposure to the tier-one Warsaw market, where it already owns the Reduta and Targowek shopping centres. The deal brings the company’s total number of income-producing assets in Poland to 19.

Promenada Shopping Centre, bought from Carpathian for €169.5m

Pontegadea acquires Spanish bank branches ISC FRESHWATER Investment, advised by its UK asset manager Moor Park Capital Partners, has sold a portfolio of Spanish citycentre bank branches to Pontegadea Group for €55m.

The units are let to Banco Sabadell

on a minimum term of 25 years.

The portfolio comprises five retail banking units situated in established retail locations within different Spanish cities, including Barcelona and Madrid.

Following the acquisition of a

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€400m portfolio of 48 Banco Sabadell branches in April 2010, ISC Freshwater Investment and Moor Park Capital Partners have decided to dispose of a selection of assets from the portfolio.

To date, around €65m of real-es-

tate assets have been sold, and the sale process is due to continue into 2011.

Cushman & Wakefield and Aguirre Newman are the joint investment marketing agents on the sales.

of prime Manhattan real estate

Come and see us at the A brand new 12 million sq ft mixed-use destination by the developers of Time Warner Center – by the Hudson River, next to Penn Station and overlooking Midtown Manhattan.

A state-of-the-art ofďŹ ce complex, with fabulous leisure and retail amenities, including a cultural center and 10 acres of landscaped park.

stand /13.01

INVESTMENT PROPERTY TALKS Don’t miss our programme of conferences and events Follow our updates on www.mipim.com, programme section

8-11 March 2011 Palais des Festivals, Cannes, France

Top international real estate players talk top business at MIPIM. Network with leaders and evaluate opportunities with the exclusive MIPIM 2011 programme.

Transmitting knowledge, engaging new projects and establishing new contacts is at the heart of our event. The Investment Property Talks are shaped to provide valuable and updated information to address current economic challenge through highly efficient formats:

Attend the Investment Property Talks organised around 4 themes: Finance: Beyond the credit crisis Geographical focuses Sustainable cities Hotel, Tourism & Leisure

NEW: Discover our dedicated exhibition and networking areas • The Architecture Pavilion, an exclusive zone to connect architects with MIPIM participants, through a range of conferences and debates.

• Gateway Netherlands, a 150m² conference platform designed to highlight the Dutch real estate community to an international audience.

Mingle and make connections Business Accelerators • NEW: Investment Labs on emerging countries.

Learn and network with experts (45’ workshop followed by a networking event) • Hotel, Tourism & Leisure Presentations and Power Meetings.

In partnership with PKF hotelexperts Networking events • Premium events including the Opening Cocktail Party and the MIPIM Awards Ceremony & Cocktail • Thematic Lunches (by invitation only)

As the leading European country for real estate investment, MIPIM applauds the UK as this year’s Country of Honour. A range of dedicated products and services will highlight investment opportunities and projects in the UK and allow top level networking with British key players.

NEW! The Investor Quest: gain inside tips and a window into the capital-raising process at this interactive and entertaining event.

DON’T MISS MIPIM 2011 CONFERENCES AND EVENTS PROGRAMME Finance : Beyond the credit crisis

Geographical focuses

TUESDAY 8 MARCH A.M.

Sustainable cities

A.M.

10.00-10.45

Investment Lab: Africa

Keynote address by Gilberto Kassab, São Paulo City Mayor (Brazil)

ASIA DAY

11.30-12.30

A.M. MAYORS’ DAY

By invitation only

10.00-11.00

Investment Lab: Egypt, urbanisation of a sleeping giant

11.30-12.30

Keynote address by Dr. Nouriel Roubini

Between shock and profit: the global perspectives of German investors

Co-org: REIDIN.com

Co-org: Immobilien Manager

Capital requirements: understanding what sovereign wealth funds are looking for when investing in property

P.M.

13.00-14.30

ASIA DAY

Asia Lunch

10.00-13.00

10.00-11.00

Co-org: IPD

HTL presentations - The art of relaxation: Resorts and Resort hotels

14.00-17.00

HTL Presentations - Projects for a better life: Tourism & Leisure destinations 15.00-16.00

Poland: best investment products in 2011 & 2012

MAYORS’ DAY

Mayors’ Think Tank - Building the city together: urban strategies and integrated solutions’ implementation

15.00-16.00

Co-org: IPD

ASIA DAY

Asian capital flow Co-org: ANREV

16.30-17.30

Russia: The time is now!

Co-org: IP Real Estate

Distressed investing or distressing investments?

11.30-12.45

Co-org: IPD

11.30-12.30

Investment Lab - Brazil: the present and future of investments Co-org: ADIT

Making green buildings pay - sustainability for occupiers

Central Europe: Not too hot, not too cold – advantage or handicap?

Co-org: International Sustainability Alliance

Hotel & Tourism Lunch Sponsored by Jones Lang LaSalle Hotels By invitation only

15.00-16.00

A global challenge: how to make resort hotels profitable?

P.M.

13.15-14.30

P.M.

13.00 - 14.30

16.30-17.30

16.30-17.30

Co-org: Assoimmobiliare and Chiomenti Studio Legale

Co-org: SAPOA

11.30-12.30

Co-org: RICS

11.30-12.30

Real Estate Investment in Italy - a new season

From stimulus to austerity assessing the outlook for UK property

Co-org: Vedomosti

Dense cities: For better or for worse?

11.30-12.30

The new city scale

Investment Lab: South Africa - The case of emerging markets

11.30-12.30

Towards a better investment marketplace: reporting, regulation & risk

Investors' Power Meetings

11.30-12.45

Sponsored by GDF Suez By invitation only

Co-org: Eurobuild CEE

15.00-16.00

11.00-13.00

HTL Presentations Good, better, best: Luxury hotels (part 1) Cheap chic: Budget hotels (part 2) 11.15-12.15

10.00-13.00

By invitation only

8.30-9.30

MIPIM Leaders Breakfast Private talks with Dr. Nouriel Roubini

10.00-11.15

Co-org: DTZ

Events

THURSDAY 10 MARCH

WEDNESDAY 9 MARCH

11.30-12.45

China: reward versus risk

Hotel, Tourism & Leisure

MAYORS’ DAY

Co-org: PKF hotelexperts

15.00-16.00

Co-org : Warsaw Business Journal

Mayors Lunch: Political leaders meet End-Users

16.30-17.30

Sponsored by GDF Suez and Hines By invitation only

US property markets: where are the opportunities?

14.00-17.00

15.00-16.00

HTL Presentations - Islands in the urban jungle: City hotels

Participating in a meaningful response to the global housing shortage

Panel on France Co-org : Les Echos Conferences

19.30

MIPIM 2011 Opening Cocktail

14.30-15.30

Making regeneration happen in the UK Co-org: UK Regeneration

15.00-16.00

Conferences sponsors

Keynote panel on economics - Real estate as an asset class: setting out the road map of future prospects

Co-org: NAREIM

Co-org: Global Housing Foundation

16.30-17.30

Hotel & Tourism panel Co-org: Jones Lang LaSalle Hotels

16.30-17.45

Investment Lab Turkey: Too good to be true?

Co-org: REIDIN.com

Co-org: IPD

16.30-17.30

15.00-16.00

Updating to create value: renovating & greening property

Common cause, common measures Co-org: BPF

15.00-16.00

Retail: the customer is always right Co-org: IPD

Co-org: IPD

16.30-17.30

Real Estate Roulette, Winners & Losers Emerging Trends 2011

Co-org: Co-organiser

Keynote by top architects Co-org: Lord Culture

: UK Country of Honour

18.00-18.30

HTL Power Meetings

16.30-17.30

19.00

Healthcare real estate: a diversification opportunity?

MIPIM Awards Ceremony

Co-org: Your Care Consult

Green topics are marked by the Reed MIDEM Going Green® Logo

16.30-17.45

Investment Lab: Latin America Access to MIPIM 2011 conferences is free of charge for all registered delegates, within the limit of space available.

All information contained in this programme may be subject to change.

Programme as of 20 January 2011.

FRIDAY 11 MARCH

16.30-17.30

Investor Quest

10.00-11.00

Wrap-up Keynote In association with Wisconsin School of Business

Follow our updates on www.mipim.com, programme section.

MIPIM® is a registered trademark of Reed MIDEM - All rights reserved.

Co-org: PriceWaterhouseCoopers & ULI

16.30-17.30

••• NEWS

Strasbourg’s EURHECA moment EURHECA - vital for increasing the attractiveness of Strasbourg

STRASBOURG will be at MIPIM to finalise future partners for the ambitious EURHECA project, described by the local authority as a vital element in the strategy for increasing the attractiveness of the French city.

Located between European insti-

tutions, the site is served by two tramlines which link it to the TGV rail station.

The plan comprises three elements: first, an 8,000 sq m music, congress and exhibition centre, which will open for business in

2012; second, a new exhibitions park will include a 50,000 sq m covered area with 30,000sq m of exhibition space. Lastly, there will be a major business quarter, built in two stages on a 12ha site and intended to provide the full range of

services: offices, hotels, trade, cultural and sports facilities, and restaurants. The first stage of the scheme will see 60,000 sq m opening between 2013 and 2017, and a further 90,000 sq m will be completed between 2017 and 2023.

East-west venture buys into Croatia now 95% let, with tenants including Zara, Gap and Apple stores.

"Investors in CEE and SEE [central eastern and south-east Europe] are able to acquire prime schemes at a relative discount compared to the west,” Charles Taylor, of Cushman & Wakefield, said. He added that 2010 saw 10 shopping-centre transactions above €50m each in the CEE and SEE areas.

HUNGARIAN developer TriGranit and America-based property investment fund Heitman European Property Partners IV (HEPP IV) have launched a joint venture to hold the Arena Centar Shopping Center in Zagreb, Croatia.

HEPP IV will hold 50% of the new landmark development and was represented by Cushman & Wakefield in what is said to be the largest single property investment transaction in Croatia to date.

TriGranit developed the 60,000 sq m Arena Centar, which opened in November 2010. The building is

Arena Centar Shopping Center in Zagreb, Croatia

LaSalle annual maps global opportunities THE MULTI-speed global economic recovery and fast-moving capital markets will create a demanding environment for real estate investors in 2011, according to LaSalle Investment Management’s 17th edition of its Investment Strategy Annual, a survey of the global real estate markets in 2011.

LaSalle believes that in 2011 property investors need to get prepared for the challenging realities of a multi-speed global recovery. With continuing aftershocks of the global financial crisis still occurring, very different strategies need to be used, depending on which country investors are targeting.

In the Asia Pacific region, develop-

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ment and leasing will provide some of the best investment opportunities, while edge-of-core properties will be attractive in the UK, France and the US. Investors should look to take advantage of financially distressed sectors in Japan, Mexico, the US, the UK and Germany.

Commenting on the report, Jacques Gordon, global strategist

at LaSalle Investment Management, said: “Growth strategies that take advantage of rapid urbanisation and a burgeoning middle class will be most successful. In the lowgrowth countries, investment performance will get a boost from low interest rates and a rising flow of debt and equity capital, despite the weak recovery.”

••• NEWS: UK

ULI appoints Marc Mogull THE NEW chairman of the Urban Land Institute’s (ULI) UK National Council is Marc Mogull, founder and managing partner of Benson Elliot Capital Management.

Effective from January 1, 2011, Marc succeeds Jonathan Short, founding partner and executive chairman of Internos Real Investors, who has served in this voluntary role since June 2009.

UKR flies flag for 2011 Country of Honour UK REGENERATION (UKR) — a new organisation arising out of the demise of BURA (the British Urban Regeneration Association) — comes to Cannes with a stand especially designed to help UK-based public and private bodies achieve their MIPIM goals.

UKR believes that MIPIM is a vital event for regeneration professionals. Local authorities use it to showcase the opportunities in their area, find partners who can share their vision and attract inward investment. The private sector uses it to showcase expertise and capability, find opportunities, and establish and build relationships.

presence whose mission is to promote UK regeneration opportunity and expertise.

UKR’s acting chair, Jackie Sadek, said: “The UK is the Country Of Honour at MIPIM 2011 so we expect a stronger than usual focus on our stand. The investment community present at MIPIM will have a heightened level of interest in what the UK has to offer, so it is more important than ever to be there.”

UK Regeneration’s Jackie Sadek

UKR says its stand is similar to MIPIM’s established city stands, such as London, Birmingham and Manchester, but serves the whole country. It is a hosted

Making regeneration happen in the UK Wednesday 9 March — 14.30-15.30

Hoban room — level 3

Half-billion City acquisition for JP Morgan clients

Marc Mogull: “The next few years will be important for ULI in the UK ”

Mogull, a dual UK and US national, brings 25 years of property investment, development and policy-making experience to ULI’s UK council, the largest ULI national council in Europe. During his two decades in the UK, Mogull has held senior leadership positions in the public and private sectors, developing a strong track record in fostering industry dialogue, championing sustainable development and driving successful public-private partnerships. His association with ULI extends back to the mid1980s.

Mogull said: “The next few years will be important for ULI in the UK as we focus on how best to support the property industry’s emergence from the recent crisis.”

TWO INSTITUTIONAL property funds advised by JP Morgan Asset Management have acquired Bishops Square Holdings, whose principal asset is the long-leasehold interest in Bishops Square, the 76,000 sq m (817,500 sq ft) mixeduse estate in the City of London.

The property was acquired from a joint venture between Hammerson and the Oman Investment Fund

Bishops Square in the City of London

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based on a property price of £557m (representing a net initial yield of 6.0%). Bishops Square was developed by Hammerson and completed in 2005. Hammerson sold a 75% stake to Oman Investment Fund in June 2009.

JP Morgan Asset Management’s funds were advised by Berwin Leighton Paisner and Deloitte.

Hammerson and the Oman Invest-

ment Fund were advised by Clifford Chance and Jones Lang LaSalle.

Peter Reilly, head of JP Morgan Asset Management’s European Real Estate Group, said: “We remain bullish about investing in high-quality well-tenanted office properties in Europe’s most important cities, and this acquisition represents a further expansion of our funds’ core property portfolio in Europe.”

••• NEWS: FRANCE

Team changes at Goodman France

Emmanuel Deport

AXA Real Estate lets 285,000 sq m in France AXA REAL Estate Investment Managers, which claims to be the leading real-estate manager in Europe and the second in the world with €39bn of assets under management, let 112 properties across its French portfolio in 2010, representing 285,000 sq m of space. Of this total, 64 (199,000 sq m) consisted of new leases, while the remaining 48 (86,000 sq m) were renewals.

Within AXA Real Estate’s office portfolio, 48 new leases totalling 60,000 sq m were taken and 41 renewals for 82,000 sq m were completed. And within its French logistics portfolio, the company made three lettings covering 132,000 sq m.

One of the largest office lettings was at AXA Real Estate’s Porte du Parc asset in St Ouen in northern Paris. GFI Group has relocated its

headquarters to the new building, taking 11,000 sq m on a nine-year lease. Cushman & Wakefield acted for AXA Real Estate on the letting.

Matthieu Ropert, AXA Real Estate’s head of letting transactions, France, said: “The volume of successful lettings we have secured so far this year reflects the breadth, quality and diversity of our portfolios, and our office portfolio in particular.”

Philippe Arfi

GOODMAN, owner, developer and manager of logistics and business space, has made two senior appointments in its team in France. Philippe Arfi has been appointed head of business development, while Emmanuel Deport has been promoted to key accounts manager.

Arfi will lead the development teams based in Paris, Lyon and Marseille. He will develop the commercial strategy for the group, creating customised solutions tailored to clients’ needs.

As key accounts manager, Deport will develop and maintain the group's business relations with strategic players in the supply chain, including retailers, manufacturers and logistics providers nationally and internationally. He will also devise tailored solutions for the French market.

Goodman’s Jean-Francois Mounic, regional director for southern Europe, said: “I am confident that Philippe and Emmanuel’s track record will allow Goodman France to capitalise on further growth opportunities and maintain its strong balance-sheet position.”

Goodman France has 140,000 sq m of projects currently under construction or in newly secured developments.

Porte du Parc, St Ouen, scene of one of AXA’s largest office lettings, to GFI Group

Aerium targets France with €100m retail fund AERIUM, the pan-European realestate fund management group, has launched the Aerium Vendome I fund to invest in retail real estate in France.

Aerium Vendome I falls under the umbrella fund Aerium Special Opportunities Fund, a Luxembourg-regulated FCP (Fonds Commun de Placement), a type of open-ended collective invest-

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ment vehicle available in francophone countries.

Aerium is aiming to raise equity of €50m-€60m for the vehicle which, with gearing, will provide €100m-€120m to invest in retail environments. The fund has a target IRR (internal rate of return) of 9%-11% after all fees and aims to pay a quarterly income distribution of 5%-6% of con-

tributed capital. CB Richard Ellis will act as placement agent on behalf of Aerium.

The fund’s investment strategy focuses on retail properties in and around Paris. It will also concentrate on high-street and edge-of-town units with large catchment zones and a successful retailing history in France’s main regional centres.

••• NEWS: GERMANY

Berlin offices on high-rise trend the year and the number of contracts for larger units of space increased — there were four lettings over 10,000 sq m in the fourth quarter alone.

“Based on this annual result, the players on the Berlin market can feel very satisfied,” said Lisa Ebert, from the Berlin office rental department of C&W. “On the one hand we can see that the market again demonstrated its above-average stability in the second half of the year, while on the other hand

WITH a turnover of 505,000 sq m in 2010, the Berlin office market recorded its best annual result since 2007. Lettings increased by 22%, compared with the previous year’s result of 414,000 sq m, which represents good performance in an economically critical period, according to Cushman & Wakefield (C&W). It was well above the 441,000 sq m average of the last 10 years.

A total of 303,000 sq m of office space was let in the second half of

we could recognise that the location of Berlin again increased in attractiveness. For us 2010 was also a year of relocations. It was particularly foreign companies which again boldly took the first step to establish themselves in the capital city of Germany.”

C&W’s Lisa Ebert: “Based on this annual result, the players on the Berlin market can feel very satisfied”

AS EUROPE’s 2011 Green Capital, Hamburg is assuming a pioneering role in sustainable urban development and has a number of model projects well under way. These include carbon-neutral residential quarters, zero-energy and passive houses, as well as the so-called Energy Bunker — a former flak tower being converted into a renewable energy power plant.

Many of these projects are part of the International Building Exhibition (IBA 2013).

HafenCity, the redevelopment of Hamburg’s dockland area, also reflects the effort to implement sustainable construction methods.

Contaminated soil has been removed section by section, and new

Photo: Roberto Hegeler

Hamburg is painting the city green

Hamburg — working towards a sustainable future

buildings erected on these sites are setting standards for the future.

HafenCity Hamburg GmbH has created the HafenCity Ecolabel — Silver or Gold — which is an incentive for other builders and investors to utilise resources responsibly.

Hamburg’s Train of Ideas — a railway-borne interactive exhibition on wheels — will carry these concepts of sustainable urban development all over Europe in 2011, showcasing the Green Capital in 18 European cities, among them Copenhagen, Brussels and Barcelona. Loaded with numerous best-practice examples, both domestic and international, the Train of Ideas will depart from Hamburg on 15 April 2011.

Joint venture scoops up Hurth Park centre THE CANADA Pension Plan Investment Board (CPPIB) and a fund managed by LaSalle Investment Management have jointly bought a regional shopping centre in Hurth, near Cologne, Germany, for €157.3m. The CPPIB owns 80% of the centre while

the LaSalle fund holds 20%.

The Hurth Park centre previously belonged to the open-ended property fund Degi Europe, which is managed by Aberdeen Immobilien Kapitalanlagegesellschaft, and is now in liquidation.

Located 10km south of Cologne

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the 60,000 sq m shopping centre has an annual rental income of €12.5m. Anchor tenants include Peek & Cloppenburg, Real and Saturn. The joint venture has planned a comprehensive refurbishment as well as a new positioning of the centre.

David Ironside, managing director LaSalle Germany, said: “The German real estate market continues to be one of the key markets in Europe and is set to recover significantly with very good investment opportunities like Hurth Park.“

Unparalleled insight into real estate Visit ULI - the Urban Land Institute on the 4th Floor Join your colleagues for insight and inspiration spanning the whole spectrum of land use and real estate development at the Urban Land Institute stand.

4th Floor Workshops, panel and roundtable MIPIM programme highlights include: discussions on the most important topics > Sustainable Cities Europe 2011 Forum: Cities of Hamburg, Nuremburg and Stockholm. in real estate, together with networking among ULI’s European leaders and fellow > ULI Urban Investment Network: insights from city leaders and CEOs on the future of urban development property professionals, plus ULI’s and investment beyond the recession. renowned book store. > Presentations of the Funds Symposium report – unique research on global fund performance.

For the latest MIPIM news

www.uli.org/MIPIM

> Country Insights: individual forums dedicated to France, UK, Germany, Russia and others. > LessEn: the latest news and research from our global energy efficiency and retrofitting exchange.

Join ULI's 30,000 members and become part of the world's most effective urban network www.uli.org/join

> ULI Leaders: meet our global and European leadership team, including the new CEO of ULI Europe.

••• NEWS: ITALY

Venice floats new schemes

Prelios adds €47m to its bottom line

NOVA Marghera comes to MIPIM to showcase its plans for Venice’s waterfront, which include a 12,700 sq m ‘urban village’ featuring services, retail and leisure.

The waterfront regeneration specialist, part of the Guaraldo group, was founded to promote and develop Venice’s Porto Marghera area.

Known as Venice Waterlines, the scheme encompasses more than 2,000 ha of waterfront facing on to the city’s lagoon, where there are 340 ha of canals and other expanses of water.

Around €100m has been invested in the project between 2000 and today. More than 60,000 sq m of offices have been built and 3,000 occupiers have moved in.

Nova Marghera was founded to promote and develop Venice’s Porto Marghera area

Italian style PROVIDING the fittings and furnishings for the Hotels & Tourism Lounge at MIPIM this year is Italy’s Interna Group.

The company serves the highend hospitality and contract industries through three specialist subsidiaries: Interna Contract, Interna Collection and Logica.

Interna Contract focuses on contract furnishing for the niche luxury market, producing furniture, furnishings and ornamentation on a turnkey basis.

Interna Collection offers furnishing concepts from three different lines: Traditional, inspired by the 19th and early 20th centuries; Transitional, described as “the classical seen through modern eyes”; and Contemporary, which harnesses the creative talents of five top contemporary designers: Uwe Fischer, Alfredo Haberli, Isao Hosoe, Franco Poli and Hannes Wettstein.

Logica provides four standard collections of office furnishings, various lines of chairs and space partition systems.

The former Istituto Poligrafico e Zecca dello Stato in Rome is to be converted into a luxury hotel and residences

WITH two recent sales under its belt, Italian asset-management company Prelios (formerly Pirelli RE) has improved its net financial position by €47m.

The first deal saw Prelios sell its 13.6% ownership in the Cloe fund to the Singapore government’s GIC Real Estate entity for €27m. A closed-end real-estate fund founded by Prelios in 2004, Cloe holds 11 properties with a total value of €550m.

The second transaction — worth €20m — was the sale of Prelios’ 35% interest in Finprema. The latter entered into a 50:50 joint venture with Fintecna to form the Residenze Immobiliari 2004, which is responsible for Progetto Pentragramma, a project to revitalise four real-estate assets in Rome with a total book value of €406m.

The most important of these assets is the Istituto Poligrafico e Zecca dello Stato (the former state

mint), which is to be converted into a luxury hotel and residences.

Prelios’ real-estate assets total €14.1bn. Geographically, €7.3bn of this comprises real estate located in Italy. The remainder of the portfolio is in Germany (€6.6bn) and Poland (€0.2bn).

Real estate investment in Italy: a new season Thursday 10 March — 11.30-12.30

Hoban room

Fimit merger creates market leader

BY THE time the doors open on MIPIM 2011, the Italian asset manager Fimit (Fondi Immobiliari Italiani) is widely expected to have completed a merger that will have created the largest independent real-estate asset-management company in Italy.

Talks with DeA Capital have been under way since April 2010,

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when the go-ahead was given for a feasibility study into the merger of DeA’s First Atlantic Real Estate with Fimit. The enlarged organisation will command about 25% of the property fund market in Italy.

At the time, the two companies had assets of more than €8bn under management in a combined

19 funds.

At the beginning of December, Fitch Ratings awarded Fimit an ‘M2’ assessment (the scale runs from M1 to M5, with M1 the top ranking). Fimit said the Fitch rating acknowledged its improved organisational structure, as well as the low level of borrowing across its portfolios.

ADVERTISEMENT

Krasnodar.

Best Place For Business High concentration of financial and personnel resources, a well-developed infrastructure and consumer market as well as favorable investment laws are the factors that determine any of Krasnodar’s economic branches as very investment attractive.

Vladimir Evlanov, Mayor of Krasnodar

The renowned magazine Forbes has acknowledged Krasnodar three times in succession as being the best Russian city for making business.

In 2010, City Leaders and PropertyEU put Krasnodar City on the list of the 100 European cities with the most favorable conditions for the international real estate market.

In spring 2010, the International Rating Agency Moody’s gave Krasnodar a Ba2 credit rating with the city’s financial situation being estimated as stable.

400 companies funded by foreign capital operate in the city, including Philip Morris, Cargill Yug, Claas, Knauf, Raiffeisen Bank, Banque Société Générale Vostok, etc. Many of those corporations have been present on the city’s market for over 15 years.

Investors for the city’s joint ventures come from over 40 countries.

City On Map Krasnodar is a modern city situated in Southern Russia and an economic, education and cultural center of the region which is going to host the Winter Olympics 2014 and the FIFA World Cup 2018.

The city’s economy includes all the major branches, i.e. industry, construction, agriculture, transport, communication and consumer services, with trade being the dominant branch covering 50.5 percent of the city’s entire economy. According to Macon Realty Group, the sales space amount available per 1,000 citizens in Krasnodar exceeds that in Moscow by 42 percent and that in Saint Petersburg by 66 percent. Over the past five years, more than 20 billion rubles was invested into the city’s

consumer sector. Over 600 retail and 240 public catering facilities were put into operation, with Krasnodar’s consumer potential being far from exhausted.

Each year, this branch is going to enjoy further growth due to the fact that Krasnodar City is the center of gravity for the entire Krasnodar Region’s five-million population.

The construction industry growth rates are high, too. Five million square meters of housing was put into operation over the past four years.

The city is currently expanding its territory. 14 big areas totaling over two thousand hectares were joined to the city in 2008. These areas will provide space to future residential districts with apartment houses, kindergartens, stadiums and shopping centers.

Krasnodar’s Investment Projects At MIPIM 2011, the delegation from Krasnodar City is going to present 47 promising projects to exhibition visitors.

Among those projects is the redevelopment of city blocks located in the historical part of Krasnodar, which is now a prestigious district with an assemblage of administrative, business and cultural facilities. The total area available for redevelopment amounts to 1,250 hectares. The projected housing stock is expected to total 4.5 million sq.m. The projected area of public and business buildings is estimated at 1.7 million sq.m. The city will also present some turnkey investment sites already supplied with all the documents required.

Another project to be presented at the exhibition is called “Eastern Industrial Zone”. It involves further industrial development and introduction of high-technology production and is to be implemented on the PPP basis. The total plot area is 400 hectares.

More information on Krasnodar’s investment offers is available at: www.investment.krd.ru/en.

You are welcome to visit our stand (Аzur 01) to find out more about Krasnodar’s priority investment projects and talk about cooperation possibilities.

We will do our best to make our partners believe that Krasnodar is an investment-friendly city!

More information on Krasnodar’s investment offers is available at: www.investment.krd.ru/en.

••• NEWS: SPAIN

Barcelona’s right-angle triangle

Barcelona Sagrera Alta Velocitat will transform the area around the highspeed rail network and create the city's largest building

THE BARCELONA Economic Triangle (BET), a marketing and branding concept, is designed to attract investors to the Catalan capital.

“It’s more than a business park. Our idea was to positively discriminate in favour of activities and assets that can provide value to new intensiveknowledge activities,” said Francesc Miron, economic adviser at Barcelona City Council.

The three points of the triangle — 22@, Delta Plan and Alba Park, two of which border the Mediterranean — are designed to become motors of

economic activity around new strategic clusters such as agro-foods, media, ICT, energy and design. The area covers over 7 million sq m — or more than 10 times the floorspace of London’s Canary Wharf.

“There are so many projects happening at the moment in the Barcelona area that we needed a concept to pull them all together in a way that would attract foreign investors,” Miron said. Those investors can choose from a portfolio of projects at different stages of development, he added.

The Barcelona Economic Triangle: a marketing and branding concept designed to attract investors to the region

The economic-triangle concept was particularly successful with Chinese investors, who are more familiar with large-scale projects, he said.

At MIPIM, the Barcelona Economic Triangle will be promoting a number of projects including the BZ Barcelona Innovation Zone and Barcelona Sagrera Alta Velocitat.

The BZ area covers 50,000 sq m in a former industrial zone just behind the port logistic facilities . Its new identity will be focused on food business, technology and culture building on existing activities.

Sagrera is the company set up to promote and manage the urban transformation around the highspeed rail network including new residential areas, business activities, and public amenities such as parks.

Sagrera station will be Barcelona’s largest building — similar in size to the new Prat airport — and designed to cope with more than 100 million passengers a year. Architect Frank Gehry is working on an iconic building for the area — known as The Bride.

TV deal highlights leaseback trend MADRID-based Distribuidora de Television Digital (DTS), the largest provider of digital pay television in Spain, has carried out the corporate sale and leaseback of its headquarters in Tres Cantos at a cost of €80m.

The building was bought by CPA:17 — Global, a REIT and an affiliate of American investment management company WP Carey.

DTS is a subsidiary of Promotora de Informaciones (PRISA) and operates the group's pay-TV production and distribution activities. PRISA is the largest media company in the Spanish- and Por-

Distribuidora de Television Digital has sold and leased back its headquarters to an affiliate of investment management company WP Carey

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tuguese-speaking worlds.

Constructed in 2008, DTS’s Madrid headquarters building comprises 41,000 sq m of both office and television production space.

DTS was advised on the action and process by consultant CB Richard Ellis (CBRE). Adolfo Ramirez-Escudero, executive managing director, capital markets, at CBRE Spain, said: “This transaction confirms institutional investors’ interest in these kinds of deals in the Spanish market and is a reminder of the special place that sale and leasebacks hold in Spain.”

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••• NEWS: RUSSIA

Moscow region plays to its strengths THE GOVERNMENT of the Moscow region — ‘oblast’ in Russian — is headed for MIPIM 2011 to showcase the attractions and

advantages of investing in this rapidly growing zone, either directly or via joint-venture collaborations.

The Moscow region benefits not only from its proximity to one of the most vibrant cities in the world, but also from being associated with one of the fastest growing and fastest developing urban environments.

The region, which consists of 378 municipal entities, covers an area of 45,900 sq km (17,700 sq miles).

It is home to a population of around seven million people, making it one of Russia’s most densely Moscow region is second in importance only to Moscow city in terms of industrial production

populated areas. In terms of industrial production, the region is second in importance only to Moscow city itself.

With its advantageous economicgeographic position, the Moscow region offers an efficient transport network, a well-developed engineering and social infrastructure, high scientific and technical poten-

tial, and a highly skilled workforce.

Moreover, the regional government claims that the high purchasing ability of its citizens makes the region a particularly attractive destination for outside investment.

Russia: The time is now!

Tuesday 8 March — 16.30-17.30

Auditorium A — level 3

MIPIM'S RUSSIAN BREAKFAST Russia's economy, real estate market and the impact of growth on the office market will come under scrutiny at the now traditional MIPIM Russian Breakfast.

The breakfast will be hosted in the Majestic hotel's Salon Croisette, March 9, 9am to 11.30. For more information telephone +7 495 926 7340

CUSHMAN & Wakefield’s European Cities Monitor 2010 has revealed that, although London, Paris and Frankfurt remain the top three European cities in which to do business, Moscow is now the most favourable city in Europe for com-

panies that are looking to expand.

The Russian capital beat other European cities to the title, with 47 companies citing Moscow as their next target for expansion — a jump from 35 in 2009.

The European Cities Monitor,

Photo - Bradmoscu

Moscow first choice for firms looking to expand which is published annually, is based on interviews with board directors and senior executives in charge of location for the 500 largest companies in Europe.

Moscow – Europe’s most favoured city for corporate expansion

Nizhny Novgorod on road to international partnerships THE RUSSIAN city and region of Nizhny Novgorod comes to MIPIM with a simple message for the world’s developers and investors: “We are ready. Join us.”

Nizhny Novgorod will be showcasing the latest in an ongoing series of major infrastructure projects

costing 40bn roubles ($1.3bn), aimed at improving and fine-tuning the transport environment and investment potential of the city.

It is expected that the infrastructure projects will be implemented through PPPs (public-private partnerships). Key among the

schemes is a major new motorway, which will also serve as Nizhny Novgorod’s southern bypass. The motorway project also features a major new Volga crossing in Nizhny Novgorod.

At MIPIM, the region will be unveiling a 3D model of the planned Nizhny

New road infrastructure is accelerating development in Nizhny Novgorod

34 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

Novgorod transportation system.

In addition to transforming the region into an investment magnet, the planned infrastructure projects also aim to improve communications between Nizhny Novgorod, the central regions of the Volga district and Russia’s northern provinces.

••• AWARDS

THE JURY 87 entries vie for MIPIM Awards THE MIPIM Awards are now in their 21st year and going from strength to strength, with an increasing number of entrants and award categories. The panel of seven jurors has already formulated its shortlist which has been selected from a total of 87 projects submitted from 27 countries.

In selecting the shortlist, the jury’s task has been, collectively, to select three nominees in each of six categories as well as three projects located in the United Kingdom to reflect its status as MIPIM 2011’s Country of Honour. MIPIM participants will now have their opportunity to choose the winners by casting their votes in the dedicated MIPIM Awards exhibition area during the show.

This year the voting process has been improved and the jury’s original votes for each project will also be taken into account alongside the participants’ votes cast at MIPIM. Voting can take place at any time during MIPIM from 9.00 on Tuesday, March 8 to 12.00 on Thursday, March 10.

President of the Jury Mr. Michael Strong CB Richard Ellis Chairman & CEO – EMEA United Kingdom

Jacques Ferrier Jacques Ferrier Architectures Architect & Town Planner France

Paolo Gencarelli Unicredit Group Head of Group Real Estate Italy

The six categories are: • Business Centres • Futura Projects (new category) For developments that are as yet unbuilt.

• Green Buildings • Hotels And Tourism Resorts • Refurbished Office Buildings • Residential Developments The jury will also select a Special Jury Award winner from among the 18 nominees.

The winners will be announced at a glittering awards ceremony that begins at 19.00 on Thursday, March 10 in the Grand Auditorium of the Palais des Festivals, followed by a cocktail party at 20.00 in the Grand Auditorium’s foyer. MIPIM participants are welcome to attend this prestigious event.

The Awards are sponsored by

Ann Heywood The College of Estate Management Principal United Kingdom

Frank Khoo Axa Real Estate Global Head of Asia Singapore

Robert Peto Royal Institution of Chartered Surveyors — RICS President United Kingdom

Olivier Piani Allianz Real Estate Chief Executive Officer France

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

35

••• AWARDS

MIPIM AWARDS

2011 NOMINEES Special tribute to a UK project UK PROJECTS always feature strongly in the MIPIM Awards entries postbag and have won their share of awards over the years.

Marking the UK’s special status as MIPIM Country Of Honour in 2011, the jury will also select and pay tribute to a British project that deserves further attention.

BUSINESS CENTRES CHEQUE DEJEUNER HEADQUARTERS AT CARRE 92 Submitted by Art & Build Architect

France

CMA CGM TOWER

THE UK, COUNTRY OF HONOUR 5 MERCHANT SQUARE Submitted by mossessian & partners

KPMG CANARY WHARF Submitted by Kohn Pedersen Fox Associates

W HOTEL Submitted by Jestico + Whiles

FUTURA PROJECTS CENTRAL PARK Submitted by Frasers Property Australia

Australia

PIXEL GARDEN CITY

Submitted by Zaha Hadid Architects

Submitted by Bertelsen & Scheving Architects Aps

France

Denmark

INTERNATIONAL COMMERCE CENTRE

SUSTAINABLE URBAN REDEVELOPMENT

Submitted by Kohn Pedersen Fox Associates

Submitted by Tokyo University Machizukuri Graduate School

Hong Kong

Japan

36 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

••• AWARDS Vote for your favourite projects on Level 01 of the Palais des Festivals

GREEN BUILDINGS 3M ITALY HEADQUARTERS - MALASPINA BUSINESS PARK Submitted by 3M Italia SpA

HOTELS & TOURISM RESORTS NAVARINO DUNES, COSTA NAVARINO Submitted by Temes S.A.

Greece

Italy LEVENT OFFICE PROJECT Submitted by Tekfen Real Estate Development Co., Inc.

Turkey

THE NEW DEUTSCHE BANK TOWERS (PROJECT "GREENTOWERS") Submitted by Deutsche Bank AG

THE PARK HOTEL HYDERABAD Submitted by Skidmore, Owings & Merrill LLP

India

W HOTEL Submitted by Jestico + Whiles

United Kingdom

Germany

REFURBISHED OFFICE BUILDINGS

RESIDENTIAL DEVELOPMENTS

FIRST TOWER

BURJ KHALIFA

Submitted by Altarea Cogedim

Submitted by Skidmore, Owings & Merrill LLP

France

United Arab Emirates JOHANNISCONTOR Submitted by kbnk Architekten GmbH

Germany

ONE JACKSON SQUARE Submitted by Kohn Pedersen Fox Associates

US SCHRÖDTERHAUS LEIPZIG Submitted by MAGNAT Asset Management Deutschland GmbH

Germany

SAVONNERIE HEYMANS Submitted by MDW Architecture

Belgium

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

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••• KEYNOTE SPEAKER INTERVIEW

NOURIEL ROUBINI

The man who saw it coming DR NOURIEL ROUBINI, THE RENOWNED ECONOMIST WHO NOT ONLY PREDICTED THE FINANCIAL CRISIS BUT WAS BRAVE ENOUGH TO SAY SO OUT LOUD, SHARES HIS VISION OF REAL ESTATE’S ROLE IN THE GLOBAL ECONOMY IN A MIPIM KEYNOTE ON MARCH 10.

PAUL STROHM TALKS TO THE ‘PROPHET OF ECONOMICS’ 38 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

••• KEYNOTE SPEAKER INTERVIEW

L Nouriel Roubini

“

Fiscal

consolidation is certainly necessary to avoid the plane wreck that has occurred in Greece and Ireland

”

Keynote address by Dr Nouriel Roubini Thursday 10 March — 10.00-11.00

Grand auditorium - level 1

OOKING back to the start of the global financial crisis, the causes seem obvious. It was an accident waiting to happen and one that far more of us perhaps should have predicted.

But few can really say, hand on heart, that they saw it coming.

One of the few that did, however — and publicly said so — is MIPIM 2011 keynote speaker Nouriel Roubini.

His warnings went unheeded. Roubini had been forecasting a serious financial crisis in the US for years, notably speaking to a sceptical International Monetary Fund (IMF) about his predictions in 2006.

In fact, his prognostications earned him the epithet Dr Doom, following a profile of the same name in The New York Times.

Roubini’s distinguished academic career includes an undergraduate degree gained at Bocconi University, Milan, and a PhD in economics at Harvard University. He later joined the faculty of Yale University’s department of economics prior to moving to New York University’s Stern School of Business, where he is currently professor of economics. He is also co-founder and chairman of Roubini Global Economics, an economic and geo-strategic information service and consultancy with 30 economists on the staff.

As well as top-notch academic and research credentials, Roubini has policy experience under his belt. From 19982000 he served as the senior economist for international affairs at the White House Council of Economic Advisors, subsequently becoming senior advisor to the under secretary for international affairs at the US Treasury Department. He has also served as a consultant to the IMF, the World Bank and other prominent public and private institutions.

So cutting to the chase, come March when Roubini steps on to the MIPIM podium, will he still be a harbinger of doom? And will his message for the real-estate professionals gathered in Cannes be a negative one?

After all, real estate was, via the medium of the sub-prime mortgage market, fairly instrumental in triggering the events that Roubini had foreseen — although he has since been quoted as saying: “We have a subprime financial system, not a subprime mortgage market.”

Nonetheless, to what extent is property a tarnished medium and to what extent does he feel that it will be important to the recovery?

Certainly, Roubini sees real estate as a key sector of the economy, pointing out that, typically, it makes a contribution to GDP of about 3%-5%. But the effects go wider. “When you buy a home, you buy furniture, appliances and other durable goods and this has an indirect effect, which is significant and we need to bear that in mind,” he says, observing that there is a parallel effect at play in the commercial real-estate sector.

Roubini makes the point that the current recovery is more robust in the emerging economies than in the advanced economies. “Advanced economies have balance-sheet problems in both the private and public sectors,” he says. “Some emerging markets have balance-sheet problems too, but these are limited to a few countries with financial excesses.”

Roubini also maintains that the growth prospects are more promising and immediate in emerging economies such as in Asia, Latin America and even the Middle East, where there is increased demand for both commercial property and housing. “Given the overhang of new and existing property in advanced economies, the recovery there is going to be slower,” he says.

Roubini points out that a select few of the advanced economies — he cites Canada, Nordic countries such as Norway and Sweden, as well as Israel, Australia and New Zealand — are doing rather better thanks to better economic fundamentals. He adds that it is the commodity exporters that tend to do best among the advanced economies.

Of the developing economies, Roubini says that China has evidently learned some lessons from the West and, while introducing important liberalisation had, until the recent stimulus package, avoided excessive credit growth. But it has only partially learned, he adds, and there is still “some froth” in real estate given loose monetary and credit policies. However, this is largely in cities such as Beijing and Shanghai, and principally in the high-end housing sector and some parts of the commercial real estate market.

Lower-end housing is still subject to strong demand driven by economic development and urbanisation.

“What drives housing markets are macro factors but also local markets,” Roubini says.

But are countries like the UK in danger of killing their recovery with austerity packages? Or have they not yet gone far enough?

Roubini says that one challenge is that budget deficits are very large, standing at around 10% of GDP, if not higher, in the US, the Eurozone, the UK and Japan. “Fiscal consolidation is certainly necessary to avoid the plane wreck that has occurred in Greece and Ireland,” he adds.

But he also believes that it is important not to push economies into stagnation. As a result, he says that it is probably right to “commit today to policy action of reduced spending and raising revenue in the long term” rather than front loading most of the fiscal austerity. He adds that governments need to be seen to be credibly taking action.

But in some cases, countries have few options on timing because the bond markets have imposed their own discipline. Cases in point are Ireland, Greece, Spain and Portugal.

Meanwhile, Roubini says the agenda that the US, Europe and the G20 countries have established for reforming capital regulation is going in the right direction. “But it could be too little, too late,” he adds.

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

39

Credit: © Transport for London 2005

••• INVESTMENT

INVESTMENT, BANKING AND FINANCE

Mind the funding gap THE GLOBAL PROPERTY INDUSTRY IS FACING A VERTIGINOUS $245BN DEBT-FUNDING GAP, WITH $2.4 TRILLION DUE TO MATURE BEFORE THE END OF 2013. IT CAN'T BE DEFERRED FOREVER, WARNS DOUG MORRISON

T

RADING volumes are returning to some semblance of normality and values have recovered from the lows of the recession — usually enough to put a spring in the step of investors.

But in 2011, the property industry is rather more concerned with debt.

To be precise, the big challenge facing the global property industry is the socalled debt-funding gap, which consultant DTZ estimates will total $245bn in the three years to 2013.

This gap is defined as the difference between the existing debt balance se-

cured by commercial property as it matures, and the debt available to replace it. DTZ’s latest research shows that $2.4 trillion of debt is due to mature before the end of 2013.

The largest debt-funding gap is in Japan ($70bn), followed by the UK ($54bn), the US ($49bn) and Spain ($33bn). The remaining markets, including Germany and France, have debt-funding gaps below $10bn. Relative to their size, many smaller European markets also have significant funding gaps, especially Ireland.

New equity raised could help bridge

40 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

“

I think the banks

accept this is going to be a protracted and painful

workout, extending

”

over several years

Peter Damesick

the funding gap. Indeed, DTZ estimates that $376bn of fresh capital is available for investment in commercial real-estate markets globally during the three years.

But if only it were that simple. As DTZ and most other market-watchers acknowledge, many investors with equity in hand still do not have the ability to secure loans on attractive terms.

Overall, DTZ says, Europe has the greatest exposure, with 51% of the debt-funding gap ($126bn), followed

by Asia-Pacific with 29% ($70bn) and the US with 20% ($49bn).

You are Invited to Join the International Real Estate Federation, FIABCI, as we Host: “Real Estate As A Driving Force for Recovery: UNECE Principles, Government and Private Sector Study Cases”

REAL ESTATE MARKET ADVISORY GROUP OF ECONOMIC COMMISSION OF UNITED NATIONS EVENT ORGANIZED BY FIABCI AT

MIPIM IN CANNES, FRANCE MARCH 10, 2011, 15.00

FOR MORE INFORMATION, PLEASE VISIT US ONLINE AT: www.FIABCI.ORG & www.FIABCINEWS.COM

••• INVESTMENT

It is at company level that Europe’s debt burden tends to hog the headlines. The European Public Real Estate Association (EPRA) estimates that the debt of European listed companies totals €184bn ($246bn) — up from €78bn ($104bn) in 2004. EPRA says 10.8% is set to mature in 2011, while the bulk will mature over five years.

The challenge in refinancing property debt is all the harder when set against the new Basel III regulatory standards for banks, which are intended to make the system less vulnerable to the flaws exposed by the credit crisis. As a result, consultant McKinsey & Company estimates that banks in Europe and the US will have to raise about €1.65 trillion of new capital, about €1.9 trillion of short-term liquidity and about €4.5 trillion of long-term funding.

“Banks are already mobilising to re-

Paul Lewis, CBRE Real Estate Finance: “We expect to see more enforcements of loans for prime, good-quality assets”

DTZ’s Hans Vrensen envisages a “prolonged messy workout process”

price assets and cut costs further,” McKinsey reported during the G-20 summit in November that endorsed Basel III. “Whatever they do, the new rules are sure to dent their profits.”

The new rules are also sure to affect property, says Paul Leatherdale, a corporate finance partner with consultant Cushman & Wakefield.

“The bigger banks have put in place, with the support of governments, holding mechanisms so that they don’t have to dump loads of distressed assets [on the market] at any price and crystallise large losses,” he adds. “Having said that, they need to manage down their real-estate books and Basel III is a big driver of that. Because of their own credit ratings, banks need to be seen to be managing down selectively, where they can get out at a sensible level, albeit probably still at a loss-making level.”

The constraints on banks have opened doors elsewhere, not least insurance companies which, points out Peter Damesick, EMEA chief economist at CB Richard Ellis (CBRE), made a major move into the European debt market in 2010. The most notable example is AXA Real Estate Investment Managers, which has already made more than €1bn worth of loans in Europe.

As Damesick suggests, this brings Europe more in line with the US, where the big insurers have long been key players and account for nearly 20% of commercial real-estate lending. There are obstacles, however, such as lack of transparency and document standardisation, which prevent such institutions from growing their presence in Europe to the same level as seen in the US. All of which suggests that the banks will remain the centre of attention — and frustration — for the foreseeable future.

Damesick says one reason for the shortage of distressed stock on the market is simply the time taken by the banks to assemble their ‘workout’ teams. But he adds: “There are signs now that the banks are in a place where they can manage their loan books more actively. Our perception is that the flow of disposals is going to

42 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

step up, but it will be a flow and not some sudden flood, which just isn’t practical. I think the banks accept the fact that this is going to be a pro-

“

A renewed focus

on active assetmanagement strategies [is

needed] to sweat

”

out value

Paul Lewis

tracted and painful workout, extending over several years.”

Hans Vrensen, DTZ’s global head of research, envisages a similarly “prolonged messy workout process”. He says: “Although banks and borrowers have not been forced to seek more dramatic solutions to the debt-funding gap, a number of imminent changes look set to increase the pressure. As governments focus on reducing their sovereign debt, a potential unwinding of accommodating fiscal and monetary policies will put more pressure on banks to deal with Distressed investing or distressign investment?

Thursday 10 March — 11.30-12.30

Le Corbusier room — level 01

••• INVESTMENT

their most problematic loan positions.

New regulatory changes will also increase pressure for equity investors. As a result, we expect that market participants will continue to implement a range of innovative solutions.”

Up to now the debt-funding gap has inspired not so much innovation as

a herd-like investor focus on prime property, since secondary stock faces a much higher refinancing risk. The result, DTZ says, is very low demand for secondary assets.

However, Paul Lewis, director of CBRE Real Estate Finance, believes more innovation is exactly what is required right now. With 27% of the

€73bn of the outstanding European commercial-backed security due to mature in 2011, Lewis says “loan servicers” have become over-reliant on extensions as the main recovery tool — essentially putting the problem off for another day.

“We expect to see more enforcements of loans for prime, good-quality assets

to bring them under the control of the creditors, while loan restructurings for secondary assets should fulfil the objective of bringing in capital and expertise without the need for fire sales,” he says.

As Lewis suggests, the industry and the banks must work together on “a renewed focus on active asset-management strategies to sweat out value”.

O C C U P I E R H OT S P OT S

Moving in on quality

Net absorption is positive in a number of office markets, including Washington DC

THE RECOVERY FROM THE GLOBAL DOWNTURN OF THE PAST TWO YEARS HAS BEEN PATCHY. SO WHICH LOCATIONS ARE FINDING FAVOUR WITH OCCUPIERS? GRAHAM PARKER LOOKS AT THE GEOGRAPHY OF TENANT DEMAND

E

XPERTS agree that, in almost all sectors of the market, the recession has made occupiers risk-averse. Triedand-tested locations are seen as the safest option, and the fact that prime rental levels are still depressed in many markets means prime buildings in

“

Occupier

prime locations have been mopping up what demand there is.

In the office sector, for instance, CB Richard Ellis’ (CBRE) global chief economist, Dr Raymond Torto, says that the major office locations are outperforming. “As economic sentiment has improved in most regions across

the globe, occupier demand is starting to show signs of picking up,” he adds. “More companies are looking to expand and net absorption is positive in a number of office markets, including Hong Kong, Washington DC and London’s City and West End districts.”

The City of London, for example, has

demand is starting to show signs of picking up

”

Dr Raymond Torto

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

43

••• INVESTMENT

KEEN ON GREEN? DEVELOPERS are increasingly eager to parade their green credentials, specifying designs that achieve the highest LEED (Leadership in Energy and Environmental Design) or BREEAM (BRE Environmental Assessment Method) ratings.

And although corporate social responsibility (CSR) is held to be important, property developers are not especially known for their altruism.

So what's in it for them? In the downturn, have green buildings let more readily than their eco-unfriendly counterparts?

Research commissioned by the Royal Institution of Chartered Surveyors (RICS) in the first half of 2009 found that green buildings in the US commanded a rental premium. The research, entitled Doing Well By Doing Good?, concluded that buildings with the Energy Star rating achieved rents 3% higher than others. And when looking at effective rents (net of rental concessions, spread over the life of the lease), the premium is higher still, at above 6%.

In 2010, RICS looked at the topic again, this time measuring occupancy levels rather than rental levels. It would seem that money spent on improving a building's environmental performance is still money well spent. The latest research concluded: “There is clear evidence that eco-labelled office buildings have higher occupancy rates.”

The results suggest an 8% higher occupancy rate for LEED-labelled offices, and a 3% higher occupancy rate for Energy Star-labelled offices.

Standard Life's Anne Breen: “With tenant demand now recovering, there are precious few empty good quality buildings to choose from”

CB Richard Ellis’ Dr Raymond Torto: “More companies are looking to expand”

Chris Staveley, Jones Lang LaSalle -- “As economic growth returns, occupiers are increasingly committing to deals”

shown exceptionally strong rental growth over the past year. CBRE reports that prime rents increased in the third quarter of 2010 to £52.50 per sq ft (£565 per sq m), 25% up on their levels at the market nadir. Further double-digit growth is expected in the coming year.

And it's not just in London that supply-side factors are leading to a subtle shift in market fundamentals. CBRE forecasts that in the coming year the squeeze on development finance will lead to a further tightening in supply, particularly in continental Europe and the Americas.

“A change in the supply/demand balance means that most of the key markets in Europe and Asia are now showing some degree of rental growth,” Torto says. “There is also an expectation that rental growth will accelerate over the coming months.”

rents grew by 6.3% in the third quarter of 2010, and Stockholm's by 5.4%.

London saw 2.9% growth.

The European Commission’s economic sentiment indicator illustrated further improvement in September 2010, when it reached its highest level since March 2008. Staveley notes: “As economic growth returns, occupiers are increasingly committing to deals, although much activity remains driven by consolidation and churn.”

However, he issues a warning: “The public deficit across Europe is likely to drive cost cutting and austerity measures, which could reduce occupier confidence to deal, and lead to negative net absorption from the public sector.”

Standard Life's head of real-estate research and strategy, Anne Breen, points out that commercial real estate is now truly a global market. “London and Paris illustrate a theme across many global office markets,” she says.

“They are in remarkably similar positions to, say, New York, Washington, Sydney, Hong Kong or Stockholm.

With tenant demand now recovering, there are precious few empty good quality buildings to choose from and landlords are gaining more power over rental negotiations.”

Chris Staveley, head of pan-European office and industrial capital markets at Jones Lang LaSalle (JLL), agrees that London is one of the hotter markets, but he also points to Moscow and Stockholm as favoured locations.

“Our research shows that demand for office space stands 36% higher than a year ago, with net absorption remaining positive,” he says.

According to JLL, Moscow's office

44 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

“

With tenant

demand recovering, there are precious few empty good quality buildings to choose from

”

Anne Breen JLL's research also reveals that the average European vacancy rate remains stable at 10.3%, roughly where it has been since the end of 2009. Whereas vacancy continued to decrease in Central and Eastern Europe (CEE), mainly driven by further reductions in the Moscow and Prague markets, levels in Western Europe are increasing slightly. Vacancy rates of over 15% could still be found in Amsterdam, Dublin and Budapest, and there is a significant spread across Europe, with the lowest rate standing at 6.4% in London's West End.

Making green buildings pay sustainability for occupiers Wednesday 9 March — 11.30-12.30

Le Corbusier room — level 01

••• INVESTMENT

Dusseldorf is among the cities that have already returned to rental growth

AT T R ACT I N G T E N A N T S I N H A R D T I M E S

Room for inventive incentives IN AN UNCERTAIN MARKET, HOW DO OWNERS INCREASE THEIR TENANT PULLINGPOWER? FLEXIBLE LEASE TERMS, INCENTIVES, RENT-FREE PERIODS? OR IS GREEN THE NEW BLACK? GRAHAM PARKER REPORTS

T

HE DOWNTURN has fundamentally changed occupiers' attitudes to real estate. In theory, the fall in values and the lower cost of borrowing could have made owner-occupation a more attractive option than leasing. But oc-

cupiers themselves have been starved of capital, and the harsh business climate has made many wary of the long-term commitment that ownership entails. As a result, the leasing market has remained the preferred option for many.

46 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

Where owners are offering incentives to attract occupiers, which are the most attractive from an occupier's point of view? Fitting-out contributions? Rentfree periods? Capped rents?

Vincent Lottefier, the Paris-based CEO of Jones Lang LaSalle’s (JLL) EMEA

corporate solutions team, warns that incentives may be on the wane, particularly in the major global business locations. He says the second half of 2010 saw significant upturns in demand as occupiers sought to conclude deals while market conditions were

••• INVESTMENT

“

Constrained

development

pipelines means that an imbalance between supply and demand is imminent

”

in many markets

Dr Lee Elliott still in their favour. “The key drivers of these deals include the desire to consolidate, a need to churn the occupied portfolio and/or upgrade the quality of occupier space,” Lottefier says.

And he notes that locations such as the City and the West End of London, Paris and Dusseldorf have already re-

Marie Puybaraud of CoreNet Workplace Community Europe –businesses “want to avoid commitment”

Dr Lee Elliott, Jones Lang LaSalle: “An imbalance between supply and demand is imminent in many markets”

Vincent Lottefier, Jones Lang LaSalle — Landlords should tailor buildings to meet the needs of occupiers

turned to rental growth, while the rate of rental decline is slowing in locations including Frankfurt, Madrid, Barcelona and Hamburg.

The result, as Lottefier points out, is that “the incentives offered by landlords are also stabilising, with some markets such as London City, London West End, Bucharest and Hamburg seeing incentives reducing”.

Dr Lee Elliott, head of EMEA occu-

pier research at Jones Lang LaSalle, adds: “The current market does, however, present risks for corporate occupiers. There is a growing divergence between prime and secondary markets, and for those occupiers seeking quality space, the options are becoming more limited. Constrained development pipelines means that an imbalance between supply and demand is imminent in many markets,

thus placing pressure on real-estate decision timing as the window of opportunity closes.”

Incentives offered by landlords are reducing in some markets, including Bucharest (pictured)

48 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

Lottefier points to cities such as Moscow as an example of this market polarisation. “Let's say, for the sake of argument, that vacancies are 15%,” he says. “But only 1% or 2% of that available space is ever going to be suitable for a bank or a law firm. The question

••• INVESTMENT

is, what do you do with the remaining 13%? You'll need to look at alternative uses or make substantial changes.”

New research from CB Richard Ellis (CBRE) found that the development industry is unlikely to step into the breach and provide more grade-A space — in the short term, at least.

CBRE warns: “Limited development activity next year may cause supply shortages. Despite a more stable vacancy picture, the availability and terms of development finance remain restricted. This will limit the reactivation of mothballed development schemes in the near term and shortages of new prime buildings are likely to become more widespread over the next two years. Corporates with large strategic requirements will increasingly need to act quickly or consider pre-letting.”

Against this market backdrop, JLL's Lottefier says a number of new factors are informing corporate decisionmaking. For example, new accounting standards will change the way in which long-term leases are treated. He asks: “Will occupiers move to a model

where they own their strategic offices long term, but take space in more peripheral locations on a short-term, flexible basis? A hub-and-spoke model, if you like...”

At the same time, businesses are wanting to become carbon neutral. And many are well aware that their buildings account for 40% of their carbon emissions. “There is also a trend towards alternative workplace solutions and flexible workspace,” Lottefier adds. “It's all about attracting talent.”

So rather than offering financial incentives to attract tenants, landlords might be better advised to spend their money on tailoring buildings to meet the needs of occupiers more closely. “The smarter landlords are already starting to think about it,” Lottefier says.

This is a trend that Marie Puybaraud, leader of the CoreNet Workplace Community Europe and director of global workplace innovation at Johnson Controls, has also observed. “It's very clear that the downturn changed the perspective of how businesses look

“

The downturn

has been a time to become more

”

innovative

Marie Puybaraud at their space,” she says. “They have become cautious. They want to avoid commitment so they have become reluctant to buy and prefer to lease for as short a term as possible.”

Puybaraud says that many companies are looking to insert exit clauses into their leasing agreements, and that they are also looking for greener contracts — what the French call the 'bail vert'.

“It's about more than just euros per square metre,” she adds.

And like JLL's Lottefier, Puybaraud notes that companies are increasingly requiring landlords to carry out specific works to a building as part of

their lease negotiations. But she warns: “It's not enough to fit out the building in a green manner. You have to occupy it in a green manner as well.”

This, she observes, is putting new pressures on the financial-management sector — and it also requires the users themselves to change their behaviour. “That's the trickiest one to achieve,” she says.

Puybaraud points out that there have also been significant changes in the way companies occupy their space.

“Most buildings now operate with desk-sharing, which means that corporate occupiers typically need 10% less space per person than they did,” she says. “The downturn has been a time to become more innovative. If you are looking to acquire now, you will get a good deal — and you will also get a building with lower costs going forward.”

Making green buildings pay sustainability for occupiers Wednesday 9 March — 11.30-12.30

Le Corbusier room — level 01

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••• INVESTMENT

CA P I TA L S O U R C E S

The quest for cross-border cash

Paris, and London, seem to have an increasing diversity of investors

THE TALK IS OF A FLIGHT TO SAFETY IN 2011 AS FAR AS PROPERTY INVESTMENT STRATEGY IS CONCERNED. BUT IN AN UNCERTAIN CLIMATE, THE INTRIGUE RESTS AS MUCH IN THE SOURCES OF CAPITAL AS ITS DESTINATION, WRITES DOUG MORRISON

A

NECDOTAL evidence on the ground in the major cities that historically attract overseas investment — notably London and Paris — points to an increasing diversity of investors. No one group of investors dominates these markets.

This diversity is reflected in Cushman & Wakefield’s latest figures for European commercial property, which show a surge in trading volumes to more than €100bn for 2010, underpinned by a revival in cross-border investment.

The sheer spread of cross-border capital is evident in the latest figures from Real Capital Analytics (RCA), the global research firm. RCA shows that cross-border acquisitions from Hong Kong and Singapore have rebounded to peak levels, while investors from South Korea and China have emerged as major players globally.

Collectively, buyers from these four

countries now represent nearly 40% of cross-border activity — up from less than 15% a few years ago. While most acquisitions have been within Asia, they are increasingly competing for assets in major cities across the globe. As RCA says, buyers from China have only recently spread their wings, but could be a significant force in coming years.

“

The Chinese have

”

started to arrive

Peter Damesick Peter Damesick, EMEA chief economist at CB Richard Ellis (CBRE), agrees. He says the investment in Songbird Estates, the owner of London’s Canary Wharf office complex, by sov-

ereign wealth fund China Investment Corporation as long ago as August 2009 was a sign of things to come.

“The Chinese have started to arrive [in Europe], but mainly via the corporate route,” Damesick says. “But we are aware of a range of other Chinese funding investors and property companies that are looking to get involved in European markets, and they have focused predominantly on the leading cities. I suspect London is first in their sights.”

The dominance of Asian investors aside, RCA’s research uncovers a fairly mixed pattern of global capital flows.

In a category the firm describes as “down but rebounding” is the following eclectic collection: Canada, Israel, the Netherlands, Sweden and the Gulf Co-operation Council (GCC).

RCA reports that cross-border capital from Canada has rebounded to 2008 levels and is targeting US and UK as-

sets. Israel remains focused on the US, with capital from the Netherlands and Sweden largely staying within Europe.

There is also a revival in cross-border capital from the GCC, with Saudi Arabia, Qatar and Abu Dhabi all active in a variety of global markets. The exception is Dubai, which had been a major global player but has now been sidelined by well-documented problems in its domestic market.

Domestic issues have also suppressed investors from the US, the UK and Germany, which have been the most prolific sources of cross-border capital.

Together, they still account for about 40% of the global total — although, as RCA points out, the majority of unallocated capital currently remains in the hands of this group.

This money sitting idle is an issue, according to Paul Leatherdale, a corporate finance partner at consultant Cushman & Wakefield. “We know

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••• INVESTMENT

that funds were set up to focus on distressed debt and there have been very few deals done,” he says. “That money is still there, with investors desperate to spend it on something. Part of the problem is that their return expectations are high.”

But deals are being worked out, Leatherdale adds, especially where investors “can work with banks on an asset-management basis”, taking a portfolio and funding the equity component, while the bank keeps the debt in place.

Although third-party managed funds continue to account for the majority of capital available in the market today, consultant DTZ says their share has reduced from over three quarters to just a half following strong growth in the amount of new capital from both public and private property companies.

In its latest Great Wall Of Money report, DTZ highlights the increase in available capital from publicly listed companies,

“

The money is still

there, with investors

desperate to spend it on something

”

Paul Leatherdale

Cushman & Wakefield’s Paul Leatherdale: “We know that funds were set up to focus on distressed debt and there have been very few deals done”

which now account for 17% of capital, compared with 4% in previous reports.

Having recapitalised their balance sheets, many of these companies have taken advantage of their access to capital markets to place them in a better position to target new opportunities.

DTZ notes a similar increase in capital from private property companies and individuals, which now account for 14% of the available capital compared to 3% last time round.

Institutions have also marginally increased their share.

Amid all this upbeat sentiment, spare a thought for investors from Australia, Ireland and Spain, who are “down and out”, according to RCA. Not so long ago, they acquired more than $50bn worth of property outside their home countries. Today, their cross-border deals are off 95% from 2007 levels.

At least, the major Australian pension funds, with their stable inflows of money, are likely to be more active globally at some point. But as RCA laments, there is little expectation that Irish or Spanish investors will return any time soon.

Between schock and profit: the global perspectives of German investors Tuesday 8 March — 11.30-12.30

Le Corbusier room — level 01

Asian capital flow Tuesday 8 March — 15.00-16.00

Hoban room — level 3

CB Richard Ellis’ Peter Damesick: A range of Chinese funding investors and property companies are looking to get involved in European markets

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© Photo: Benjamin Struelens

••• INVESTMENT

Centrum-Galerie, Dresden — part of the €1.3bn portfolio of shopping centres that Corio bought from Multi

I N V E S T M E N T TA R G E T S

Rethinking the risk-reward ratio 2010 WAS THE YEAR OF PLAYING IT SAFE IN TERMS OF PROPERTY INVESTMENT, WITH ‘PRIME’ BEING INVESTORS’ WORD OF CHOICE. BUT WILL 2011 BE EQUALLY RISK-AVERSE? BERT-ERIK TEN CATE HAS THE STORY

L

AST year, property investors were looking for safety as the sovereign debt crisis spread from Greece to Ireland. Europe's biggest markets — Germany, France and the UK — attracted most of the capital. And within those markets, investors went for the best properties in the best locations with long leases signed by stable tenants.

This year, most expect a replay of 2010 — but some beg to differ.

“Everything that is not in the prime bracket is still struggling from a valuation point of view,” says Will Rowson, chief investment officer at ING Real Estate Investment Management (REIM) Europe.

Cushman & Wakefield's head of European research, David Hutchings, reckons the continued interest in prime assets will force prime yields down by 30 to 40 basis points. He expects investment volumes for commercial property to rise 15% to

54 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

“

Everything that is

not in the prime

bracket is still struggling from a valuation point of view

”

Will Rowson

€140bn-€150bn in 2011 as more large fund managers, such as AXA, Grosvenor and Schroders, step up their investments. Low inflation has enabled further yield compression in the prime segment. Already, there are signs that inflation is creeping up.

Central banks have so far refused to put up their historically low interest rates because they are concerned that to do so would kill off any growth. But as prices continue to rise, they may well change their view.

International site with high return

Sources: AWA 2010, AGOF Internet Facts 2010-III

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••• INVESTMENT

Jones Lang LaSalle’s Tony Edgley: “Asset management companies are so depleted. It’s a dwindling profession”

Cushman & Wakefield's David Hutchings: Continued interest in prime assets will force prime yields down by 30 to 40 basis points

Tristan Capital Partners’ Ric Lewis: In the first half of 2011 investors will start to take core-plus deals more seriously

The demand for prime assets pushed down yields last year and created a bigger gap between prime and secondary prices for European offices.

Property consultant Savills calculated last October that the yield gap between prime and secondary office stock was 100 basis points — a level last seen 10 years ago. It compares with 60 basis points during the peak of the market in 2007 and 2008. Prime yields compressed to 5.9%. This may seem low, but it was higher than the return on stocks and bonds.

Last year, investment in European commercial property was set to total €110bn, according to Cushman & Wakefield. While this was a 49% increase on 2009 levels, it was just over 40% of the peak volume traded in 2007. Investment volumes were similar to 2003 and 2004 levels. During the third quarter, France, Germany and the UK accounted for 69% of all trading volume, although investors started to look at the Netherlands, Norway, Poland, Turkey and even Russia.

Ric Lewis, chief executive and chairman of Tristan Capital Partners, believes that in the first half of 2011 investors will start to take core-plus deals more seriously. They may have to accept a bit of work on a building in order to get the returns they are seeking. The days of buying value have passed.

"Everyone forgot the middle piece of the risk/return spectrum," Lewis says.

"Understandably, perhaps, during the crisis, everyone decided that they wanted either core or opportunistic.

With a return to growth, active assetmanagement stories and core-plus risk/return strategies make more sense."

Lewis does not see value in all of the markets where the majority of investors are active. Among other places, he has been investing in industrial and retail assets in Poland. "The risk premium for Poland makes more sense today than it has in the past five years" he says. "These markets are still mature but growing in the right direction.”

The deals that made the headlines in 2010 were virtually all for prime assets. In London, Evans Randall

56 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

bought the Drapers Gardens office block in the City for £242.5m — a 5.3% yield. The building has been let to Blackrock for 25 years. In Berlin, South Korea's National Pension Service and US developer Hines bought the Sony Centre for €530m-€570m.

Dutch property company Corio bought a €1.3bn portfolio of finished and yet-to-be-developed shopping centres from Dutch developer Multi.

The assets are mostly in Germany, where Corio has looked for years to get a foot in the market.

“

With a return to

growth, active assetmanagement stories and core-plus risk/return strategies make

”

sense

Ric Lewis

And in Italy, Allianz and Corio bought the Porta di Roma mall for €440m, or a 6.4% net yield. In addition, several smaller quality assets around Europe were snapped up by private individuals.

What will happen in 2011 depends to a large extent on the banks. Will they become more flexible with their lending criteria? Since the crisis started in 2008, the banks have been very restrictive, lending only to prime assets with long leases signed by stable tenants. For German banks, which have been among the most active lenders during the past two years, it was the only type of deal they could refinance in the Pfandbrief market, a sort of covered bond market. Some of the German banks, including WestImmo and DG Hyp, have turned off the tap.

But other lenders are stepping in to fill the void left by the banks. Insurance companies and pension funds are in-

creasingly looking to finance real estate in a quest for higher returns.

The other question is when the banks will start to offload the real estate they hold or control. So far, only a trickle of properties, or the loans against them, has come on to the market. Banks have been worried about large write-downs if stock is returned to the market.

Lloyds Banking Group, the largest lender to commercial property in the UK with almost one-quarter of the sector's £250bn of debt, has only offloaded £4bn of property from the borrowers to whom it lent during the boom times. The bank has £30bn of bad property debt. Hypo Real Estate, meanwhile, is yet to start sorting through the €210bn of loans it offloaded to Germany's state-sponsored bank, FMS Wertmanagement.

This slow drip of property on to the market has been a big disappointment to the opportunistic funds, which had readied themselves for a deluge of discounted stock. It has not happened. Instead, they have been forced in different directions, such as the development of sale-and-leaseback deals.

Nick Cooper, a principal at Townsend Group, pointed out at the IPD/IPF Property Investment Conference in Brighton last November that eight European opportunity funds had raised €9.2bn by the end of 2008 to invest in opportunistic deals that would come out of the crisis. By the third quarter of 2010, they were still sitting on €7.5bn. Cooper reckons that most of the €1.7bn invested went to the managers themselves in the form of fees.

Many believe that the banks cannot hold out much longer and that they will have to start releasing more real estate to the market as more and more properties need to be refinanced.

DTZ has calculated that the debt gap in Europe will be $245m over the next three years. Europe is followed by Asia Pacific, with 29% or $70bn, and the US, with 20% or $49bn.

The UK and Spain have the biggest debt-funding gaps. DTZ estimates

••• INVESTMENT

“

We just need to

find the right

pricing and the right structure

”

Hans Vrensen that $376bn of new equity capital is available for investment in commercial real-estate markets globally during the next three years. This is more than 1.5 times the estimated global debtfunding gap. “There is enough money to sort out the problem,” said Hans Vrensen, global head of research at DTZ, at the Brighton conference. “We just need to find the right pricing and the right structure.”

Others are not so sure it is as simple as that. The banks own a lot of sec-

ondary and tertiary assets that investors simply do not want, even if they come cheap, as the macro-economic risks are still big. Banks are also holding back because they hope that a market recovery or inflation, or a combination of both, may lift them out of their misery.

Tony Edgley, managing director of corporate finance at Jones Lang LaSalle, sees a practical problem with these types of assets coming on to the market: there are simply not enough asset managers to work the properties.

“Where are the people and skills and businesses to take them on?” he asks.

“Asset management companies are so depleted. It’s a dwindling profession.”

Conference sessions dealing with investment in numerous countries are available throughout MIPIM. Please check our programme on page 20 for details

Sony Centre, Berlin — bought by South Korea's National Pension Service and US developer Hines for €530m-€570m

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••• CITIES AND CONURBATIONS

F I N A N C I N G P U B L I C S E CTO R P R OJ E CT S

Paying for growth with growth

Shanghai: London, Paris and New York will fall behind if they do not find the cash to pay for better roads and railways

WITH THE PRIVATE SECTOR WARY OF LARGE, LONG-TERM INVESTMENTS AND PRESSURE ON THE PUBLIC PURSE, CITIES ARE HUNTING FOR NEW FUNDING MECHANISMS FOR VITAL LONG-TERM PROJECTS. EMMA VANDORE LOOKS AT THE LATEST FINANCIAL INSTRUMENTS ON THE TABLE

S

COTLAND is staking its reputation for being canny with its cash by taking the lead with a new financial instrument designed to help local authorities weather the crisis-induced funding drought.

Edinburgh will be the first city in the UK to trial Tax Increment Financing (TIF), the funding mechanism imported from the US to save mothballed regeneration schemes.

With both public and private money harder to come by, cities are struggling to find funding for long-term projects

vital to their future economic viability. London, Paris and New York know if they do not find the cash to pay for better roads and railways, and smarter city centres, they will fall behind cities such as Shanghai, which is already a beacon for foreign investment and creative minds.

All sorts of mechanisms exist, from ‘urban transformation’ companies in Italy (see box) to selling construction rights above previously allowed building heights in Sao Paolo. In the UK, great hopes are being pinned on TIF, which allows local authorities to fund proj-

60 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

“

Here’s a model of

paying for growth with growth

”

Peter Reekie ects by borrowing against the future tax revenues expected to be generated by the proposed scheme. English cities will have to wait to introduce TIF until changes to legislation.

“Here’s a model of paying for growth with growth,” says Peter Reekie, director of finance and structures at the Scottish Futures Trust, the agency set up by the Scottish government to tap innovative ways of funding infrastructure in 2008 — the same year that Edinburgh city council approved a major redevelopment of the docks.

Forth Ports’ 30-year plan for 15,000 new homes and 100,000 sq m of office space requires infrastructure to connect it to the rest of Edinburgh — and via the port the rest of the world. To unlock this development, the Scottish

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••• CITIES AND CONURBATIONS

government approved Edinburgh’s plans to borrow £84m through a TIF mechanism to build a cruise-liner terminal, lock gates, an esplanade and a link road. Edinburgh hopes the scheme will generate £660m of private investment and 4,900 jobs.

If it were not for TIF, the project would not go ahead, Reekie says. “All other potential sources of funding had been looked at,” he adds.

TIF was created in California as a post-war fiscal tool to counter urban blight. But unlike the US model, which is usually linked to a specific site, TIF in the UK is being shaped as an area-wide regeneration tool. TIF sceptics worry that it is a high-risk strategy: calculations about the rate

increases are highly speculative.

Edinburgh’s scruffy waterfront has rebuffed previous efforts at gentrification, and if Forth Ports loses enthusiasm for its multi-billionpound project, there would be a shortfall in business rates that the city’s ratepayers could have to cover.

“There are various risk mitigation strategies in place if the development doesn’t happen,” Reekie says. Calculations have also been made about business rates falling elsewhere as activity is displaced and servicing the loan will require only about two thirds of the projected increase in rates. Still, “it’s a risk the council is taking”, Reekie adds.

It is perhaps a measure of the crisis that temperamentally risk-shy local councils are so enthusiastic about TIF.

THE ITALIAN MODEL IN ITALY, cash-strapped local authorities with ambitious urban projects can turn to a special tool — urban transformation companies, known as Societa di Trasformazione Urbana (STUs) in Italian.

severe cut back in the transfer of funds from central government to local authorities. Local authorities have had to seriously consider alternatives.” STUs, Marchesi adds, “are proving to be the most viable option”.

Similar to the societe d'économie mixte in France, STUs are companies firmly harnessed to work in the public interest but run independently in public-private partnerships. They exist for the duration of the project in question, and are then dismantled. Crucially, they allow local authorities to circumvent strict limits on the amount of debt they are allowed to acquire.

There are currently 59 STUs in 15 Italian regions, from Porta Sud in Bergamo to Bagnolifutura in Naples. Daniela Mello, a researcher at Palermo university funded by ASTUR, says another key benefit is that STUs allow local authorities to draw on specific competencies for large and complex projects. Because they are run independently, STUs do not interfere with the everyday activities of running a city.

STUs were created by the Italian government 10 years ago, after local authorities complained that budget limits meant they could not raise money for sensible investments in strategic infrastructure.

“Initially, local authorities were afraid of this new instrument,” says Simone Marchesi, an urban-policy expert and advisor to the Italian government. “But in recent years there has been a

Still, the complexity of the sort of large-scale projects for which STUs were designed can dissuade some local authorities from using them. “If you compare this kind of company with project financing, you can understand why the number of STUs is not very high,” says Sara Poggesi, a research fellow at the University of Rome, Tor Vergata.

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Future of London’s Ben Harrison: TIF is not a panacea for government cuts, not all schemes can use it

Scottish Futures Trust’s Peter Reekie: Edinburgh project would not go ahead without TIF

"TIF represents quite a significant departure from how we do investment in this country," says Ben Harrison, executive director of Future of London, a local government forum designed to help authorities tackle infrastructure funding and delivery hurdles.

Instead of relying on government hand-outs, TIF will give local authorities the liberty to negotiate new funding sources for themselves, although the projects are likely to require Treasury approval.

But TIF is not a panacea for govern-

waterfront from Vauxhall to Battersea.

“

TIF represents

quite a significant departure from how we do investment in

”

the UK

Ben Harrison ment cuts, because many schemes will not be able to use it. In London, Harrison points out, most development is housing-led, and TIF as it is currently conceived is based on an expected uplift in business rates. But it could help projects such as the proposed regeneration of the Thames

In Europe, governments have urged the European Investment Bank (EIB) to step into the funding gap.

In 2009, the EIB, which has tailored its loans practice to allow cities to apply for funding, lent around €10bn to 40 urban projects. The minimum loan is usually €25m and, since the EIB usually only finances 50% of the total project cost, this implies a minimum project size of €50m. But because such large projects are relatively rare in cities, the EIB is now allowing cities and other promoters to group together a number of smaller projects to satisfy its minimum-loan threshold. The bank has also extended the scope of its structured finance facility, initially confined to projects in the transport and environment sectors, to include urban projects.

The EIB is also supporting a number of EU initiatives that promote the use of financial engineering to leverage scarce resources. A case in point is JESSICA, or Joint European Support for Sustainable Investment In City Areas.

Under new procedures, EU countries can use some of their European grant funding, or structural funds, to invest in urban projects. Since it was launched last year, the EIB has agreed loans under this mechanism to Lithuania, Poland and Spain.

"One of the consequences of the cri-

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••• CITIES AND CONURBATIONS

sis is that traditional sources of financing have dried up,” says Brian Field, an urban planning and development adviser at the EIB. “EIB is part of the resulting rescue package and is trying to mitigate that gap."

While they cannot receive funding from the Organisation for Economic Co-operation and Development (OECD), cities can turn to it for advice. The rich-country club has been monitoring and charting the infrastructure needs of its members, seeking to encourage them to learn from each other.

“In future, given the tough government budgets that lie ahead, cities will need to find more diverse and more secure sources of funding and financing for their infrastructure, if they are going to be successful in getting new infrastructure built,” says John White,

an advisor to OECD secretary-general Angel Gurria.

White sees a trend towards what he calls “network funding”, whereby revenues raised from, for example, congestion charging can be used to pay off the large up-front costs required to build, maintain and expand infrastructure. Although few cities have followed London’s congestion-charging lead, largely because people do not tend to vote to pay more in taxes, some

“

Lots of people are

thinking in new and

”

creative ways

Lewis Atter

countries — notably France, Italy and, most recently, Germany and Austria — have moved in the ‘network’ direction to fund road infrastructure.

Another option for local authorities is to fall back on a financial mechanism with a long history: squeezing value out of their land. In his radical reshaping of Paris in the nineteenth century, Baron Haussmann used excess land left over after the grand boulevards were drawn as collateral for borrowing to finance new roadways, water supply, and natural gas and sewer lines.

George Peterson, a consultant on public finance, and urban infrastructure and management to the World Bank, said in a 2008 report that similar mechanisms are becoming increasingly important for cities in developing countries.

Edinburgh docks scheme aims to generate £660m of private investment and 4,900 jobs

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Using land to fund infrastructure can be done in three ways: requiring developers to fund the infrastructure required to service the site they are developing; introducing ‘value capture’, whereby local authorities demand a share in the increased land value after building infrastructure; or by selling or leasing publicly owned land.

In the suburbs of Cairo, a private developer is undertaking $1.45bn of infrastructure investments in the New Cities area in exchange for free allocation of desert land. In Sao Paulo, public authorities have been selling building rights for construction above the previously allowed maximum building height to compensate for budget constraints and to help fund infrastructure.

Peterson notes that such schemes do involve risks, such as dealing with realestate bubbles, or a lack of transparency

••• CITIES AND CONURBATIONS

and accountability in land sales. Local authorities must also resist the temptation to drive up land prices through zoning practices, thereby extracting more from developers.

Of course, the way cities fund their investments varies because their revenue sources differ considerably. Istanbul gets 68% of its income via grants from central government, while Stockholm takes only 4%. Less than 5% of Amsterdam’s revenues come from local taxes; in Stockholm, the figure stands at 74%. Cities also have different access to capital markets.

But global cities are increasingly looking to each other for inspiration on new and better ways of doing things. “There are a lot of people looking at what their options might be,” says KPMG partner Lewis Atter. “Lots of people are thinking in new and creative ways.”

Structure of JESSICA, or Joint European Support for Sustainable Investment In City Areas

A series of conference sessions on finance & investment are available in the programme of conferences.

Please check the programme on page 20 for details

NAPLES RECLAIMS AND TRANSFORMS Bagnolifutura is transforming a gritty, industrial site in the Bay of Naples with stunning views across to Capri into an urban utopia. Chief Executive Mario Hubler explains.

The largest urban transformation company in Italy, Bagnolifutura is 100 percent public: 90 percent owned by Commune of Naples

with smaller participations by other local authorities.

"Our mission was to reclaim, transform, exploit and manage the former industrial area Italsider and Eternit, a vacant site of over 200ha,” Hubler says. Bagnolifutura was set up in 2002 as part of the Commune of Naples’ wider objective to create a “vast low

Porta del Parco

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density zone with a few business activities interspersed with recreational and cultural activities.”

“Bagnolifutura reinvented the concept of public-private partnership, choosing public projects likely to stimulate private investment,” Hubler said.

Helped by European Union funding, Bagnolifutura projects include

the Porta del Parco, a vast structure comprising an auditorium and a well-being centre costing €4m; the €37m sporting complex Parco dello Sport; the Acquario Tematico, an €11m centre for the protection and scientific research of marine tortoises; and the €22m audiovisual and movie production center centre Napoli Studios.

Shining lights in the Süddeutsche Zeitung Property Market nd Come a at see us 33.08 stand R and l editoria ng si adverti nt e departm

Commercial real estate from office to industrial properties, for sale or rent – Bavaria‘s largest real estate market brings exclusive offers to just the right target group. Every Wednesday and Friday in the Süddeutsche Zeitung, and permanently listed at sueddeutsche.de/immobilienmarkt. We will be glad to advise you. Just call +49 (89) 2183-8476 or e-mail: immobilien-anzeigen@sueddeutsche.de

••• CITIES AND CONURBATIONS

A R C H I T E CT U R E A N D S U S TA I N A B I L I T Y

Photo — Adam Mørk

Blazing a green trail

The Unilever German headquarters building in Hamburg is among the schemes to have been awarded DGNB Gold certification

THE NEED TO BUILD ECONOMIC, SOCIAL AND ENVIRONMENTAL SUSTAINABILITY INTO THE DNA OF CITIES IS AN IMPERATIVE. BUT HOW ARE EUROPE’S CITIES ACHIEVING THIS IN THE CURRENT ECONOMIC CLIMATE? BRIAN BAKER REPORTS

T

HE EU launched its European Green Capital scheme in 2008 in the midst of a dramatic slowdown in development. But cities must continue to meet their commitments for carbon reduction — and they are looking to buildings to be a major contributor.

The European Green Capital Award, which recognises exemplary eco achievement and ambition, is open to all cities with populations of over

200,000. The first round of competitive bidding led to Stockholm becoming European Green Capital in 2010. This year, the honour goes to Hamburg.

In October 2010, at the first European Green Capital Conference in Stockholm, Vitoria-Gasteiz in Spain and Nantes in France were selected as, respectively, the 2012 and 2013 Green Capital title-holders after a second tight contest.

During the conference, European

68 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

“

The city of

tomorrow will need to be compact and

”

green

Janez Potocnik

commissioner for the environment, Janez Potocnik, said: “The city of tomorrow will need to be compact and green. Several good examples already exist. I am sure nobody will be surprised to hear that they are mainly based on Scandinavian planning and building traditions.”

Stockholm’s achievements were also recognised in 2010 in the first edition of the Siemens’ European Green City Index, which placed the Swedish

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••• CITIES AND CONURBATIONS

Ile de Nantes: Energy conservation is a prerequisite for new-build schemes in the 2013 European Green Capital of Nantes’ concentrated development zones

Photo — Peter Hoelstad

capital in overall second place — and first among the 32 major cities included in the index’s buildings category.

“The elimination of fossil fuels requires co-operation between the city, developers and architects if we are to

succeed,” says Stockholm mayor Sten Nordin. “Architects and developers cannot build areas that ordinary people don’t want to live in but, at the same time, we must aim to achieve greatness in terms of exemplary green credentials in our new houses and other buildings. This is a tricky balance

“

Architects and

clients must go the extra mile to achieve top-class results if they want to be entrusted with projects in the Stockholm’s mayor Sten Nordin: “The elimination of fossil fuels requires co-operation between the city, developers and architects if we are to succeed”

70 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

”

future

Sten Nordin

but one that, together, we must find.”

The first phase of Stockholm’s new Royal Seaport district, which is being built on 236 ha of brown-field land, begins this summer with 10 consortiums of builders and architects involved in the delivery of 700 apartments. These will be organised into 14 or 15 buildings in four blocks.

Stockholm Royal Seaport’s head of development, Staffan Lorentz, says: “We remain confident that we will deliver 500 apartments per year over the next five to six years. We have a total of 3,200 units at one or other stage in our planning process.”

Lorentz reports that, although more stringent eco-standards will apply to the third phase of apartments, negotiations with the first-phase developers for voluntary agreements to achieve below 50 kWh per sq m have gone well. “We have persuaded many to use these projects to support the marketing of their schemes across the region,” he says.

Nordin adds: “We have a high demand for residential, office and retail and can set high requirements. It’s important architects and clients go the extra

mile to achieve top-class results if they want to be entrusted with new projects in the future.”

In the 2011 European Green Capital, Hamburg, the focus in terms of sustainable buildings and architecture is on the re-development of the inner harbour. The Ministry for Urban Development and Environment and HafenCity Hamburg have succeeded in maintaining the momentum of their sustainability priorities throughout the downturn. More than 40 of the projects in the 167 ha HafenCity district were completed by early 2011.

The HafenCity approach has included the use of architectural competitions.

Two outstanding schemes delivered via this model are the multi-awardwinning Unilever headquarters in the Strandkai quarter on the banks of the Elbe, and the Elbarkaden scheme on Magdeburger Hafen in the Elbtorquartier. The Unilever building was completed in 2009 and the Elbarkaden scheme is slated to finish in 2012.

The Elbarkaden architectural competition was won by Zurich-based Bob Gysin + Partner. The mixed-use

••• CITIES AND CONURBATIONS

scheme includes several elements designed to achieve dual HafenCity Ecolabel and DGNB (German Green Building Council) certification.

Project manager Daniel Leithold describes this as “difficult”, but emphasises that it is a challenge that will be met.

Leithold adds: “The scheme includes a 10 m high arcade or ‘loggia’, accessible from two levels, which will extend along the entire 170 m length of the buildings. It will be a first for Hamburg on this scale and it’s also important be-

“

I think

sustainable demands can be made and met in an existing urban

”

neighbourhood

Martin Haas

cause the location is on a primary north-south axis and will lead to the future university buildings.”

The most sustainable element will be the new 10,000 sq m headquarters of eco-energy supplier Greenpeace Energy eG, which will act as a net energy provider. Elbarkaden also includes 100 residential units and ‘designport’, a 10,000 sq m complex that will be available for use by Hamburg’s design sector.

According to Haas, first-year monitoring indicates that the building is performing at 95 kWh per sq m. He also says that the efficiency and appearance of the building were enhanced by the use of ETFE (ethylene tetrafluoroethylene) as a second skin — the first time the material has been deployed in this way for a major office building. The design team also developed a new SMD-LED system for lighting, which achieves up to 70% energy consumption savings.

Unilever’s German head office was named World’s Best Office Building at the 2009 Barcelona World Architecture Festival Awards. In 2010, it was also presented with a RIBA International Award and a Green Good Design Award from the European Centre for Architecture Art Design and Urban Studies.

“Hamburg’s officials have a clear approach to standards and regulation in HafenCity,” Haas says. “We knew from the competition phase what they wanted. The project was a very close collaboration between the city authority, the HafenCity people and ourselves.”

The principal information centre and exhibition space for Hamburg 2011 is located in HafenCity. The sustainable credentials of the new district also figure strongly in Hamburg’s presentation on its ‘Train of Ideas’, which is visiting more than 10 cities across Europe during the year.

This clustering of buildings designed to high eco-standards in the Elbtorquartier is being promoted as Hamburg’s first model green neighbourhood.

The 38,000 sq m, seven-storey Unilever building also includes public access in a large and dramatic groundfloor atrium. The architects were Stuttgart-based Behnisch Architekten and the developer was Hochtief.

Behnisch partner Martin Haas says that Unilever wanted an open and welcoming building. “I do not think that mono-functional buildings in the city are successful now,” he adds. “Opening up the ground floor to the public could be a good model generally.”

The standard of contenders for the green-capital title is high. Losing bidders include Nuremberg, which has a CO2-reduction target of 40% between 1990 and 2020, and Malmo, which aspires to be carbon neutral in all its own activities by 2020.

In the 2013 European Green Capital of Nantes, energy conservation is a prerequisite for new-build schemes in concentrated development zones, where high-energy performance is a standard condition. The city’s local authorities are committed to a 25% CO2 reduction between 1990 and 2020, and a 1 million tonne reduction between 2007 and 2025.

In addition to a mix of smaller scale

SETTING THE ECOGOLD STANDARD THE HAFENCITY Ecolabel green-building rating system was introduced in 2007. In 2010, it was revised by consultants GfoB to make it applicable to all building types.

HafenCity Hamburg CEO Jurgen Bruns-Berentelg, says: “The Ecolabel is critical to HafenCity and Hamburg because it is necessary to help drive forward the objective that at least 30% of all buildings in HafenCity should be of Ecolabel Gold standard.”

From 2010, all residential buildings are required to be of gold standard. The system, which includes a contractual agreement between HafenCity Hamburg and clients, aims not only to achieve built quality, but also to ensure actual quality by measuring energy efficiency.

The 2010 revision also takes account of dual-certification aspirations by introducing certain overlapping documentation with the DGNB (German Green Building Council) scheme, which was introduced in 2009.

Among the schemes to have been awarded Gold certification to date are the Unilever building, the Spiegel Group building designed by Henning Larsen Architects, the Elbarkaden scheme (preliminary) and the HafenCity University (preliminary), designed by Code Unique.

urban-edge development and innerarea redevelopment zones, Nantes is also working on large masterplanned schemes at Ile de Nantes and Malakoff. Its approach is to deploy several different architects on schemes to advance diversity and appeal.

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••• CITIES AND CONURBATIONS

Nuremberg has a CO2-reduction target of 40% between 1990 and 2020

By late 2010, the production of energy from installed photovoltaic panels at Ile de Nantes had reached 200,000 kWh per year. During 2011 and 2012, the culture and education quarter of the district will be completed and occupied.

In Vitoria-Gasteiz, the growth in population cannot be accommodated within the city’s compact traditional footprint. The challenge for the Spanish city and its developers and architects has been to extend that footprint while preserving its admired green belt and improving its energyefficiency performance. To this end, bio-climatic techniques have been used prominently in the city extensions and a new technical code for all new buildings introduced.

Haas emphasises the possibilities for synergy on low carbon between am-

bitious cities and good architecture. ”A large new district allows a city to make extra demands,” he says.

“But l think that sustainable demands can be made and met in an existing urban neighbourhood. I see it as a challenge for cities to change their urban development plans to require all commercial projects to consume less than 100 kWh per sq m and to be accessible by all means of transport.”

Dense cities: for better or for worse?

Tuesday 8 March — 16.30-17.30

Hoban room — level 3

Making regeneration happen in the UK Wednesday 9 March — 14.30-15.30

Hoban room — level 3

72 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

DEVELOPERS AND ARCHITECTS INVOLVED IN PHASE 1 OF STOCKHOLM ROYAL SEAPORT Developers

Architects

NCC

Sodergruppen Arkitekter

Seniorgarten

White Arkitekter

Svenska Hus

Brunnberg & Forshed Arkitektkontor

Viktor Hansen

Equator Stockholm

Eric Wallin

Tengborn Arkitekter

Jantorget

Sweco Architects

Lennart Erickson Reinhold Gustafsson (architect/builder)

Joliark

Familiebokader

Equator Stockholm

SBC

Equator Stockholm

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••• CITIES AND CONURBATIONS

Vancouver still reaps the benefits of Expo 86, considered the moment when the city was transformed into a city with global punch

HOSTING MAJOR EVENTS

Do host cities really win?

CIVIC PRIDE, INTERNATIONAL PROFILE, A REVAMPED INFRASTRUCTURE AND SHINY NEW HOTELS AND STADIUMS ARE THE OFT-CITED BENEFITS OF HOSTING AN OLYMPIC GAMES OR WORLD CUP. BUT DO THESE PERKS JUSTIFY THE MASSIVE INVESTMENT REQUIRED TO PUT ON AN A-LIST EVENT? STEVE MACVICAR REPORTS

A

S RUSSIA and Qatar celebrate their successful bids for the 2018 and 2022 World Cups respectively, the losers — England, Australia, Spain and Portugal among them — are left to contemplate what might have been and the size of the financial bonanza they have just missed out on.

According to PricewaterhouseCoopers (PwC), winning the right to host the 2018 World Cup would have been worth around €3.8bn to England —

the estimated €2.4bn investment required being more than offset by the revenue that would have been generated by tourism (€4.8bn), ticket sales (€710m) and those Britons who would have stayed at home rather than holidaying abroad that summer (€647m).

The PwC income figure is roughly in line with the estimated €2.4bn uplift that Germany enjoyed from hosting the 2006 World Cup, while its cost estimates also tally with Russia’s prediction that it needs to spend just

under €3bn renovating and building new stadiums.

The maths behind the Qatar bid, however, are in a different ballpark altogether. While its stadium construction and refurbishment programme is also anticipated to cost around €3bn, this unexceptional expenditure needs to be seen in the context of the €75bn that this small Persian Gulf State plans to spend as part of its wider initiative to become a sports and cultural centre to rival Dubai.

Qatar is one of the world’s fastest growing economies, which also happens to be sitting on substantial oil and gas reserves. It consequently has considerably deeper pockets than most other countries and can afford to take a very long-term view of the value of hosting the World Cup. But with international sporting and trade events now taking place on an annual basis, the need to balance the investment in such projects against the return is more important than ever.

“

Would the money

have been better

spent on hospitals, social housing or other projects of more pressing

”

concern?

South Africa’s World Cup was an unqualified success, in the short term at least

74 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

Between now and the kick-off of the 2018 World Cup in Moscow, we can look forward to Euro football tournaments in Poland and France. With Ukraine, Poland is co-hosting Euro 2012, UEFA’s international football tournament, which has been the catalyst for the construction of some

••• CITIES AND CONURBATIONS

3,000 km of highways and expressways, as well as other infrastructure, including a second line to the Warsaw Metro and numerous hotels. This is in addition to the sports infrastructure, which includes new football stadiums in the host cities of Warsaw, Gdansk and Poznan.

Before 2018, there will also have been World Expos in China, South Korea, Italy and Turkey.

There is also the small matter of the next Olympic Games in London, the one after that in Brazil (which will also host the 2014 soccer World Cup) and a whole range of smaller gatherings, such as the World University Games in Kazan (Tatarstan) and the 2014 Winter Olympics, to be hosted by Sochi on Russia’s Black Sea Coast.

Faced with such bullish predictions from PwC, it is hard for sceptics to argue against the short-term benefits to developed countries of winning the right to host one of these mega-events.

Although the cost of security has risen almost exponentially since 9/11, these global gatherings undoubtedly engender the feel-good factor so cherished by politicians, usually provide a pretournament boost to the host country’s property and construction industries, and give the tourist and retail sectors a welcome boost for the lifespan of the tournament or exhibition.

By these short-term criteria, last year’s World Cup in South Africa and the World Expo in Shanghai, for instance, were unqualified successes. What is far less clear are the longer term economic and social benefits that accrue from investment in transport, stadiums and accommodation projects in a country like South Africa, which was short on the infrastructure required to satisfy governing bodies such as FIFA and the IOF. Down the line, will the expenditure have been justified by the increase in foreign direct investment (FDI)? Will the shiny new infrastructure meet the long-term needs of the communities in which they sit? Or would the money have been better spent on hospitals, social housing or other projects of more pressing concern?

The experiences of both Barcelona and Vancouver suggest that that expenditure can indeed be justified. In Barcelona’s case, the Catalan and Spanish authorities had earmarked the revitalisation of the city’s derelict downtown for priority treatment long before they decided to bid for the 1992 Olympics. The Games therefore became a catalyst for that initiative. In the end, the authorities spent three times as much on permanent infrastructure projects — coastal recovery, telecommunications, housing, roads and transport — as they did on the Games themselves.

In the ensuing years, Barcelona has managed to establish itself both as a regional business hub — it now ranks as the fourth most popular business location and financial centre in Cushman & Wakefield’s annual survey, compared to the 11th slot it held in the 1980s — and as a hugely popular tourist attraction. In 1986, the city welcomed around 1.7 million visitors; by last year, that figure had risen to over seven million. Barcelona now also attracts roughly 25% of all of Spain’s FDI.

Vancouver is another city still reaping the benefits of playing host to a global event many years later. Some 22 million people visited British Columbia’s capital for Expo 86 and, although the event eventually recorded a deficit of

“

Expo 86

transformed Vancouver from a sleepy provincial backwater into a city with global clout

”

over C$300, it is still considered the moment when Vancouver was transformed from a sleepy provincial backwater into a city with global punch.

While part of the site was redeveloped

and re-used for last year’s Winter Olympics, the most durable evidence of this transformation is Concord Pacific Place, the $2bn mixed-use waterfront development on the former 200-acre Expo 86 site.

As with the Olympic Games in Barcelona, Expo 86 proved the catalyst for the redevelopment of Vancouver’s run-down dock area.

Concord Pacific Place has now provided the city with more than 10,000 homes, intermixed with parks, schools and a variety of retail and commercial services.

As well as being blessed with farsighted leadership, the Vancouver and Barcelona success stories have three other key factors in common.

The first is a matter of timing: since playing host, both cities have benefitted from the long bull market of the 1990s and the positive effects of increased globalisation. Had they found themselves hosting their respective events now, it is by no means clear they would be held up as such shining examples.

Athens may consider itself unlucky to have found itself hosting the Olympics

London’s Olympic Village takes shape promising a major housing legacy

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

75

!

S N U E I S N E H C BESU 41 .

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••• CITIES AND CONURBATIONS

when it did (2004). And while it has been criticised for allowing some of the purpose-built Olympic venues to fall into a state of neglect, what is of far greater concern is the country’s capacity to fund the 3,000 units of social housing that were planned for the Olympic-village site since its eco-

“

The larger the

initial investment, the longer the payback is

”

likely to be

nomic crisis took hold last year.

There is, secondly, the geographically concentrated nature of the events.

Both the Olympics and the World

Expo franchises are awarded to cities, not countries, which simplifies the investment decision and gives the host government the opportunity to focus its efforts on one particular area.

One of the key selling points of England’s unsuccessful bid to host the 2018 World Cup was the fact that much of the regional infrastructure was already in place. Although South Korea and Japan both received an immediate economic fillip when they co-hosted the 2002 games, the maintenance bill for the stadiums built for the games is now higher than the revenues they bring in. Eight of the 10 stadiums built or renovated in Japan for the event lose between $2m and $6m a year, the balance of which is being picked up by the Japanese taxpayer.

The third is that both the Vancouver and Barcelona events

took place a long time ago, which means that any temporary setbacks are now firmly in perspective. It is now largely forgotten, for instance, that Concord Pacific Place took considerably longer than anticipated.

The larger the initial investment, the longer the payback is likely to be — a lesson that the hosts of to-

morrow’s global events, however large or small, need to take into account, regardless of the political requirement to turn a fast buck.

Poland: best investment products in 2011 & 2012 Tuesday 8 March — 15.00-16.00

Le Corbusier room — level 01

The 2014 Winter Olympics will be hosted

by Sochi, on Russia's Black Sea Coast

Poland’s role as co-host of UEFA’s Euro 2012 football tournament has been the catalyst for major infrastructure improvement as well as sports infrastructure including a new stadium in Warsaw

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

77

••• HOTEL, TOURISM AND LEISURE

Sol Melia paid €133m for the freehold of the ME London, which is scheduled to open in 2012

B R A N D P R O F I TA B I L I T Y

Staying power required THE GLOBAL DOWNTURN HAS THROWN THE FLAWS IN THE HOSPITALITY INDUSTRY INTO STARK RELIEF. BUT THERE ARE STILL OPPORTUNITIES FOR THOSE OWNERS AND OPERATORS ABLE TO STAY AHEAD OF THE GAME, WRITES KATHERINE DOGGRELL

T

HE HOTEL sector has come a long way since Mary and Joseph were told there was no room at the inn — and hotel ownership has evolved alongside it.

Now the story is less a case of “No room”, but “Which one?”. There are a staggering variety of rooms available, particularly in the developed western markets. Brands have made their mark in their quest for global dominance, with names such as Hilton and Holiday Inn recognisable around the world. At the other end of the hotelowning scale are the ‘moms and pops’

with a single, often unbranded, hotel outside a country’s capital. Moreover, the rise of the brands has meant that financial institutions such as banks or funds with no experience in the sector other than that gained as customers on business trips can also participate in the market.

Those owners who have not taken up a brand face being marginalised.

Some, however, have been able to level the playing field by benefiting from the marketing and sales offerings of groups such as Leading Hotels of the World, or leveraging the power of the TripAdvisor ratings system, where

“

Unless trading is

falling off a cliff, the strategy is to hold

”

and wait

Dermot Power close monitoring can allow them to move up the ranking and into greater prominence, irrespective of their independent status.

But despite the diversity of owners and plethora of brands that can be seen in all destinations, from teeming Western financial centres to resorts in emerging markets, the ingredients of a successful hotel remain the same: providing good service and a good night’s sleep.

While globalisation and the rise of the brands has been the source of the hotel industry’s growth, they have also — as the current financial crisis has revealed — been a source of weakness.

Owners may find safety from the downturn among the global reservation machines of the leading brands,

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••• HOTEL, TOURISM AND LEISURE

but that security comes at a price. The relationship between owners and their operators can easily become strained if the latter are obliged to apply rigorous and costly brand standards in return for a safety net.

However, the need for hotel operators to maintain their pipelines has brought about a subtle readjustment in their attitudes. The emergence of asset-light models a decade ago, particularly through the popularisation of sale-and-leaseback, allowed investors to enjoy the rise of hotels as an asset class, despite having no operational experience or knowledge of such specialised investments. The adoption of this approach also forced an increase in financial rigour.

Since then, the global brands have been disposing of their assets, focusing instead on selling their skills as operators. Many have also been able to charge a premium for their flags.

However, now that the finance market has fallen away and development finance in particular is hard to come by, operators must look to their own balance sheets to help keep their estates growing. In other words, they must put ‘skin in the game’ — or use their own money to buy stock in the company they are running.

This investment is more sophisticated than simply moving back into buying hotels, although this is not unheard of. The acquisition of the Berners Ho-

tel in London by Marriott International was an example of a hotel operator investing its own cash in a transaction that was of high strategic value to it. The company expects to sell the hotel and continue to operate it in a few years’ time.

In a similar deal, Sol Melia paid €133m for the freehold of the ME London, which is scheduled to open in 2012 after a further €52m spend on the site. The acquisition was financed through previous asset sales and anticipated future sales. The group justified the break from its low capital-intensive expansion strategy by describing the deal as a “magnificent purchase opportunity” of a “strategic asset in a key destination”, which positioned the ME by Melia brand in “one of the most important feeder markets in the world travel industry”.

“Regardless of the profitability expected in the medium term, this flagship hotel will help the ME by Melia brand to grow globally through management, franchise and joint-venture agreements,” says Gabriel Escarrer, Sol Melia’s CEO and vice-chairman.

Andrew Shaw, Accor’s development director in the UK and Ireland, says that Accor will “deploy its cash” to protect guarantees. He describes the development market as “not closed, but very hard to extract debt out of ”.

Hilton Worldwide is to go one step

“

The loaded

question with ‘pretend and

extend’ is asset quality. There may not be enough money to invest back into the

”

portfolio or staff

Tim Helliwell In the main, however, operators have avoided moving back into real-estate ownership and have instead looked to offer money to support the guarantees called for by banks to top up any shortfall and ensure that debt servicing is secure.

further and offer mezzanine finance.

Patrick Fitzgibbon, senior vice-president of development, Europe and Africa, at Hilton Worldwide, claims that the move is part of a burgeoning trend. "The government stimulus

for new growth hasn't worked,” he says. “You will see a lot of mezzanine lending into distressed assets coming into the European markets in the next couple of years."

It is likely that this style of financing will be offered only in the short term, and only in secure but hard-to-access markets with high barriers to entry, such as Europe.

One of the issues facing the sector in addition to the lack of finance is the lack of distressed assets that were expected to flood the market.

Unlike the recession in the 1990s, which saw the banks become the biggest owners of assets in regions such as the UK, a combination of lower interest rates and lenders more familiar with the sector has meant that only the most desperate of cases have come to the market.

Dermot Power, partner at BDO Stoy Hayward, says that the banks are much more sophisticated than they were in the early Nineties. “They are more prepared to hold [their assets] and sweat them,” he adds. “Unless trading is falling off a cliff, the strategy is to hold and wait. Now, the bid-and-ask between buyers and sellers is coming together and banks have the opportunity to shake out the poor performers.”

Power’s view is echoed by Tim Helliwell, head of hotels at Barclays Corporate,

Hilton Baynunah: Brands have made their mark in their quest for global dominance, with names such as Hilton and Holiday Inn recognisable around the world

80 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

••• HOTEL, TOURISM AND LEISURE

“

You can tighten

the screw only so

far. The capex bomb is ticking

”

Patrick Fitzgibbon who observes: “What you are seeing now is the banks working with, arguably, better clients. The banks are extending, deals have matured, hedges have matured… It’s good business for the banks. However, the loaded question with ‘pretend and extend’ is asset quality. There may not be enough money to invest back into the portfolio or staff.”

Helliwell cautions: “By doing this, are we just pushing things out for two to thee years? There’s a big bubble of debt due in 2012 and clients are refi-

BDO Stoy Hayward’s Dermot Power: Banks are much more sophisticated than they were in the early Nineties and are more prepared to hold their assets

Sol Melia’s Gabriel Escarrer: “This flagship hotel will help the ME by Melia brand to grow globally through management, franchise and joint-venture agreements”

Hilton Worldwide’s Patrick Fitzgibbon: “You will see a lot of mezzanine lending into distressed assets coming into the European markets in the next couple of years"

nancing now, in order to miss a liquidity bubble in 2012.”

The relationship between operators and their owners looks likely to be tested by the so-called ‘capex bomb’ alluded to by Helliwell, with owners forced to spend their cash servicing debt, rather than making capital expenditure to maintain the standard of their properties.

Hilton Worldwide’s Fitzgibbon observes: “You can tighten the screw only so far. The capex bomb is ticking. It depends on the product, the market and the owner. It’s all about branding and really delivering consistency. You have to be brave enough to allow hotels to leave your system. The problem has been the many hotels sold at inflated prices three years ago.”

Allowing hotels to leave a brand’s system is an action of last resort and one that, as brands look to attract new owners, is unlikely to be widespread. For owners, the good news is that the downturn has meant that there is a more even spread of risk between owner, lender and operator than existed during the boom years.

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

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••• HOTEL, TOURISM AND LEISURE

I N V E S T M E N T TA R G E T S

Hot spots in a cold climate

Brazil is strongly tipped as a frontrunner over the next decade

THE LAST YEAR HAS BEEN THE BEST OF TIMES FOR SOME HOTELIERS — AND THE WORST OF TIMES FOR OTHERS. IT ALL DEPENDS WHERE YOU ARE AND WHO YOU ARE CATERING FOR, WRITES STEVE KILLICK

T

IMES are tough. Hoteliers around the world are finding that the chill wind of economic recession coupled with spiralling travel costs are causing many tourists simply to stay at home.

Yet unlike many a retail high street, we are not seeing ‘to let’ boards go up on famous landmarks in the plusher parts of Paris, London and New York.

Indeed, far from it. The hotel market

“

China will be the

world’s biggest

market in 10 to 15 years’ time

”

Arthur de Haast

is still extremely active. Across the board, 2010 showed a strong recovery in global hotel transactions, according to research released by Jones Lang LaSalle Hotels.

While the five-star end of the sector continues apace, targeting clients who may be down a few million but still have plenty more in the bank, and failures are picked off cheaply, the emergence of a new breed of hotel vis-

itor is sweeping through the Asian and Pacific markets: local residents who are discovering at first hand the delights of having a hotel vacation.

While the ‘staycation’ in the UK has made very little difference to the turnover of British hotel stock, other than perhaps propping up a few that might otherwise have gone to the wall, the growth of budget hotels in emerging markets around the globe,

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

83

particularly in Asia, is proving little short of spectacular.

When pressed on where the shrewd investor should go next, Arthur de Haast, global CEO of Jones Lang LaSalle Hotels, cautions that before we look at ‘where’, it is important to understand ‘how’. He points out that, unlike his colleagues in the commercial sector dealing with shops, retail warehouses, offices and industrial complexes, there is a far wider spread of ownership in the hotel sector, with institutional ownership far from dominant, except in the UK. “Asia is an enormous area of activity in hotels, with a rich spread of investors involved in the market,” De Haast says. He cites luxury operators such as Mandarin, Shangri-La and Peninsula right down to family concerns — some of which are fairly sizeable, particularly in India and China — running their own operations and appealing to the parochial rather than the international markets.

“There has certainly been a significant shift away from owner-occupiers in the last few years,” he adds.

China and India are as hot as it gets when it comes to recent activity, with the burgeoning wealth of the Chinese needing a full range of hotels to sate their appetite. “It will be the world’s biggest market in 10 to 15 years time,” De Haast predicts.

Certainly Intercontinental Hotels Group (IHG) is targeting both China and India as the places to be. Andy Cosslett, IHG chief executive, says: “This is unprecedented in world history. In 15 years’ time, there is going to be a middle class in China twice the size of America’s. The only thing similar to this was when America opened up the freeway network in the 1950s and all those great brands such as Holiday Inn were born. You are going to see the same in China and India — but 20 times more.”

Like its main rivals Hilton, Marriott and Starwood, IHG has moved away from the owner-occupancy model and now runs a franchise operation while still retaining a few trophy assets in London, New York and Hong Kong.

Photo: Vismedia

••• HOTEL, TOURISM AND LEISURE

Andy Cosslett, IHG: “In 15 years’ time, there is going to be a middle class in China twice the size of America’s. The only thing similar to this was when America opened up the freeway network in the 1950s”

Arthur de Haast, Jones Lang LaSalle Hotels: “Asia is an enormous area of activity in hotels, with a rich spread of investors involved in the market”

Derek Gammage, CB Richard Ellis: “Some institutional owners have simply not understood performance income”

Cosslett says that, without franchising and a sale of assets, the company would have faced a “huge loss, cash would have run out and the business would have been in serious trouble”.

Instead, he is preparing for a massive roll-out across Asia and the Middle East.

gence of powerful hotel property companies such as Starwood and Blackstone, which owns Hilton Hotels, as the way things have changed in the mid- to top-end sector, although he notes that we have yet to see the emergence of a big-name Chinese hotel investor.

have never been granted before. We could yet see some tenure difficulties along the way. But despite these ‘what ifs’, the opportunity to earn money probably outweighs the risk.”

Gammage is also cautious about the Indian subcontinent. “Not being one nation is a sizeable barrier,” he says, citing the doubts expressed by Hilton and Whitbread’s Travel Inn chain, both of which have made noises about moving into the sub-continent but have so far held back.” “India is undoubtedly a huge market but, as yet, remains largely a self-funding one,” he adds.

The investors of old were attracted to hotels because they kept trading, even if they were not full, and offered better yields than the traditional commercial sectors.

“In fact, not a great deal of thought went into it,” says Derek Gammage, head of hotels in Europe, Africa and the Middle East for CB Richard Ellis (CBRE). “If you are buying performance based on income stream, then you have got to understand it.”

Many of these investors were only too keen to sell off when the market headed south and the new generation of hotel companies emerged. “What we have seen, especially over the last few years, is things coming home to roost, because some institutional owners have simply not understood performance income,” Gammage adds.

The CBRE chief points to the emer-

“

India is

undoubtedly a huge market but, as yet, remains largely a

”

self-funding one

Derek Gammage “China is a fantastic market,” he adds, noting that everyone wants in. “There are huge cities with no recognisable hotel. But because China is still an emerging market, it’s incredibly young. No one knows yet what happens when you reach the end of a lease, for the simple reason that leases

Looking west, Brazil is strongly tipped as a frontrunner over the next decade although it does not yet have quite the same appeal as India and China. The general view is that Brazil is generating a lot of talk but, as yet, relatively little action.

And even in economically battered Europe, there are still deals to be done if the product is right. Vassilis Konstantakopoulos was born into a humble Greek family and went to sea to earn his fortune. He now owns a shipping line and a development company.

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••• HOTEL, TOURISM AND LEISURE

“

We are here for

the long run. If

there is a hiccup for a year or two, it doesn't really

”

matter

Achilleas Konstantakopoulos

velopment company Temes, says: “We have a long-term view on this. We started buying [land] 25 years ago. We are here for the long run. If there is a hiccup for a year or two, it doesn't really matter.”

With the €27,000-a-night presidential suite in The Romanos occupied since the first week of opening in June, it seems that Starwood has certainly backed a winner.

A Starwood spokesman says: “We are committed to working with the right partners on the right properties in the right places, creating new luxury destinations.”

Photo: courtesy InterContinental Hotels Group

In the 1980s, Konstantakopoulos bought some land — a lot of land, in fact — in Messinia in the Greek Peloponnese. One site was a 130 ha plot in an area of stunning natural beauty, which is now being transformed into the new luxury destination Costa Navarino. The first phase of the €1bn project is a mixed-use beachfront development called Navarino Dunes, featuring Starwood’s The Romanos and a Westin resort. All this has occurred in the face of Greece’s massive debt problems.

Achilleas Konstantakopoulos, son of Vassilis and managing director of de-

China and India will be the world’s biggest market in 10 to 15 years time Jones Lang LaSalle Hotels’ De Haast predicts

86 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

Having done just that at Costa Smerelda in Sardinia, Starwood sees Navarino Dunes as another low-density scheme capable of pulling in affluent visitors from Greece, the rest of Europe and the US, thus proving that there are still great deals to be done whatever the state of the global economy.

A global challenge: how to make resort hotels profitable Thursday 10 March — 15.00-16.00

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••• PRACTICAL GUIDE

USEFUL TIPS FOR MIPIM 2011

The information is divided into 3 sections:

Dear Participant, Your experience at MIPIM is important to us. The entire MIPIM team is committed to ensuring your market runs as smoothly and efficiently as possible, so that you can focus on achieving your objectives.

These pages are is intended to assist your preparation for the event. The following information will enable you to arrive with a full meeting schedule in place and an in-depth understanding of the market.

1• PREPARING MY MARKET MAKE APPOINTMENTS AND CONTACTS BEFORE ARRIVAL To benefit fully from MIPIM experience, we encourage you to: Connect to the MIPIM Online Community, the most effective way to prepare for MIPIM! MIPIM is a tremendous opportunity for your business. Anticipating and preparing by using the Online Community at www.mipim.com is definitely the key: • Identify and contact the people you want to meet among thousands of real estate professionals • Increase your visibility by completing your company and personal profiles • Showcase and identify real estate projects • Schedule and plan meetings ahead of time • Select the conferences and events you want to attend

1 • Preparing my market 2 • Arriving in Cannes: MIPIM Opening Hours & Events

3 • The Exhibition Halls & Clubs

2 • ARRIVING IN CANNES The Palais des Festivals is situated on the seafront along the famous Croisette. It is clearly signposted throughout Cannes.

The exact address is: Palais des Festivals – Esplanade Georges Pompidou – 06400 Cannes Country Dialling code: +33 Time zone: GMT + 1 Electricity: 220 volts AC, 50 Hz, round two-pin plugs are standard Measurement System: Metric Currency: Euro To gain access to MIPIM, you will need your badge

NEW!

MIPIM kicks off a year of changes for our clients with badges.

This year, e-tickets now replace ID cards. They will be sent a few days before MIPIM by e-mail, this e-mail has an attached ticket and barcode. You will be able to print this e-ticket for rapid collection.

The badge collection process: thanks to your e-ticket you can collect your badge yourself by scanning the barcode on the eticket at a self-service badge delivery point. you can, if needed, make corrections to your name and photos (in which case you will be required to show identification) New badge format: the new credit card shaped badge, is made of biodegradable plastic, and the client’s photo is no longer printed on the badge (it is now visible on a PDA at the entrance security check).

After the event, the badge becomes a CannesPlus card, which allows the holder to benefit from advantages in the city of Cannes outside show periods.

You can collect your badge at several badge collection points:

• Registration Hall From Sunday 6 March, 14.00 to Friday 11 March, 13.00.

Auditorium Debussy - Foyer - Level 1 of the Palais des Festivals on the Croisette in Cannes.

• Nice Airport From Sunday 6, 14.00, to Wednesday 9, 22.00.

MIPIM desk in Terminal 1 & 2.

• Hotels From Sunday 6, 14.00, to Wednesday 9, 19.00.

Majestic (on the Croisette) Carlton (on the Croisette) Martinez (on the Croisette) Please note, that the full payment has to have been made in advance to pick up your badge at the airport and in hotels.

Registration Opening Hours Sunday 6 March: 14.00 - 19.00 Monday 7 March: 9.00 - 19.00 Tuesday 8 March: 8.30 - 20.00

Wednesday 9 March: 8.30 - 19.00 Thursday 10 March: 9.00 - 19.00 Friday 11 March: 9.00 - 13.00 Market Opening Hours

• Exhibitors’ Access Sunday 6 March: 14.00 - 19.00 Monday 7 March: 9.00 - 19.00 Tuesday 8 March: 8.30 - 19.00 Wednesday 9 March: 8.30 - 19.00 Thursday 10 March: 8.30 - 19.00 Friday 11 March: 8.30 - 16.00

• Participants’ Access Tuesday 8 March: 9.00 - 19.00 Wednesday 9 March: 9.00 - 19.00 Thursday 10 March: 9.00 - 19.00 Friday 11 March: 9.00 - 16.00

M I P I M P R E V I E W M AGA Z I N E 2 0 1 1 /

89

••• PRACTICAL GUIDE

Events, open to all delegates

• The Opening Cocktail Tuesday 8 March from 19.30 at the Carlton Hotel.

Please note that your badge will be required to enter.

Sponsored by:

• The MIPIM Awards ceremony Thursday 10 March at 19.00, Grand Auditorium, Level 1, Palais des Festivals.

Sponsored by:

3 • THE EXHIBITION HALLS AND CLUBS EXHIBITION HALLS The Palais des Festivals is comprised of distinct exhibition areas: There are two buildings connected via mechanical escalator.

Palais des Festivals: - Level 01 - Level 0 - Level 1 - Level 3 - Level 4 - Riviera Hall - Lerins Hall Outside Structure: - Marina Hall - Azur Hall - Sunset Hall Maps are available throughout the market to help you find the exhibitor you are looking for. Hostesses can also assist you.

CLUBS Business Lounge (Palais des Festivals - Level 01) This club is reserved for participants without a stand, and offers: Wi-fi access, a meeting area, bar, hostesses to help organise your meetings.

Architecture Pavilion NEW! (Palais des Festivals - Level 3) This new area open to all MIPIM delegates and is the best place to network with international architects. In addition to having a lounge area, this new pavilion will host conferences, debates and video projections.

90 / M I P I M P R E V I E W M AGA Z I N E 2 0 1 1

VIP, Investors & End Users’ Lounge (Palais des Festivals - Level 3) Set up in a specially arranged area, this club is intended for investors, end users, VIPs, and directors of exhibiting companies.This private lounge offers free Wi-fi acces and a complimentary bar. A number of hostesses will be at clients' disposal to help organise their meetings.

Please note that in order to enable all participants to benefit from this business lounge, we respectfully request our participants to keep their meetings to a maximum length of an hour.

REGUS Member Business Lounge (Palais des Festivals - Level 1)

The Regus Members’ Business Lounge offers complimentary and personalised business services: • Private lounge area • International press • PC/Internet access • Refreshments • Specialised staff Members only Press Club (Palais des Festivals - Level 3) This facility for journalists includes computers, internet connection, a printer and the full-time presence of a member of staff.

FOR MORE INFORMATION ABOUT TRANSPORT, SERVICES PLEASE VISIT WWW.MIPIM.COM

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Alstertal-Einkaufszentrum, Hamburg

Always changing. Always successful.

Shopping centers in Germany – our pioneering idea has now enjoyed 40 years of continually growing success. From the beginning it guaranteed our tenants exceptionally highly frequented retail space. In order to maintain this standard, we have always been committed to improving and renewing our centers. Count on our long-time experience and on our intuition for setting thriving trends.

MIPIM t a s u t Visi 6.01 Stand 1

Shopping | Office | Traffic | Industries ECE Projektmanagement G.m.b.H. & Co. KG Heegbarg 30, 22391 Hamburg, Germany Phone: +49 (0)40 60606-0, Fax: +49 (0)40 60606-6230 www.ece.com, info@ece.com