MIPIM was bookended with good news. It began with British Land raising nigh on £1bn and ended with strong results from Savills. Everyone left Cannes more positive than when they arrived. Well, almost everyone.
To those who left worried in a moment, because there was much to cheer this week.
Strutt & Parker finally did a deal. Not the merger that the rumour mill had willed but an alliance with Scandinavian giant Catella. With Norway the world’s largest sovereign wealth fund, it could prove underwhelmed rivals wrong. And don’t be surprised if the cohabitation – a handful of Catella staff are moving to Strutts’ London office – leads to marriage.
Boris Johnson enhanced his already stellar reputation as UK plc’s best salesman with barnstorming sets before packed houses in both the Palais and the London Pavilion. Mayors from Bristol to Vilnius were among those looking on admiringly, with one Russian delegate remarking: “I want to live in a city run by a mayor like that.” Job done.
In an environment like this one, Boris is perhaps surpassed only by the Olympics as the UK’s best advert.
Say what you like about his prime ministerial credentials – and he does; this week’s joke likened his chances of becoming PM to those of him becoming the first non-Catholic Pope – but there was no more effective tub-thumper at MIPIM.
There was confidence in continental Europe too, relatively speaking. “Having concern over growth is better than concern over defaulting,” said Aldo Mazzacco, chief executive of listed Italian propco Beni Stabili.
Meanwhile, I caught up with one fund manager in a darkened corner of the eye-wateringly expensive Hotel Majestic bar. He contrasted his experience of trying to interest American investors in the continent a year ago – when, ran the joke, the prevailing US intellectual view of Europe was that of “a cemetery with great art” – with today. Their appetite for the right assets is returning.
And that definition of the right assets is undergoing a welcome change, one that buoyed many UK tier-one cities. Nottingham, Manchester (as always), Leeds and others all had “good” MIPIMs.
Investors are recognising the need to look beyond fully priced, core assets, which are thin on the ground and affordable only to sovereign and global institutional wealth. Those investors are remote enough to require assets that tick every box: strength of covenant, perfect location, long lease length and so on. Most other investors needn’t set the same barriers to find returns. And they can’t afford to, especially as more and more Chinese, Korean, Taiwanese and other Asian pension funds are set to push west.
It was a record performance in Asia that helped Savills to a 12% uplift in revenues and a 21% hike in profits. And it was two Asian investors (alongside a European) that helped British Land offload Ropemaker to an Axa-fronted consortium for a cool £472m.
Is London the capital of Asia? asked an Estates Gazette debate provocatively on Thursday. “Yes,” said one panellist. “Capital of Europe,” said another. “Capital of the developing world,” said a third. London’s claim to the title “real estate capital of the world” was undoubtedly strengthened this week.
So who wasn’t happy? Well, Paris felt unloved by investors. And had any senior UK politician been at MIPIM – and it’s a worthwhile debate to ask whether they should – he or she would have left with a headache.
I think it was Becky Worthington, ex of Quintain and now of Lodestone Capital, who first used a recurring phrase on another Estates Gazette debate this week. “This is the government’s to screw up,” she said of London’s supremacy and the dangers of over taxation and over-regulation. With the Budget next week, let’s hope that phrase does not come back to haunt.
damian.wild@estatesgazette.com
