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MAY 2014

mipim

mipim.com The official MIPIM magazine

REVIEW ®

WRAP-UP

SOUTHERN EUROPE

Property poised for recovery Key takeaways from MIPIM 2014

Investors expect Spanish rebound Global players circle distressed assets

SEE PAGE 24

SEE PAGE 33

Also inside:

MIPIM Awards • RE-Invest Summit • Mayors’ Think Tank • MIPIM Innovation Forum

Confidence grows at MIPIM


WINNER

BEST REFURBISHED BUILDING

2014

TRANSFORMING A LOCAL LANDMARK FROM THE PAST INTO THE FUTURE. MIPIM AWARD WINNER

Transforming an 18th century hospital so steeped in history into a superb 5-stars hotel was a real challenge. Everything noteworthy in the former Hotel-Dieu had to be restored, enhanced and preserved to transform it into an InterContinental Hotel ready to host international visitors for the opening of Marseilles, international capital for culture. Altarea Cogedim and AXA Real Estate made it possible respecting the highest international standards: 23,200 sqm were refurbished in a stylish and contemporary design. It has been amongst the ďŹ rst historical building to reach the highest environmental labels making Hotel-Dieu a unique place to stay in the heart of Provence.

www.altareacogedim.com


EDITORIAL

CONTENTS iNEWS

Filippo Rean Director of MIPIM

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ELCOME to the MIPIM 2014 Review magazine which looks back at the highlights of the 25th edition of the world’s property market. What was clear during MIPIM was that many markets are in recovery mode, with post-2008 distressed territories in Southern Europe and Ireland back in the radar screen of investors. With the Japanese government determined to stimulate the economy, MIPIM welcomed a record delegation from Japan, showcasing some 120 projects that are looking for inward investment. On the other side of the coin, Asian investors, led by China, were noticeably active in the international market. By the end of MIPIM’s third RE-Invest Summit, over 30 of the world’s leading sovereign wealth funds, pension funds, insurance funds and endowments signaled they were preparing to increase their exposure to real estate, including such alternative assets as healthcare and studentrelated property. In many markets, investors and owners are focusing more on asset management than has been the case at other times. Investors are holding assets longer, so they’re increasingly planning how to use and develop their properties. A building’s energy efficiency, its links to transportation hubs and its flexibility over time, have become more and more important. This is why innovation, infrastructure and sustainability are so central to MIPIM and will continue to be so in the future. As MIPIM celebrated 25 years devoted to the remarkable real estate industry, it was fitting that we could announce a new addition to the ‘family’ in the form of MIPIM Japan, which will take place in Tokyo, in May 2015. With the first MIPIM UK set to open its doors in October of this year, we’re proud to be able to expand the MIPIM portfolio. We would like to thank you for being at MIPIM this year and hope this Review magazine will provide additional insights and information.

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Who made the headlines at MIPIM 2014?

iMIPIM IN VISION

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Business and pleasure in Cannes

iFEATURES

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MIPIM Wrap-up Key takeaways from a packed conference programme

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MIPIM Innovation Forum A glimpse of the future of real estate

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Africa Property’s new land of opportunity

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Southern Europe Investors prepare for the rebound

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RE-Invest Summit Property back on the agenda

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MIPIM Mayors’ Think Tank Cities bid for self-sufficiency

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MIPIM UK Looking ahead to October 2014

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MIPIM Japan Resurgent economy drives real estate growth

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iAWARDS

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And the winners are...

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mipim REVIEWThe official MIPIM review magazine May 2014. Director of Publications Paul Zilk Director of Communication Mike Williams EDITORIAL DEPARTMENT Editor in Chief Graham Parker Technical Editor in Chief Herve Traisnel Deputy Technical Editor in Chief Frederic Beauseigneur Graphic Designer Carole Peres Sub Editor Joanna Stephens Proof Reader Debbie Lincoln Contributors Mark Moore, Doug Morrison, Paul Strohm PRODUCTION DEPARTMENT Publishing Director Martin Screpel Publishing Manager Amrane Lamiri Publishing Co-ordinators Nour Ezzedeen, Emilie Lambert Printer Riccobono Imprimeurs, Le Muy (France) Reed MIDEM, a joint stock company (SAS), with a capital of €310.000, 662 003 557 R.C.S. NANTERRE, having offices located at 27-33 Quai Alphonse Le Gallo - 92100 BOULOGNE-BILLANCOURT (FRANCE), VAT number FR91 662 003 557. Contents © 2014, Reed MIDEM Market Publications. Publication registered 2nd quarter 2014. ISSN 1968-2379. Printed on 50% recycled paper ®

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NEWS APSIS GLOBE SETS SIGHTS ON 200,000 SQ M PER YEAR APSIS Globe was at MIPIM with an exhibition of its expertise. The Russian developer and investor has a portfolio of projects comprising over 1 million sq m of real estate. In the next few years, Apsis Globe plans to achieve an average completion figure of around 200,000 sq m per year. The company is currently working on projects in Moscow, the Moscow Region and St Petersburg. One of the projects is the construction of a school in Pushkino in Moscow Region, which is designed to become the town’s cultural and educational centre. The cost of $35m (1.26bn roubles) is being funded entirely by Apsis Globe. The Apsis Globe group of companies was formed in 2008. Its general director Sergey Vakhrameev, as former director of construction at Renova-Stroy Group between 2007-2008, was directly involved in designing Russia’s biggest real estate project — the construction of the Akademichesky residential district of Ekaterinburg, with a total area of 11 million sq m.

Investors shown scope of Mebe’s Russian ambition

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T MIPIM, Mebe Group showed investors its significant portfolio of projects in Russia. The dynamic developer has completed more than 80 major construction projects in the Russian Federation, where it claims that Mebe Concrete, Mebe Metal and Mebe Facade have all become leaders in their sectors. In 2010, Mebe launched Mebe Development, which aims to improve the quality of office and residential buildings available in the Russian market. Mebe Development operates three brands: Mebe One, specialising in high-end residential and commercial developments; Mebe Life, which develops large-scale residential projects; and Mebe Voyage, which delivers hotel and leisure schemes. Among the group’s projects on show in Cannes was the Mebe Voyage Khimki Hotel. The new hotel project is located near Mebe One Khimki Plaza, which is an office project in Moscow’s Khimki district developed by the group in 2014. The 16,000 sq m hotel, which is due to open in the first quarter of 2016, will include a fitness area with swimming pool, restaurants, and conference and function halls, as well as parking.

Mebe Voyage Khimki Hotel

Invitation to the house market School projects are key to Apsis Globe’s growth strategy

The Russian Housing Development Foundation’s Cheboksary project

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THE RUSSIA N Housing Development Foundation (RHDF) was at MIPIM to showcase its capabilities and track record to the global investment community. The Foundation’s main function is to promote the development of the housing market in Russia, with a focus on economy-class housing, infrastructure facilities, and the construction-materials industry. Currently, the RHDF has 189 projects under development with a total area of 9,330 ha in 44 regions of the Russian Federation. In 20102013, the total volume of housing commissioned on RHDF land was 2,277 million sq m. It currently has 22,363 million sq m of housing at different stages of development.


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i NEWS TRANSPORT HUBS GET MOSCOW ON THE MOVE RUSSIAN urban regeneration specialist Mosinzhproekt announced at MIPIM that it had been appointed by the Moscow city government to develop 48 new transport hubs across the Russian capital. The transport hub is an engineering solution to the problems of Moscow’s complex and rapidly expanding transport network. Built at key interchanges between different modes of transport, the hubs will allow easy interchanges for passengers, while opening up development opportunities for leisure and retail uses.

Look beyond Moscow and St Petersburg, investors urged

Regional development minister Igor Slyunyaev: “source of relevant and accurate information”

T Seligerskaya a transport hub at the junction of Moscow’s two busiest highways, developed with DTACC Architecture

The first two landmark projects — the Troparyovo and Seligerskaya hubs — were unveiled at MIPIM. The first is being developed in partnership with the South Korean urbanists Dohwa and will provide offices and shops above a new transport interchange. The second is being developed in partnership with the French firm DTACC Architecture. At the junction of Moscow’s two busiest highways, Seligerskaya will include a 153,000 sq m shopping centre, 90,000 sq m of apartments and a 500-bed hotel. Meanwhile, Mosinzhproekt has launched Mosinzhinvest, a new company set up to supervise the delivery of these projects on behalf of international investors.

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HERE is a wealth of great investment potential in Russia outside Moscow and St Petersburg. That was the message from the Invest In Russia agency, which was at MIPIM to tell the story of the positive attractions of the Russian regions to investors. Invest In Russia was at MIPIM for the first time — not surprisingly, since the agency was only set up last December. It was created under the aegis of Russia’s regional development ministry. In Cannes, minister of regional development Igor Slyunyaev explained some of the background to the creation of the new agency. “A working group in the Ministry of Regional Development was created in 2013 aimed at increasing the investment attractiveness of the Russian Federation. This group selects promising investment projects, which further receive assistance through the development of mechanisms [for attracting] extra-budgetary investment. The working group acts as an integral platform for co-operation between public authorities, banks, investors and the initiators of investment projects.” The Invest In Russia agency emerged from the same impetus as the working group.

“The Russian Federation is a country with 83 regions, each of which has significant potential for investment growth and economic development,” Slyunyaev added. “The main task of the Invest In Russia agency is to function as a unified central customer point. It is the source of relevant and accurate information for international investors about the investment potential of the Russian regions, on-going projects and new investment opportunities, as well as an instrument to create favourable conditions for foreign companies to enter the Russian market.” The key activities of the Invest In Russia agency include building close working relations with foreign investment agencies and investors; providing fast and valuable information for foreign investors about projects and the business environment in Russia; supporting foreign investors during all stages of investment project implementation; promoting regional investment projects and the business image of Russia; conducting specialised training for regional investment agencies about best international practices; and facilitating permanent two-way communication with the international investment community.


i NEWS Passive housing receives active support from BuildTog scheme

EMAAR STILL ON WORLD-BEATING FORM THE CENTREPIECE of Dubai developer Emaar’s participation at MIPIM was a showcase of its major projects, including the 200 ha mega-development Downtown Dubai, the world’s tallest building Burj Khalifa, the Dubai Mall and the Dubai Fountain which, shooting water jets as high as a 50-storey building, claims to be the world’s tallest performing fountain. Dubai Mall — one of the components of Downtown Dubai — had over 75 million visitors in 2013, supporting its claim to be the world’s most visited shopping and entertainment destination. Emaar also highlighted its Opera District project, located centrally in Downtown Dubai. The area’s features include the Dubai Opera, a 2,000-seat multipurpose performing-arts centre, hotels, residential and serviced apartments, a retail plaza, restaurants, waterfront promenades, recreational spaces and parks. Outside of its home market, Emaar showcased Emaar Square in Istanbul, billed

partners and investors to provide new sites for THE MIPIM Innovation Forum, now in its third development, as well as industrial partners year, highlights successful new ideas in who might be interested in joining the BuildTog development and construction. project. Among the exhibitors at this year’s event was German chemical giant BASF, which was on the “We want to work with all fields attracted by sustainable housing and those who want to fit hunt for more partners to join its BuildTog passive house components, as well as housing European research and construction project. companies that want to learn about passive BuildTog — the Building Together project — is a collaboration between the European Housing housing and construction and show what they can do,” Meyer-Hoffmann said. Network EURHONET, French architect Nicolas Michelin and his firm A/NM/A, German energy- The BuildTog methodology, to which BASF contributes its insulation expertise, has efficiency consultancy Luwoge consult and BASF. already been incorporated into several construction schemes, with eight BuildTog BuildTog aims to create a new generation of projects currently in various collective residential homes in stages of planning or construction several European countries. in Germany, Sweden and France. These will combine top energy The first project in Darmstadt, performance with costGermany completed last month efficient construction and and is already tenanted. A second, high-quality architecture, as in France, is due to complete in Europe moves towards the September, while a third site will incorporation of passive begin construction in the summer. houses as standard by 2020. Henrik Meyer-Hoffmann, BASF’s Henrik-Meyer Hoffmann: Meyer-Hoffman said he was also architect and market developer seeking more partners for the looking to expand into additional countries. at BASF, called for both housing BuildTog scheme

Emaar’s Dubai Opera District as a new leisure and business hub. The scheme comprises 1,000 dwellings, a 180-room five-star hotel, high- and lowrise residences and a shopping mall. One of the largest in Turkey, Emaar Square Shopping Mall is the trophy asset within the development, with 150,000 sq m of leasable space, 400 shops and a range of leisure and entertainment facilities, restaurants and cafes. Robert Booth, CEO of Emaar Dubai Real Estate, said: “Emaar’s showcase at MIPIM highlighted our credentials as a global developer of iconic properties that transform the economies we operate in.”

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Spanish / English version Print and Digital format

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YEARLY PUBLICATION. REVIEW AND TRENDS FOR REAL ESTATE IN LATIN AMERICA.

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w w w.an uar i o i n m o bi l i ar i o .co m For further information: andrea@mktre.com


i NEWS SMALLER IS BETTER FOR SEGRO PAN-EUROPEAN logistics property specialist Segro is finding increasing demand for smaller logistics facilities in suburban locations, driven by the growth of e-commerce, convenience retail and click-and-collect. “The supply chain is adapting — and it’s adapting into a space where we are strong,” said chief investment officer Phil Redding. And Redding believes there is more change to come as operators face consumer demand for same-day delivery and dedicated delivery slots. Equally, he believes click-and-collect has further to go. “Click-and-collect will span out to a lot of convenient places, like stations and post offices,” he forecast. “Both will need to be served by smaller loads and replenished frequently.” While the UK has Europe’s most advanced e-commerce market, Segro is experiencing demand across Europe, according to chief operating officer Andy Gulliford. “We see our urban logistics format working in any capital city,” he said. “It’s already working well in Paris and now we are seeing demand for smaller units inside Warsaw’s inner ring road.”

All in order for Belgian police at new Belair headquarters

Belair, Brussels: a new home for Belgium’s federal police

G Segro is building at key transport hubs

ER M A N i nvestor Han nover Leasing, in partnership with a major Asian institutional investor, has completed its purchase of Immobel and Breevast’s Belair development in Brussels. Designed by Jaspers-Eyers Architects, Belair is part of a 6 ha project that will transform the former administrative centre of Belgium into the largest mixed-use scheme ever created in the heart of Brussels. The final touches to the first phase of the redevelopment of the obsolete Sixties building are currently being put in place.

The now renovated Belair accommodates Belgium’s Federal Police headquarters. The Regie des Batiments — Belgium’s main state body for owning and leasing real estate — leased 80,000 sq m for a period of 18 years in two phases to Immobel and Breevast to develop the headquarters of the federal police. Belair, which holds a BREEAM Very Good rating, will also house a fire department and retail space. The renovated building forms the first phase of the redeployment of the Belair site.

URC cements lead in MENA region UNITED Real Estate Company (URC) was back at MIPIM 2014, following its win last year at the MIPIM Architectural Review Future Projects Awards, where its Junoot development in Shuwaimiya, Oman was presented with the Special Judges Recognition award. Commenting on URC’s participation at this year’s MIPIM, Renimah Al Mattar, the company’s executive vice-president, said: “Following last year’s success and award win, we were very excited to be part of this prominent event for 10

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the second year in a row. URC was proud to have an opportunity to present its portfolio of real estate developments to international audiences.” She added that URC’s MIPIM stand enjoyed “very high” recognition, helping to strengthen the company’s position as “a leading developer in the MENA region”. URC is one of the Middle East’s foremost real estate development companies, with total assets of $1.6bn at September 2013. Its

majority shareholder is Kuwait Projects Company (KIPCO), one of the largest holding companies in the Middle East and North Africa. URC’s operational assets in Kuwait include KIPCO Tower, Marina Hotel and Marina Mall. In Oman, its portfolio includes Salalah Gardens Mall and Salalah Gardens Residences. In the region, URC is developing Abdali Mall in Jordan, Raouche View at 1090 in Lebanon, Aswar Residences in Egypt and Junoot Resort in Oman.


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i NEWS Nobels win their own special prize — a home of their own THE NOBEL Prize — dynamite king Alfred Nobel’s gift to world peace and enlightenment— will be given its own dedicated home, MIPIM delegates learned. A public building to serve as home to arguably the world’s most prestigious awards is to become a reality. An architectural competition for the creation of the Nobel Centre drew more than 200 entries from architectural firms across the world. The German office of David Chipperfield Architects was selected as the winner from a shortlist of three that included Swedish fi rms Johan Celsing and Wingardh Arkitektkontor. The Nobel Centre, planned for completion by 2018, will also house the Nobel Foundation and its activities within the knowledge building, digital media and research spheres. Costing an estimated $184m, the Centre is primarily being funded through private donations. The activities of the Nobel Centre will be supported by the Swedish state and the City of Stockholm. “It is fantastic to finally make use of Sweden’s doubtlessly strongest international brand to strengthen the interest in Stockholm with activities all the year round,” said Anders Nylander, member of Nobelhuset’s board of directors. Nobelhuset, which is owned by the Nobel Foundation, has been tasked with building the Nobel Centre at Blasieholmen in Stockholm.

David Chipperfield’s winning design for the Nobel Centre

OPPORTUNITY GALORE IN SCOTLAND’S CITIES MIPIM provided the platform for the Scottish Cities Alliance (SCA) to launch over £2.5bn of investment opportunities in Scottish cities. SCA unveiled the details of 18 investment sites being brought forward for development and occupation across the Scottish cities. These included the 240 ha Dundee Waterfront, a £1bn mixed-use redevelopment of the Dundee coastline; the 150,000 sq m, £200m Aberdeen Exhibition and Conference Centre, a mixed-use office, hotel and entertainment development;

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Inverness Campus, a £200m development for a state-of-the-art educational and business environment; and the 65,000 sq m mixed-use redevelopment of Haymarket railway station in Edinburgh. SCA is a partnership of Scotland’s cities and the Scottish government, facilitated by the Scottish Council for Development and Industry. The Alliance, which was established in 2011, aims to increase investment jobs and business opportunities in Scotland’s cities.

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Alternative investment less risky with Taliance TALIANCE, which develops business systems for the investment property market, showcased its new software for forecasting, financial modelling and what-if analytics at the MIPIM Innovation Forum. Taliance software is used by many firms with international operations in the private-investment sector. “It helps to reduce risk, achieve real-time forecasting and analytics, and provides the first real Excel alternative for frontand middle-office roles in alternative investments,” said Guillaume Fiastre,

Taliance president and CEO. Many of the company’s clients, including AXA Real Estate, Grosvenor, Hammerson, Generali Real Estate, SCOR Global Investments and Cordea Savills, have reported the improved performance of global alternative investment portfolios thanks to Taliance’s systems, Fiastre said. He added: “The alternative investment sector is becoming increasingly complex and competitive. Our software can help fund managers prepare for risks and turn market conditions to their advantage.”


i NEWS KONE GIVES GREEN ECO-MALL A LIFT THE EMPORIA shopping centre is Sweden’s first environmentally certified mall, according to lift and escalator manufacturer Kone, which was closely involved in the development. The 93,000 sq m mall in the Hyllie district of Malmo aims to set a global example in sustainable urban development. Emporia is the greenest mall in Scandinavia, Kone said at MIPIM. The Steen & Strom-developed Emporia is the first mall in Sweden to achieve BREEAM environmental certification. Kone supplied a range of transit products equipped with energy-saving features, including the new Kone Direct Drive for escalators and autowalks, which was piloted in this project. “We were chosen as the total solutions provider based on our active promotion of Kone’s ecoefficiency expertise,” said Kone project manager Rasmus Anjert. “Through our maintenance contract, we will continue working with the customer to ensure the project’s on-going success.”

HB Reavis comes to MIPIM with first UK development

VERITAS ROLLS OUT BUILDING IN ONE BUREAU Veritas and real estate-market players have joined forces to launch the Building In One initiative, which aims to create a valid real estate data ecosystem that includes all players: property managers, asset managers and owners. The Building In One system will ensure that real estate data is collected, stored, exchanged, verified and made available at any time throughout a property’s lifecycle. The system’s benefits are said to include reliable data to facilitate a optimal decision-making; guaranteed data traceability and transparency throughout a building’s lifecycle; certified and reliable data; an information system based on one international standard; and increased confidence and performance across the entire market.

HB Reavis’ first UK project: 33 King William Street, London

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ENTR A L European developer HB Reavis showcased a number of its projects in Poland, the Czech Republic and the UK at this year’s MIPIM. Located on an island site between Bank and London Bridge in the City of London, 33 King William Street is the first project in the UK for HB Reavis, and represents the first stage of the company’s strategy of expanding outside of its core region. The project has planning consent for 21,344 sq m. The nine-storey grade-A office building designed by John Robertson Architects will be completed in the second half of 2016. HB Reavis’ projects in Poland include Postepu

14, a 34,000 sq m A-class office complex situated on Marynarska street in Warsaw. And Gdanski Business Center is a 46,500 sq m A-class office complex in two buildings, situated in Warsaw’s CBD district. Projects in the Czech Republic include the 34,000 sq m Metronom Business Center and the 25,000 sq m River Garden II/III. Metronom is in Prague 5, close to Vaclav Havel Airport and connected to the country’s principal motorways, including the Prague city ring road. The project has low operating costs, guaranteed by the extensive use of green technology, and is verified by BREEAM Certification.

Cannes launch for German fund

Realogis Real Estate’s Bodo Hollung: aiming to generate a 7%-plus dividend yield per year

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MUNICH-based industrial and logistics real estate specialist Realogis Real Estate is creating a new logistics property investment fund for institutional investors, it was announced at MIPIM. Complying with the new German Capital Investment Act (KAGB), the Realogis Real Estate Logistics Fund-Germany is seeking an investment volume of €250 m. “The Realogis Real Estate Logistics FundGermany aims to generate a more than 7% dividend yield per year, as the target return for

investors such as company pension plans, pension funds, foundations, insurance companies, banks and family offices,” said Bodo Hollung, managing director of Realogis Real Estate. The fund is long term and construed for 10 years. Realogis Real Estate is responsible for the portfolio management, asset management and acquiring the equity commitments. It has also established its own market-research department for industrial and logistics real estate investments.


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i NEWS VAL-DE-MARNE SETS OUT ITS STALL THE VAL-de-Marne district of greater Paris has a lot going for it. At MIPIM, Val-de-Marne outlined its assets. Chief among these was the fact that it has the most attractive prices in the entire Greater Paris conurbation. Figures show Val-de-Marne’s average rent for new offices is €318 per sq m per year, which is less than the Ile-de-France average. The commercial real estate market totals 3.8 million sq m, with office space that meets the latest environmental standards. Given these attractions, it is not surprising the creation rate for new businesses has tripled since 2005. Val-de-Marne lies at the heart of Europe’s leading economic region, its delegates said at MIPIM. And the figures back up that claim. Its road, rail and river hubs provide access to a vast market of 495 million domestic and European consumers. Meanwhile, the Paris region as a whole has 30% more international headquarters than London — and Rungis is the world’s largest agribusiness platform, with a sales figure of €8.2bn. The area’s other attractions include the Gustave Roussy Institute, which is the leading cancer research centre in Europe.

HafenCity becomes greener, younger and more creative

HafenCity has nine projects under way in 2014

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AFENCITY, the complete redevelopment of the German city of Hamburg’s port area, continues to gather pace. Its presentation at MIPIM focused on sustainable growth, with nine projects under way in 2014 on 180,000 sq m of gross floor area (GFA). This accounts for an investment volume of around €650m. At the same time, HafenCity’s development trends are becoming clearer, its promoters said — it is growing more diverse, younger and more creative. In central HafenCity, a new developer and jointventure partner is expected to be engaged for the southern Uberseequartier. Construction should start on the mixed-use showpiece project, which will have an investment volume of at least €800m, in the second half of 2016. HafenCity is also emerging as a knowledge quarter. It features several private universities, including Kunhne Logistics University and Medical School Hamburg, both of which have been located at Grosser Grasbrook since 2013, along with the public HafenCity University

Hamburg (HCU), specialising in architecture and metropolitan development, which opened in April 2014. Networks and synergies are developing among these centres of higher education, as well as between them and the businesses located in HafenCity. The Elbphilharmonie concert hall, whose exterior is largely complete, is already dominating the HafenCity district. Its interior construction is now under way. The building provides two concert auditoriums, a five-star hotel, a large publicly accessible plaza with a height of 35 metres and 45 apartments. The completion target is 2016, with the inaugural concert scheduled for 2017. HafenCity is developing visible urban, creative and green credentials. There are now over 2,000 people living in the area in a wide variety of housing, ranging from up-market, privately owned apartments to residential association housing, co-operative developments and the first publicly subsidised housing. More than 2,500 further apartments are currently being planned or built.

Opportunity abounds in Tuscany

The new Societe Generale campus in Val-deFontenay, Val-de-Marne

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SOME €100m in potential investments in real estate — that’s what the central Italian province of Tuscany’s Invest In Tuscany development board brought to this year’s MIPIM. A series of talks and presentations on the Tuscany stand highlighted the actual and potential investment opportunities to be found in the region — especially in PIUSS (Integrated

Plans for Urban Sustainable Development) projects. These include the recovery of several industrial structures in the district of Follonica in Colle Val d’Elsa, involving high-profile architect Jean Nouvel, which are now under way. Meanwhile, the cities of Arezzo and Florence promoted investment projects in historical buildings.


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i NEWS Marica offers ‘multiple ways to invest’ in its success story OIL- AND gas-rich Marica, which lies close to Rio De Janeiro, came to MIPIM for the first time in 2014 in search of investors to share in its success. The Brazilian city’s stand showcased its plans for major infrastructure development. Marica mayor Washington Quaqua was at MIPIM to explain the opportunities to the investment community. “We want international investors as part of our strategy of capturing investments

from external sources,” said Quaqua, who is one year into his second term as mayor of Marica. “We are not only looking for real estate investments,” added Quaqua, who is also a sociology professor. “There are multiple ways to invest. We are looking for investors in oil and gas, buildings and structures. We are looking for different perspectives.” Marica claims to have the largest seaport in

south-west Brazil, and this is the site of the city’s biggest investment — the $2.5bn Ponta Negra terminal, which will include a liquefied natural-gas terminal to service a gas pipeline, now under construction. The 150,000-population city also has a newly modernised airport and plans for a rapid train project costing $400m. Another project is the creation of a waterways link through the Marica’s seven lagoons. The link is predominantly for tourist purposes, but will also improve urban mobility. “Marica has an area of 360 sq km, so transport is a problem,” Quaqua said. “But it is also a question of quality of life. We have space to live.”

Marica mayor Washington Quaqua: “We are looking for different perspectives”

SAO BERNARDO OUTLINES ITS FUTURE SAO BERNARDO do Campo — one of the fastestgrowing districts of Sao Paulo in Brazil — showcased its City Hall Park masterplan at MIPIM. The 30 ha scheme occupies a strategically significant position within the whole Sao Paulo metropolitan area and, as such, presents an opportunity to provide a new cultural and business hub for the region. The masterplan by Kaan Architecten and Domain, in collaboration with Werkplaats Vincent de Rijk, organises the site into a series of ‘archipelagos’. Each of these has unique spaces and functions, and varies in typology, density and landscape. The masterplan is arranged around five themes: the creative industries, the automotive industry, film, technology and performance. The entire development will extend to 623,000 sq m, including the 187,000 sq m Gateway Tower and a 92,500 sq m convention centre.

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Sao Bernardo do Campo’s City Hall Park


To the thousands of remarkable MIPIM exhibitors, visitors, sponsors, speakers, and partners we say

THANK YOU for your support in 2014 and over the past 25 years

See you next year, 10-13 March 2015


i NEWS Istanbul sees record levels in stronger-than-expected 2013 ISTANBUL’s office market registered record total occupier transactions last year, as nearly 250,000 sq m of deals were completed, according to Cushman & Wakefield research unveiled at MIPIM. The research also revealed some striking figures on the retail sector, particularly on the development of shopping centres. In 2013, the total volume of investment in shopping centres reached $310m (€224m). And the gross shopping-centre space in Turkey increased to 122 sq m per 1,000 people. Ankara became the city with the largest shopping-centre space at 260 sq m per 1,000 inhabitants, while Istanbul followed the capital with 243 sq m per 1,000. The review suggested that the number of shopping centres will reach 440 in five years, with total shopping centre supply exceeding 12 million sq m. Togrul Gonden, managing partner of Cushman & Wakefield Turkey, said: “Around 1 million sq m of retail space was supplied to the market throughout the year. A year-over-year comparison shows that the volume of new openings almost doubled. In line with the increase

in supply, it is expected that shopping-centre space in Turkey will reach 160 sq m per 1,000 in 2018.” The office market was dominated by large owner-occupier deals, while new development schemes offered attractive pre-lease and pre-sale alternatives to both occupiers and investors. The report stressed that Istanbul’s Umraniye and Kagıthane districts in particular continued to be alternatives for the office market. According to Cushman & Wakefield, 15% of all deals in the last two years occurred in the Umraniye district. Meanwhile, the Kagıthane district stood out as one of the most flourishing submarkets on the European side of Istanbul. Tugra Gonden, member of the board at Cushman & Wakefield Turkey, said 2013 had been a record year for the overall volume of office deals completed. “Interestingly, nearly half of all office transactions in Istanbul last year were for owner-occupiers,” he added. The report showed that overall economic growth in the second and third quarters of 2013 was stronger than expected. The industrial and services sectors gained share in total

Togrul Gonden: “The volume of new openings almost doubled”

employment, while the construction and agricultural sectors decreased. Cushman & Wakefield expects the main engine for growth this year to be exports because of the weak Turkish lira and rising international demand.

QUASAR RAISES THE BAR IN LUXURY VIATRANS was in Cannes to showcase its luxury Quasar development in Istanbul. The 197,394 sq m mixed-use project overlooking the Bosphorus includes a high-end residential tower and a luxurious 209-room Fairmont Hotel with serviced apartments, offices and boutique retail. It also involves the restoration of the 4,000-sq m Mecidiyekoy

liqueur and cognac factory, which was built in 1930 by the world-renowned cubist architect Robert MalletStevens. This cultural landmark, which sits in a landscaped garden featuring 186 monumental trees, is being reborn as an international cultural centre. Quasar Istanbul is the first project in Turkey to target DGNB gold certification.

Viatrans’ Quasar Istanbul: going for DGNB gold

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INVISION

MIPIM from above

Business and pleasure in Cannes Four days of intensive networking at MIPIM is not without its lighter moments. Here are some of the highlights of MIPIM 2014 MIPIM Opening Cocktail at the Carlton

Opening of the Japan stand

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The exhibition floors saw brisk business


Emaar’s plans for Dubai

MIPIM’s pioneers celebrate 25 years Crowds on the Croisette

MIPIM’s Jubilee Concert

GDF Suez’s FAPE charity run

MIPIM innovation Forum

Olivier Piani, CEO Allianz

Real Estate

The Cycle to Cannes team arrives at MIPIM mipim.com I review magazine I May 2014 I 23


FEATURE MIPIM 2014: THE VERDICT Counselors of Real Estate’s Mary Fleischman

LaSalle Investment Management’s Mahdi Mokrane

A turn for the better MIPIM celebrated its 25th anniversary in Cannes this year against a backdrop of largely positive industry sentiment. The property market is back in business, writes Doug Morrison

T

HE TRADITIONAL flurry of industry research released during MIPIM suggested that most markets are in strong recovery mode, most notably the post-2008 distressed territories of southern Europe. JLL’s Office Investment Market Review noted that 2013 investment in European offices reached €70bn — a 7% rise on 2012. JLL predicted that 2014 will see continued growth in office investment, driven by southern Europe and Ireland, an increase in portfolio sales, an increase in capital raised by private real estate funds and a 20% rise in the delivery of new offices.

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CBRE’s European Capital Markets report confirmed that the European countries that were hardest hit by the 2008 economic downturn — Italy, Spain, Portugal

“If the product were available, we would see probably a doubling of investment volumes in Europe” Mahdi Mokrane, LaSalle Investment Management


i FEATURE and Ireland — have bounced back more strongly than expected. CBRE said the total number of transactions in Ireland was three times higher in 2013 compared with 2012, while Savills predicted that commercial real estate turnover would hit €3bn in the Irish market during 2014. Savills also noted that retail investment volumes in Spain topped €850m in 2013 — three times the 2012 level — with Madrid and Barcelona drawing particular interest. This was reflected in Cannes by heavy traffic to the stands of both cities.

A turn for the better stronger occupier demand and rental growth. “If the product were available, we would see probably a doubling of investment volumes in Europe, and prime [markets] in particular,” Mokrane said. “But the problem is co-ordination between the investors and sellers of real estate. It is a challenging place to be if you are on the acquisition side. It is probably a good place to be if you are a seller… and we think it is a good idea today to harvest gains in Europe.” Competition for such core assets is so intense, judging by the Wisconsin School of Business survey, that as a result many investors are reviewing their investment criteria and taking on more risk to acquire higher yielding assets. “That means moving beyond the gateway cities and considering non-traditional segments that come with operational challenges you’re not used to, including healthcare and logistics,” Quintin said.

The figures from these leading consultants were reinforced by a sentiment survey of over 300 participants during the course of MIPIM by the Wisconsin School of Business, the results of which were presented at the Wrap-Up conference session on the final day of the event. Erwan Quintin, Wisconsin’s associate professor of real Taking on more risk can also mean returning to the oneestate and urban land economics, told delegates that the time distressed markets of southern Europe, which were no-go areas to many investors this survey revealed “a distinct rise in time last year. One of the talking optimism” this year over 2013, with points on the MIPIM exhibition nearly three quarters of the re“The debate is not floor was the size of equity funds spondents reporting a rise in busiwhether interest being raised in the US that are ness activity compared with the rates will rise. It’s a destined for Europe’s distressed same time last year. “Close to two assets. According to CBRE, US thirds of our respondents are tellquestion of when investors account for the largest ing us that they are planning to inand how high” proportion of cross-border investvest more in real estate in the comMary Fleischman, CRE ment in Europe and almost half ing year than they did last year,” of Spain’s commercial real estate Quintin added. transactions in 2013 involved US Quintin referred to the “wall of cash” coming into the sector from sovereign wealth capital. funds and other global investors, which so far has been Interest rates will inevitably affect investor sentiment largely directed at prime property and much of it in the sooner or later, according to Mary Fleischman, presimajor European cities. Simply put, too much capital is dent of the Counselors of Real Estate in the US, who chasing too few available prime assets. This was a recur- also addressed the Wrap-Up session. “Even though we ring theme throughout MIPIM, not least at the popular fully expect interest rates to rise at some point in the RE-Invest Summit, which brought together representa- not-too-distant future, the council still believes the histives from over 30 of the world’s leading sovereign wealth torically low interest rates we have experienced in the funds, pension funds, insurance funds and endowments. United States will continue to drive both the economy At the Summit, Allianz Real Estate CEO Olivier Piani as well as commercial property values,” she said. “The tackled the question of whether insurance companies, debate is not whether interest rates will rise. It’s a quessovereign wealth and pension funds are partners or com- tion of when and how high. Regardless, the cost of monpetitors. He said that Allianz has a self-imposed cap of ey remains comparatively low and developers and other between €250m-€300m for a single property investment, real estate professionals will continue to take advantage of that edge as long as they can.” after which it seeks partners. As Piani suggested, the biggest challenge in such part- However, the Wisconsin survey also revealed some limnerships is aligning long-term strategies between the its to the risk investors are prepared to accept, even with low interest rates. “One thing that surprised us, given various co-investors. In the short-term, these investors face continuing “high that people are looking for yield, is that they told us that, prices and low yields” in Europe’s gateway cities, ac- right now, they are a bit hesitant to take on emerging cording to Mahdi Mokrane, head of European research market risk,” Quintin said. and strategy at LaSalle Investment Management. If Whether global investors are looking at emerging maranything, 2014 is destined to offer more of the same: kets or gateway cities, Quintin suggested that joining as Mokrane told delegates at the Wrap-Up session, forces with a local partner is an increasingly important Europe’s economic recovery, though “not massive”, has means of mitigating risk. “Local expertise is at a premiresulted in “improving fundamentals” in the form of um,” he concluded.

Discover the essential findings from MIPIM 2014 and some key trends for the coming years! Download the full “Heard at MIPIM” study by Wisconsin School of Business and the LaSalle “Global Investment Outlook for 2014”

http://bit.ly/MIPIM-Wrap-2014

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i FEATURE MIPIM INNOVATION FORUM

The shock of the new In 10 Must-Have Innovative Solutions Discovered At MIPIM 2014, the panel discussed some of the ‘disruptive innovations’ — from crowdfunding through contour crafting to car sharing — that are changing the structure and mindset of the industry. Doug Morrison was there

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MAGINE a business district that could be occupied 24/7, 365 days a year and you would have something close to the perfect built environment — a crowd pleaser for property-owners and urban planners alike. Such innovative urbanism would have to involve many and varied occupiers sharing spaces — a herculean challenge, perhaps. But it could breathe life into areas such as La Defense in Paris, which lie empty in the evenings. The idea of sharing spaces was presented to delegates at the final conference session of MIPIM 2014 as just one of the “must-have innovative solutions” to the problems and issues facing the industry today. Four students from the Cergy Pontoise-based ESSEC Business School were tasked with identifying the most “disruptive innovations” — as in market-changing in a good way — either on show during the week or inspired by MIPIM. As conference moderator Peter Woodward, co-founder and director of Quest Associates, observed, the notion of sharing spaces is hardly new. But by “doing it to the power


i FEATURE

The shock of the new

of creative 10”, there is the possibility of establishing better urban areas in which to live and work. For Carlo Ratti, the acclaimed Italian architect and engineer, who was on the conference platform to pass comment on the students’ choices, there was an analogy here with the long-established practice of hot-desking in office buildings. “We can appropriate a desk wherever we want, as long as we can use a laptop and this is changing the nature of the office,” he said. “So if we can be more flexible and share more, it is going to change the DNA of real estate too.” It is small leap to extend the concept of sharing to energy and another of the students’ suggestions: smart grids. These are energy-management systems that enable the sharing of energy between homes, offices and shops towards the goal of truly sustainable cities. “It’s happening as we speak,” Ratti said, although the question he posed is whether this sharing of energy can be managed on an even bigger scale — across borders between countries. Yet there is much more to be done to improve productivity within buildings, let alone whole districts and cities. Delegates also heard about the smartphone that can tell us whether the parking lot at work is full or whether the meeting rooms at the office are vacant or not. This is not so much blue-sky thinking as putting existing technology to better use in real estate, which was a recurring theme in many of the conferences at the MIPIM Innovation Forum. Earlier in the week, delegates were told about Unibail-Rodamco’s Majunga Tower in La Defense, where everything is connected and accessible through a platform on a smartphone. Majunga’s technology can also track the movement of occupants throughout the building, helping companies understand their current and future utilisation needs. The ESSEC students turned repeatedly to smartphones for their solutions, notably the technology that can be used while people drive around town. Such technology can analyse every major bump or problem on the road and in surrounding buildings, and then automatically send requests to the local authority for maintenance to be carried out or other assistance to be provided. In other words, smartphones can enable citizens to provide realtime information about the things going on in their community and, in effect, allow them to work in partnership with the local authority. Again, a partnership between municipal government and its people is not new, as such, but as Woodward remarked, with the benefit of technology it could be subject to “a tsunami of applications”. Ratti described such technology-enabled, civic-minded citizens as “urban mechanics” for the 21st century. “This is something we have always done from the Middle Ages but then lost in the 20th century,” he said. “But with new ways of collaborating online, we can get back to it.” Indeed, this “must-have solution” could be regarded as especially pertinent in the current age of austerity as an opportunity for cash-strapped local authorities to cut costs.

“The really big revolution that is coming is self-driving cars, which will totally blur the distinction between private and public transportation”

Left to right: EstateGuru’s Marek Partel; two ESSEC students; moderator Peter Woodward; two ESSEC students; and architect Carlo Ratti

Carlo Ratti, MIT Senseable City Lab

BYPASSING THE BANKS Saving money loomed large in the aspirations of the ESSEC students, even with their more futuristic suggestions. One of the potentially far-reaching innovations pitched to delegates was contour crafting, which is a building printing technology currently the subject of R&D at the University of Southern California. It is a version of large-scale, 3D printing for the built environment, offering the prospect of saving construction and labour costs as well as improving safety on site. The idea of 3D-printing a whole house or commercial building is not as fanciful as it sounds, Ratti said, pointing out that General Electric has already started 3D printing jet engines. “People are looking at this technology,” he said. “Perhaps not for a whole house but creating little pieces of it could be more promising.” The final “must have” innovation was suggested by members of the audience — the electric vehicle displayed all week on the Grenoble stand and due to be part of a groundbreaking car-sharing service in the French city later this year. “The sharing will happen with electric vehicles,” Ratti said. “But the really big revolution that is coming is self-driving cars, which will totally blur the distinction between private and public transportation.” As was abundantly clear from this thought-provoking conference finale, there is no lack of innovation in technology. The main challenge is often getting planners and politicians to adopt it.

FOR AN industry so reliant on the raising of debt finance, it was appropriate that by far the most popular innovation was the crowd-funding initiative from Estonia’s EstateGuru. The Tallin-based startup has devised a propertyfocused variation on the popular Kickstarter model, which it hopes will help fill the current shortfall in bank lending in many markets. Founding partner Marek Partel said that he aims to cut out the middlemen with EstateGuru, which he described as “a real estate club” that brings together developers with like-minded investors. The developers gain access to competitive finance, while investors are able to allocate funds across a number of independently valued projects to spread risk.

mipim.com I review magazine I May 2014 I 27


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i FEATURE AFRICA

The next big opportunity? Africa has been described as a commercial real estate market poised for lift-off. And judging by the continent’s strong turnout at MIPIM 2014, the countdown has begun. Graham Parker reports THE ANGOLAN MIRACLE

ANGOLA has seen a remarkable transformation, according to Paulo Trindade, managing director and partner of Abacus Angola, JLL’s new joint-venture partner. “The country’s economic growth and the consequent growth in companies, the increase in the number of businesses and expatriates, and the rise in Angolans’ purchasing power has created a growing need for living and work spaces, as well as for shopping,” he said. “We can confirm that the Angolan real estate market remains on a steady path to maturity, as is evidenced by the demands of both clients and the users of real estate assets.” And it’s not just one-way traffic — Angola is a source of capital in its own right. The country has its own sovereign wealth fund, Fundo Soberano de Angola (FSDEA), and its chairman Jose Dos Santos was at MIPIM. Dos Santos explained that Angola’s oil-generated wealth forms 90% of government revenues and 50% of his country’s GDP. His fund will re-invest a proportion of this, giving it significant firepower. Since its launch in 2012, FSDEA has been building up a core holding in fixed-income investments but, by the end of 2014, it will be ready to branch out into real estate. Dos Santos announced plans to launch a $500m fund targeting hotel properties across Africa.

A

CCORDING to JLL research, sub-Saharan Africa’s commercial real estate sector is set to take off, as the industry responds to the strong demand for high-quality property. This is partly driven by the dash to exploit the continent’s abundant mineral resources. But JLL believes Africa is not just a commodity play. “Unencumbered by a legacy of existing stock, the continent has a real opportunity to leapfrog the normal evolutionary process and to build assets equipped for the modern technologically-enabled business and consumer,” said the firm, as it unveiled a new joint venture in Angola.

Accra’s HOPE City

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The next big opportunity? © Credit: HOK

i FEATURE

The Exchange in Accra, Ghana, a mixed-use scheme involving HOK, DTZ and AECOM

A key driver of growth is Africa’s rapid urbanisation. The Roland Agambire, working in collaboration with the continent’s city-dwelling population is growing at 3.5% government of Ghana, as part of a national developper year, although some cities, such as Abuja at 9% and ment policy to transform the country into a knowledgeLuanda at 6%, are expanding much faster. Already 60 cit- driven society. ies across Africa have a population of more than one mil- Agambire commissioned the Italian architectural firm lion — a total of 170 million. And significantly, city-dwell- OBR, headed by Paolo Brescia and Tommaso Principi, to co-ordinate an international ers enjoy average incomes that are project team covering engineerdouble the national average. ing, economy, finance, transport So where are the real estate hot “Unencumbered by a and environment. spots? Accra and Addis Ababa are legacy of existing The design philosophy of HOPE among the world’s fastest-growstock, Africa has a City aims to promote — through ing city economies, while Luanda, architecture — a sense of commuMaputo, Lusaka, Lagos and Abuja real opportunity to nity and individual identities, while are also expanding rapidly and Kigali leapfrog the normal enhancing the local environment, is already branding itself as ‘the cenevolutionary process” society, culture and traditions in tre of urban excellence in Africa’. a contemporary and site-specific way. The design team is adamant One project on display at MIPIM epitomises this new vitality. HOPE City in Accra — it that it should be a project not ‘for’ but ‘by’ Africa. stands for Home Office People Environment — is a ma- Also in Accra, Laurus Development Partners has sejor mixed-use development, incorporating ICT, offices, cured financial backing from the global venture capiresidential, leisure, educational and cultural uses. The tal fund Actis to develop The Exchange, a 75,000 sq m project, which will see up to three million sq m devel- mixed-use project encompassing offices, a hotel, retail oped on a 400 ha site, is nothing less than a new city hous- and residential. Again, the emphasis has been on haring more than 65,000 citizens and providing work oppor- nessing international development expertise, with HOK as architect, DTZ as retail consultant and AECOM as tunities for more than 85,000 people. HOPE City is the brainchild of Ghanaian entrepreneur construction cost consultant. 30

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LAGOS LEADS THE WAY

ACCORDING to Knight Frank research, headline rents in Nigeria’s commercial capital Lagos remain among the highest in the world, with achievable rents at above $1,000 per sq m. This is driven in part by the shortage of buildings able to provide high-quality office spaces of more than 1,000 sq m. The pre-eminent multi-let building is Churchgate II, which is in the process of leasing rapidly now that asking rents have been revised downwards to $850 per sq m. However, Knight Frank expects the shortage to ease, with several grade-A schemes under construction. A potentially marketchanging development is the huge Eko Atlantic City scheme, which will create a new city district on nine sq km of reclaimed land south of the current CBD, off Victoria Island.

FSDEA’s Jose Dos Santos


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i FEATURE SOUTHERN EUROPE

Coming up down south The mood was palpably more optimistic at this year’s MIPIM. Even for hard-hit Italy, Spain and Portugal, writes Paul Strohm, a certain buzz is back

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OBODY was pretending that Europe’s Latin countries, nor indeed Greece, are out of the woods yet. But at MIPIM 2014 it was clear that they are no longer out-of-bounds for investors either. CBRE surveyed more than 300 property professionals at this year’s MIPIM and discovered that sentiment in the European commercial property investment market is returning to the pre-crisis levels of 2007. “Where we had a significant divide between the north and south of Europe, we are now seeing recovery and growth,” Jonathan Hull, managing director of CBRE’s EMEA capital markets, said. These findings were backed up by CBRE’s European Real Estate Investor Intentions 2014 survey, unveiled during MIPIM, which indicates a strong rise in the proportion (19%) of investors seeing Spain as most attractive for purchases in 2014 — up from just 6% in 2013. Further Iberian enthusiasm was revealed when Frankfurt-based asset manager Palmira Capital Partners, an industrial property specialist, announced

Brisk business on MIPIM’s Madrid stand

that it had struck a co-operation deal with Madrid’s Kefren Capital Real Estate. “The Spanish industrial property market is starting its comeback,” Palmira partner Peter Schuijlenburg said, announcing the deal at MIPIM. “We want to be ready when investment activities pick up in order to benefit from attractive deal opportunities for our investors.” Zug, Switzerland-based Corestate Capital also has Spain in its sights, as chief operating officer Thomas Landschreiber indicated: “Besides our recent activities in Central Europe, we will also target anti-cyclical investments across “Spain is back ‘en vogue’, with the continent. Stressed markets such as Spain the fear of investing there or the Netherlands replaced by a fear of missing show an increasing out on an opportunity” number of investment Luis Espadas, Savills Spain opportunities at measurable risk.” mipim.com I review magazine I May 2014 I 33


i FEATURE

Coming up down south

CBRE’s conclusions are backed by Savills research, also of equity in the market, launched at MIPIM, which indicates that investors from banks are still not lending, the US, France, the UK and Germany have returned Limetti pointed out. The to the market — and, significantly, have been joined by Pradera chief also stressed newcomers, the most notable of which are from Latin that the markets in Spain and Italy are distinctly difAmerica. “Spain is back ‘en vogue’, with the fear of investing there ferent: while the emphareplaced by a fear of missing out on an opportunity to sis in Spain is on prime invest in what buyers now feel is a market with upside shopping centres, in Italy potential,” said Luis Espadas, head of capital markets at prime high-street retail is the focus. Savills Spain. Madrid continues to be the most mature and solid mar- Nevertheless, as MIPIM ket in Spain, but the difficulty for new investors to gain a drew to a close, Henderson foothold in the capital has made Barcelona the preferred Global Investors and alternative. Certainly Barcelona should not be regarded McArthurGlen were preparing to open the second as Madrid’s poor relation, as the announcement on the first day of MIPIM by UK-based real estate fund man- phase of the Barberino Designer Outlet, which has added ager Benson Elliot testified: the firm’s 6,800 sq m let- a further 30 stores to the centre in Italy’s Tuscany region. ting to ADP in its Cornerstone office development in the Andrew Rich, director of outlet malls, property, at Poblenou district is Barcelona’s largest letting since 2012. Henderson Global Investors, said: “Designer outlets have been one of the strongest Nevertheless, there was a strong performing retail sectors across contingent eager to attract atEurope over the past decade. We tention to opportunities in the “For those brave have seen particularly high footSpanish capital. The Madrid delenough to make the fall across our Italian portfolio.” egation included Gestion de Indeed, Tuscany had a signifiValores y Tasaciones, Gesvalt, move, an investment cant presence at MIPIM, where Ghesa Fountains, Grupo Olloqui, in Greece can it was highlighting the opportuniIBA, IREA Corporate Finance, generate a variety of ties available in the central Italian CEM, JFC, Larkai, Likeinvest, returns” region. Amira, Maxxima Real Estate Italian trends and opportuniAdvisory, Roedl & Partner, Urus Anthony Coumidis, McBains Cooper ties were explored further during Kapital Inversiones Inmobilarias the half-day event Italian Real and Valuation & Adv isor y Estate: New Supply, New Demand, sponsored by asset Alliance Espana. Global law practice Dentons points out that the activi- management company IDeA FIMIT, which has €9bn of ty of Spanish “bad bank-like company” Sareb boosted assets under management. the market in 2013 and it will continue to be a key player and product supplier during 2014. Meanwhile, the new There was even cautious optimism about the real estate Spanish REITs (SOCIMIs) have also attracted domestic markets in Greece. Among those to welcome these positive indicators was McBains Cooper’s director of interand international investors. national PPP and environmental initiatives, Anthony Conditions are looking better in Portugal too. “It will Coumidis. “Throughout MIPIM, there has been a real take some time to recover the ground lost in recent sense of positivity about the resurgent European comyears, but things are moving in the right direction,” said mercial real estate markets, such as Ireland, Spain and Cushman & Wakefield managing partner, Portugal, Eric Greece,” he said. “This is good news because the return van Leuven. “There have been some significant changes of investor confidence is fundamental to progressing vito legislation, which have helped to improve the invest- tal infrastructure projects in these regions.” Working for the European Investment Bank (EIB), ment climate in the country.” There is, however, a risk of enthusiasm becoming over- Alpha Bank and National Bank of Greece, McBains enthusiasm. The recent activity precipitated by the im- Cooper acted as lender’s technical advisor for the firstproving fortunes of both Spain and Italy may be a case ever Greek public-private partnership (PPP) schools of too much, too soon, warned Roberto Limetti, man- project, which will provide and operate 14 schools in the aging director of retail property fund and asset manager Attica region. Pradera Italy. “The issue is that there are lots of investors “For those brave enough to make the move, an investwith a huge amount of money to spend because they are ment in Greece can generate a variety of returns, from not able to spend it in their usual markets,” Limetti said, establishing one’s presence before the market inevitably picks up right down to accessing neighbouring markets referring in particular to US investors. Moreover, although there are considerable amounts and new sectors,” Coumadis added.

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Pradera’s Roberto Limetti


i FEATURE RE-INVEST SUMMIT

Thinking of alternatives The third RE-Invest Summit, which drew representatives from over 30 leading pension and sovereign wealth funds from 17 countries, made it clear that real estate is firmly back on the investment agenda. Graham Parker reports

T

HE RE-INVEST Summit, MIPIM’s annual behind-closed-doors conclave for institutional real estate investors, provided yet another sign that confidence is returning to the global economy. The attendees included the Employees Retirement System of Texas; Korea Investment Corporation; the National Pension Service; PSP Investments and the State Oil Fund of Azerbaijan. Between them RE-Invest delegates have $300bn allocated to real estate and this is set to grow. The individual round-table discussions at RE-Invest are confidential in order to encourage a free exchange of views. However, Joe Walsh, faculty associate in the real estate program at the Wisconsin School of Business, attended this year’s event as an observer. “The 2014 RE-Invest Summit suggested that real estate is back on track to becoming a standard asset class in portfolios globally,” Walsh said. “With many investors reporting an increase in allocation to real estate, there is a sense that a lot of capital is scouring the market for the

Networking at the behind-closed-doors event: Kamarulzaman Hassan, Employees Provident Fund and Michel Vauclair, Oxford Properties Group

A free exchange of views across the table: Vadim Korsakov, NPF Blagosostoyanie (left); Timour Boudkeev, Swiss Re; Madeleine Cosgrave, GIC Real Estate; Emilio Giorgi, Fondazione ENPAM

remaining opportunities.” Delegates detected a change in strategy compared to previous years. With core assets in gateway markets fully priced, investors have been moving beyond the gateway markets. Core and core-plus assets are believed to be overpriced, which is leading to increased investment in alternative assets and emerging markets. But there was also a note of caution. The concern is that a wave of capital is seeking the same assets in the same markets, driving up prices even in cases where property level fundamentals have yet to appear. The thought-leaders at RE-Invest quickly highlighted the importance of identifying the right partner when investing abroad, particularly when considering emerging markets for the first time. Most funds seek a well-established, best-in-market operating partner, which can be quite difficult depending upon the market — and considering that other foreign investors are also seeking the best partner in those same markets. In terms of specific territories, Spain emerged as a surprise favourite, with many investors seeing opportunities to buy at the bottom of the market. Demand for the UK remains strong, although investors expressed concern that London is now fully priced. Poland, with its strong demographics, continues to grow in popularity, but concerns about overbuilding are beginning to emerge. And Turkey has slipped down the agenda for many investors mipim.com I review magazine I May 2014 I 35


i FEATURE

Thinking of alternatives Moderator Pertti Vanhanen, global head of the property division at Gold sponsor Aberdeen Asset Management, presents the outcomes of his roundtables’ conclusions

As Platinum sponsor of RE-Invest, AXA Real Estate’s CEO Pierre Vaquier gave the keynote speech at the Investors’ Lunch

“Core and core-plus assets are believed to be overpriced, which is leading to increased investment in alternative assets and emerging markets” Joe Walsh

on account of its political instability. Within the BRIC countries, Brazil and China were seen as having more attractive investment climates, while India and Russia were significantly less popular. Mexico is a market that is seeing increasing consideration due to its demographics and its correlation to the US market. However, the supply of quality assets remains small. A number of funds said they were beginning to “dip their toes in the water” in Africa, looking to gain knowledge for longer-term positions, with development being the most likely type of investment. But the consensus was that it could take another decade for Africa to enter the investment mainstream. And diversification by sector is growing, too. Hotels were cited as the most popular form of alternative real estate investment for most participants. A wide variety of approaches are being adopted, including new development, fixed leases and more traditional models of hotel ownership. Data centres are attractive due to stickiness of leases, and the high costs and expertise needed for construction, leading to a high barrier to entry. But investors are reluctant to grow their footprint within data centres because of the risk associated with the ever-changing nature of technology. Other types of alternative real estate assets were mentioned in broad terms, including healthcare, medical, educational and storage facilities reflecting the overall trend at RE-Invest this year towards greater diversification. 36

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CONFIDENCE BREAKS OUT THE KPMG RE-Invest Survey, now in its third year, is designed to set the scene for the annual REInvest Summit by asking investors to share their real estate strategies. KPMG, the industry partner of MIPIM REInvest, conducted this year’s 15-question survey, which revealed five key trends. In line with last year’s survey, investors are optimistic about increasing their exposure to real estate, with 81% of respondents sharing plans in support of real estate investment. This trend will be supported by improved economic stability and debt availability, encouraged by an improving capital market. In corroboration, 90% of respondents agree that the European core markets will remain investment hot spots over the next five years, aided by debt availability and the emergence of sovereign wealth funds and globally operating pension funds. Investors are now more willing to capitalise on undervalued or distressed assets as confidence returns to the global economy. A total of 42% of respondents are focusing on opportunistic strategies as the best investment opportunity, as compared with 32% last year. At the same time, conservative investment opportunities are also picking up pace, with 35%

of respondents considering core real estate as the best investment strategy. Surprisingly, investors’ preference for how to invest has changed dramatically from last year, with 81% now preferring direct holdings/separate account mandates, up from 41% in 2013. In addition, investor preference for club funds, deals and joint ventures has increased from 35% last year to 55% this year. In terms of region, Western Europe continues to attract the most investors, owing to stable economic conditions and a strengthening debt market. France, Spain, the UK and Germany are the mature markets of choice, with Germany leading the investment destination pool. A pent-up demand for real estate is also being seen across the US, which was considered a soughtafter investment destination by 29% of respondents. This trend is in line with that of last year, when respondents saw New York as a major investment destination, second only to London. Lastly, the European real estate market is expected to see consolidation due to regulations such as the Alternative Investment Fund Managers Directive (AIFMD), and the existing Basel III and Solvency II Directives.

Download the full MIPIM 2014 Re-Invest outcomes

www.mipim.com/re-invest


i FEATURE MAYOR’S THINK TANK

A meeting of right minds Dominating the agenda at the 2014 Mayors’ Think Tank was how cities can leverage the potential of their existing urban assets. Graham Parker reports

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AUNCHED in 2009, the MIPIM Mayors’ Think Tank is a closed-door summit for the world’s mayors and political leaders. This year, the world’s civic power players gathered at the Majestic hotel in Cannes to address the issues confronting today’s cities, such as the management of resources, maximising the potential of existing infrastructure, city autonomy and social inequality. In an inspirational keynote address, Scott Burnham, urban strategist and creative director at Scott Burnham Studio, pointed to “the vast amount of untapped resources” in today’s cities. “Underperforming assets can

become a platform of opportunity,” he told the mayors. But Burnham warned that cities would have to work in a different way to take advantage of this. For example, one resource cities have in abundance is motion. The movement of people can be used to generate energy, Burnham said, adding that systems already exist that can harvest the kinetic energy created in cars and trains when they stop and start. The amount of energy wasted in stopping a train can be used to heat 1,300 homes, Burnham claimed. And, by using a flywheel to charge a large battery, the energy can be captured and used for a range of purposes. Already in Sweden waste heat from the subway is being used to heat nearby homes, proving that infrastructure can be an arena for opportunity and not just a structure to be maintained, Burnham said. And he concluded: “Prosperity belongs to those who maximise the potential of the existing urban infrastructure.” Burnham was followed on stage by John Macomber, a member of the finance faculty at Harvard Business School, who outlined strategies for private investment in infrastructure projects. The leaders then split into roundtable groups to debate the key challenges facing cities. Arab Hoballah, chief of the sustainable consumption and production branch of the United Nations Environment Programme (UNEP), led one of the table discussions about promoting resource efficiency at city level. Hoballah said that mayors, as managers of cities, are

“Underperforming assets can become a platform of opportunity” Scott Burnham, Urban srategist Scott Burnham mipim.com I review magazine I May 2014 I 37


i FEATURE

A meeting of right minds

becoming increasingly focused on the opportunities precipitated by the better use of resources. “Increasingly, mayors are managing cities as if they are companies and they look at the costs, benefits and risks, which is a useful approach,” he added. Hoballah also said that some mayors have realised that resource efficiency is not just about saving money — it can be a force for generating income too. There are great opportunities to construct buildings that actually produce energy, meaning that, in the future, cities could become net energy suppliers rather than net energy consumers. Hoballah also referred to “mining the city” by recycling waste in all its forms to produce materials, energy, income and employment. Another major theme was city autonomy and the need to decentralise cities from central government control. “Central control is stifling innovation and investment,” is how one participant described the problem. “Autonomy should offer the potential and capacity of cities to be more autonomous Mayors share ideas and experience at the round-table event in terms of energy production and energy supply,” said anoththe EU’s Erasmus Programme, er. “Consider the buildings first, “The world will be to attract international students. and then the rest of the city as saved by the mayors” Lisbon is also working to develop a provider of energy, not only a a new economy of startups. Bernard Brochand consumer. It is a great opportuMalmo, by contrast, has a very nity that mayors have not fully young population and a substanembraced.” tial ethnic mix: 50% of the city’s For example, the city of Nottingham in the UK is atchildren speak a non-Swedish language. The city has tempting to become self-sufficient in energy. Already, made a virtue of this by establishing a Global World pro80% of the city is connected to a waste incinerator and is gramme to take advantage of its indigenous language working to use the energy from the incinerator to reduce skills. its reliance on the UK’s six major energy companies. At The upbeat mood of the 2014 Mayors’ Think Tank was the same time, Nottingham has installed solar panels on summed up by Bernard Brochand, outgoing mayor of public housing, financed privately. Cannes and member of the French Parliament. “The In addition, Nottingham’s bus company is increasingly world will be saved by the mayors,” he said. “You are the using electric vehicles and the city is also installing three only ones who know the problems and know the avenues tramlines. Significantly, when bus companies across the to prosperity.” UK were privatised, Nottingham retained control of its bus network, which means it is now able to provide what UNEP’s Arab Hoballah its population wants and needs. Another round table considered the social issues confronting cities. The table chairman, Michel Sudarskis, secretary general of the International Urban Development Association (INTA), highlighted three cities that are noted for being highly ‘liveable’ — Montpellier, Lubljana and Ghent. “What are the common characteristics of these cities?” he asked. The answer is that all three have a population of around 250,000, which includes around 80,000 students. They are all liveable for families with children and they all share a rich cultural life. The panel then contrasted two cities with very different profiles: Lisbon and Malmo. The Portuguese capital has an aging population, leading to the worrying prospect of a population decrease. To counter this, the city authorities are working with universities, especially through

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i FEATURE MIPIM UK

Next stop, the UK MIPIM 2014 saw the announcement of yet another extension to the MIPIM brand in the form of a dedicated UK event. Graham Parker looks forward to MIPIM UK, which opens for business this October in London

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IPIM 2014 drew to a close with a Britishthemed afternoon tea party acting as a bridge to the inaugural MIPIM UK, which takes place in London’s Olympia from October 15 to 17, 2014. MIPIM UK, which is expected to be attended by more than 3,000 developers, investors and advisers, will be the UK’s first comprehensive property show. Jackie Sadek, who recently joined the UK government’s Cabinet Office as a policy adviser on urban regeneration, was the keynote speaker at the afternoon tea, held at Cannes’ Majestic hotel. “MIPIM UK is the platform that will allow our cities to design the solutions to the issues they face,” Sadek told the tea party’s 300-plus attendees. “It is an opportune time for a property event that encompasses the whole of the UK property market, acknowledging not just the vital role that London plays, but also the part other cities and towns play in making Britain the real estate capital of the world. MIPIM UK is the chance for all parts of the UK market to genuinely showcase themselves to an international audience.” Greg Clark, the UK Minister of State for cities, said: “I am pleased to support the objectives of MIPIM UK, and look forward to playing a major role through the government cities units’ involvement in the event. The £2bn Local Growth Fund to be allocated through the LEPs [local enterprise partnerships] across the country this year, in the first year of a five-year programme of at least £10bn in total, has shown the way. We need the cities, towns and counties of our country to have the chance to do things their way, and reflect their own unique circumstances and opportunities.” Clark added: “An event like MIPIM UK, covering all regions and property sectors, can help reinforce this new phase of urban policy — one that sees cities as engines of urban growth.”

A mong the keynote speakers lined-up for MIPIM UK are may“MIPIM UK is the chance or of London Boris Johnson, minfor all parts of the UK ister for housing at the Department of C om mu n ities a nd L oc a l market to genuinely Government Kris Hopkins and showcase themselves to the chief executives of several maan international audience” jor property companies, including Jackie Sadek, UK Gouvernment advisor Land Securities, British Land and Hammerson, as well as house builders Barratt and Taylor Wimpey. The UK cities supporting the event include the City of London Corporation, Leeds, Nottingham, Liverpool and the Scottish Cities Alliance. Capital & Counties Properties, Pinsent Masons and TIAA Henderson Real Estate have been named as MIPIM UK platinum sponsors.

Jackie Sadek mipim.com I review magazine I May 2014 I 41


i FEATURE MIPIM JAPAN

Event hails resurgent Japan MIPIM 2014 was the launch pad for the latest event in the Reed MIDEM family — MIPIM Japan —which is destined to take place on May 20 and 21, 2015 in Tokyo. Graham Parker reports

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APAN has enjoyed strengthening economic indicators over recent years and this has led to a resurgence in the country’s commercial property activity. Boosted by a national strategy to revitalise the economy, and looking forward to huge investment in the run-up to the 2020 Olympic and Paralympic Games, Japan is once again becoming an importer of capital and an exporter of real estate expertise. One reflection of this at MIPIM was the deal signed between Mongolian developer Mon Uran and Japanese architect Nikken Sekkei to develop a 300-metre tower in the Mongolian capital of Ulan Bator. Nikken Sekkei chairman Mitsuo Nakamura said: “This tower is to be a symbol of economic growth in Mongolia, so smart building technologies and sustainability will be critical to the overall design philosophy.” Meanwhile, AXA Real Estate Investment Managers, one of the world’s largest real estate portfolio and asset managers, announced that it has bought three office properties in Tokyo. The first was Nakano Central Park East, a 39,025 sq m prime office building, bought from the leading Japanese developer Tokyo Tatemono. “This is a highly significant acquisition for AXA Real Estate, as it is the first acquisition that we have completed in Japan on behalf of a separate account client and it is of such a significant size,” said Tetsuya Karasawa, senior business development manager of AXA Real Estate Japan. Through its Tokyo Office Property Fund, AXA has also bought Kojimachi, a high-quality 2,565 sq m office building situated in central Tokyo’s Chiyoda district; and Harajuku, a prime 3,486 sq m office building located in the Shibuya district of central Tokyo. Reflecting the commitment by the Japanese government to attract inward investment, vice-minister of Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT), Motoi Sasaki, headed a record 130-person delegation to MIPIM 2014. Coinciding with the minister’s presence in Cannes, MIPIM organiser, Reed MIDEM, unveiled plans to launch a conference and networking event in Japan in 2015. Based in Tokyo, MIPIM Japan will be an international forum primarily focused on the Japanese real estate sector. The new event will feature gold-standard conferences, panels and workshops, plus numerous networking events and project showcases. The new two-day event will provide a one-stop forum,

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Vice-minister of Japan’s MLIT Motoi Sasaki: MIPIM Japan “reflects size and appeal of the Japanese real estate market”

highlighting the best of Japan. National and international delegates will have access to the latest property projects, along with innovative architecture, buildings, cities and technology. Motoi Sasaki said: “The decision to hold the event reflects the size and appeal of the Japanese real estate market. I invite international property professionals to Japan to experience for themselves the attractiveness, efficiency and technological sophistication of our offering.” Filippo Rean, director of the MIPIM events portfolio, said MIPIM Japan would bring together leaders from the Japanese real estate sector with international companies interested in investing in Japan or wanting to exhibit Asian projects that could “I invite international be of interest to Japanese inproperty professionals to vestors. He added: “Japan is Japan to experience for a leader in the Asia-Pacific real estate sector and has themselves the attractiveness, been a pioneer in the use efficiency and technological of new technology, sustainsophistication of our offering” able building practices and Motoi Sasaki, Vice-minister of Land, well-managed urban develInfrastructure, Transport and Tourism opment. We are honoured to bring MIPIM to Japan.”


MIPIM AWARDS 2014

Celebrating success

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HE annual MIPIM Awards ceremony celebrates the brightest and the best of the global real estate industry. Chosen through a combination of an expert panel of judges and MIPIM delegates’ votes, the winning projects can truly be said to be world-leaders. Projects in Singapore, Sweden and Germany dominated the winners’ list, with Singapore heading the pack with three MIPIM Awards in the Best Innovative Green Building, Best Residential Development and Special Jury Award categories.

Sponsored by

The Jury PRESIDENT OF THE JURY Mr. Michael STRONG CBRE Executive Chairman - EMEA United Kingdom

Mrs. Caroline BARAT Agence Search Co-Founder France

Mr. Frank KHOO Axa Real Estate Global Head of Asia Singapore

Dr. Alexander KOLONTAY Government of Moscow Committee for Architecture and Urban Planning Deputy Director Russia

Mr. Günther OETTINGER European Commission European Commissioner for Energy Germany

Mr. Paolo GENCARELLI UniCredit Group Head of Procurement and Corporate Real Estate Italy

Ms. Barbara KNOFLACH SEB Asset Management AG Chief Executive Officer Germany

Mr. Michael NEWEY RICS President United Kingdom

Mr. Olof ZETTERBERG Stockholm Business Region CEO Sweden

mipim.com I review magazine I May 2014 I 43


Best futura project

Yann COATSALIOU/360 MEDIAS

The glittering awards ceremony in the Palais des Festivals saw awards given in 11 categories. And the winners are...

MAX IV Lund, Sweden Architect: Fojab arkitekter and Snøhetta Developer: Fastighets AB ML4 Local authority: City of Lund

Best innovative green building

GARDENS BY THE BAY Singapore Architect: Grant Associates and Wilkinson Eyre Architects Developer: National Parks Board Singapore Building Services Engineering and Environmental Designer: Atelier Ten Ltd

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Best office & business development

TANZENDE TÜRME Hamburg, Germany Architect: BRT Architekten LLP Bothe Richter Teherani, Hamburg Developer: STRABAG Real Estate GmbH, Business Unit Hamburg


Best refurbished building

Best residential development

INTERCONTINENTAL MARSEILLE – HOTEL DIEU Marseille, France Owner & Investor: AXA Real Estate Developer: Altarea Cogedim Architect: AAA Béchu Agency & Tangram Architects

Architect: W Architects Pte Ltd Developer: TG (Balmoral) Pte Ltd

Best urban regeneration project Photo: yannpiriou.com

Best shopping centre

THE OLIV Singapore

EMPORIA SHOPPING CENTRE Malmö, Sweden Architect: Wingårdhs arkitekter Developer: Steen & Ström Sverige AB

KÖ-BOGEN DÜSSELDORF Düsseldorf, Germany Architect: Studio Daniel Libeskind, New York Developer: die developer Projektentwicklung GmbH, Düsseldorf

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Special jury award

Best Brazilian project

GARDENS BY THE BAY Singapore Architect: Grant Associates and Wilkinson Eyre Architects Developer: National Parks Board Singapore Building Services Engineering and Environmental Designer: Atelier Ten Ltd

São Gonçalo do Amarante, Brazil Architect: HCP Architecture & Engineering Developer: EcoHouse Group

Best Turkish project Photo: yannpiriou.com

Best Russian project

BOSQUE DAS ACACIAS

VTB ARENA PARK Moscow, Russia Architect: Manica Architecture / SPEECH Tchoban & Kuznetsov Developer: Closed Joint-Stock Company “Management company “Dynamo”

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SPINE TOWER Istanbul, Turkey Architect: iki design group Developer: Soma Group.


SAVE THE DATE! 20-21 May 2015 The Prince Park Tower Tokyo, Japan

MIPIM Japan is the 1st real estate forum for Japanese and global leaders, joining together property and finance professionals from all asset classes. It enables Japanese real estate professionals to share their projects and knowhow with the world and international stakeholders to source capital or new opportunities in Japan.

CONTACT US FOR MORE INFORMATION International – Reed MIDEM Paris Luigia De Ianni luigia.deianni@reedmidem.com Japan – Reed MIDEM Tokyo

During 2 days of expert-led conferences and high-level transactional networking, MIPIM Japan offers the ideal setting to initiate in and outbound investment and create business opportunities.

Lily Ono lily.ono@reedmidem.co.jp

www.mipimjapan.jp

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

WHAT IS MIPIM JAPAN?


www.strabag-real-estate.com

NUMBER ONE COMES FROM HAMBURG

immobilienmanager.

AWARD 2014 KATEGORIE Projektentwicklung Neubau

GE

WINNE

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The MIPIM Award and the immobilienmanager.Award juries agree: the Dancing Towers are the number one – and not just as the house number on Hamburg’s most famous street. The tangodancing high-rise couple at Reeperbahn 1 has won both awards, making it one of the most significant properties in Germany today. A remarkable success – all the more so as it makes STRABAG Real Estate the only company to date to win both distinctions two years in a row. But that’s no reason for us to rest. We will continue to apply our know-how and our experience so we can keep on realising spectacular properties like the Dancing Towers in the future.

STRABAG Real Estate GmbH Bereich Hamburg Reeperbahn 1, 20359 Hamburg Tel. +49 40 20208-1200 Fax +49 40 20208-1260 sre.hamburg@strabag.com


Mipim 2014 review