MIPIM was pretty business-like this year. A sense of 'can-do', or perhaps better, ... "we would like to try"....and make something happen. More confidence. More energy and generally speaking, more to talk about. I think the market is bored of being bored and there is a growing willingness to entertain new ideas, projects and ventures. Much of it is probably old wine in new bottles but if last year was, by and large, people pretending to do business, this year the market definitely wants to do business.
Equally though, while most would acknowledge that we have turned the corner, thereafter views differ wildly as to what the next 12 months hold. Consequently, the appetite for risk is widely divergent and opinions on where 'real pricing' lies (rather than where hot money will play for well leased assets) is similarly all over the map.
My take would be that the majority of commentators think we're in for a pretty bumpy 12 months with more risk on the downside. (However, its also possible that we've talked ourselves into this as a forward view. After all, last years MIPIM, which was full of doom and despondency, got it pretty wrong as equity began piling up and pricing rushed forward in the second half of the year).
It's at this point that 'The Banks'...without any distinction between good and bad I'm afraid.... become the focus of discussion and Boy!, you were talked about a lot! There is a growing frustration, verging on despair, around the slow delivery of stock to a supply constrained market. "Will it come, wont it come?", "how will it get packaged?", "it's a stich up isn't it?", "what's taking so long?" etc etc. The general level of misinformation and dodgy opinion is high, which (unfairly) puts 'The Banks' reputations and competency levels in poor light. Ignorance around enforcement procedures and how 'The Banks' assess hold versus sell decisions is manifest. By and large though, the market seems resigned to the fact that they may have to wait longer for the doors to open and indeed that we are all in for a much longer game than was first envisaged.
It is obvious and well known that equity capital is everywhere but MIPIM was also graced by a new generation of debt originators and there was much talk of the growing 'pressure' on both UK and German banks to lend. Rising LTV's and falling margins were talked of in exaggerated terms. Few talked of the quality constraints that exist so that it felt like a return to yesterdays world...except there are no deals actually being done!
Finally, and oddly as I reflect, I didn't hear one person refer to the occupational market. It's as though it doesn't exist! Maybe next year will be the year of The Tenant? It hasn't been for the last 20 years so I guess I'm not holding my breath.
Tony Edgley
Managing Director, Corporate Finance
Jones Lang Lasalle
