After a cold and wet start, the sun came out at MIPIM to light-up the launch of our International Investment Atlas last week.
The Atlas looks at 2012 trends but also reviews the year gone by and as we commented, the raw statistics on 2011 make it look like a pretty good year – global investment up 14%, rents up 4.9% and capital values up 8.4%. In reality of course it was a year of two very contrasting halves and so far 2012 has continued the weaker pattern that blighted the year-end rather than reverting to the much more welcome form of early last year: when we had a market with improving equity and debt as well as more risk tolerance.
However, maybe it was the sunlight, maybe it was the free flowing hospitality, but I’d have to say the mood at MIPIM was better than last year and a lot better than many expected. There was of course an understandable fascination with debt but there was also something of a “can do, will do” attitude coming from a lot of investors who were ready to think more imaginatively to find opportunities – whether in new markets or by taking more risk in existing targets.
This was also reflected in the conclusions of our report and we expect more diverse patterns of investment this year, with a lot of local issues bubbling up to shape risk and growth rather than just the broad global trends that seem to have dominated since the Credit Crunch hit.
Occupiers however are still subject to some pretty broadly spread forces of course and it is changes in occupier needs rather than pure expansion which could be an early catalyst for much of the market, whether from tenants seeking space to tackle new markets, to cut occupational costs or to address structural issues such as sustainability or technological and demographic change.
Global Commercial Property Investment Volumes (excluding multifamily)
Source: Cushman & Wakefield, RCA, KTI and Property Data
In terms of investment activity, the Atlas forecasts a fairly flat year for trading meanwhile – but with something like a 20% increase in the second half of the year as confidence and the flow of opportunities increases. The report in fact concluded that while a return of better economic growth would be key to the strength of recovery, the most crucial point for the timing of that recovery will be confidence – and based on what I saw at MIPIM, that return of confidence may come sooner than we think!
David Hutchings, European Research Group, London