MIPIM 2024 Pulse: 8 Key Insights From La Croisette

MIPIM 2023 was marked by nervous energy. Silicon Valley Bank had just failed and an emerging banking crisis seemed to be spreading across the pond. Fast forward to 2024 – the 34^th annual conference – the pulse feels stronger and more buoyant.

This year, TSP went out in force with a team of five. We hosted several events for clients and friends – lunch at La Petit Maison, breakfast at Café Volupté, as well as sponsoring the Property Week editors dinner and roundtable. We attended some great events too; the Investec roof top party, Colliers yacht soirée, a fantastic dinner hosted by Habro, to name a few.

The buzzing promenade gave us a tangible sense of the industry’s beat.

Here are 8 key takeaways.

1. A beacon: major cities & structural optimism

In a keynote address, Opportunity London CEO, Jace Tyrrell illuminated the city’s landscape with an “unprecedented scale” of investment opportunities, totalling nearly £10bn, with an estimated gross development value of £38bn.

Despite the rise of remote work, the importance of physical spaces in major urban centres has perhaps never been clearer – for collaboration, camaraderie, and innovation. This reality has been highlighted by the irony of tech giants like OpenAI actively seeking a London HQ.

The world’s most forward-thinking businesses are not digital nomads traversing the metaverse: they’re organised together in physical offices and labs.

So, when confronted with that perennial question – “How do you see the market?!” – there is always reason to be optimistic in real estate; it’s engrained in its structure. Mark Twain knew it over a century ago: “Buy land, they’re not making it anymore”. Real estate stands as an age-old industry, fortified by intrinsic value and resilience.

With interest rates trending down and inflation stabilising, there is a growing sense of opportunity. The real estate investment market has rediscovered its footing and is reaffirming its value.

2. A swan song: sub-standard assets

There is an optimism that this is the year real estate gets fired up again – but not all real estate.

Many have been talking about the “flight to quality” in the tenant market and, naturally, this is filtering through the development landscape. The increased cost of financing will ultimately boost build quality – resulting in the end of sub-standard developments. As Swiss Life Asset Management CEO put it: “If you stay focused on good properties in core areas and segments, which have high ESG standards, it’s worth investing”.

Moreover, there’s a consensus that new developments will become fewer and further between, as the focus shifts to strategically re-investing in our existing stock.

In 2024, there will be opportunities for opportunistic investors, although that may mean going to a more granular level to close deals. Those with a quick and nimble mindset will be best equipped to capitalise.

3. How to differentiate yourself when acquiring assets?

There continues to be a lot of talk about pricing dislocation, and how you can differentiate yourself when acquiring assets when the whole market is down. It’s about generating alpha, rather than just the beta that comes as a result of a market downturn.

It’s about being strategically clever and finding ways to add even more value than usual. Adopting hospitality-levels of service, designing thoughtful amenity, embracing boldness and architectural flair to genuinely stand out in a saturated market.

You won’t differentiate by cruising along with market mediocrity.

4. The “Airbnb-ification” of the office market

During an interview with PropertyEU editor, Zac Goodman commented, “we are seeing the Airbnb-ification of the office market”. This means that it is now not just the physical fabric of a building that can render it obsolete, but also its operational capability.

In 2024, we will see the word ‘operator’ used much more than ‘manager’. The operators who truly excel will be those who prioritise crafting tailored, best-in-class experiences for their occupants.

Simultaneously, occupants will leverage office spaces in ways far more efficient and effective than ever before – representing a major opportunity, rather than threat.

5. New trend or cyclical pattern?

People are talking of change everywhere. There are undoubtedly tectonic plates moving beneath our industry – driven by ESG, PBSA, hybrid working, extra/intra urban working…

Yet amidst this flurry of emerging trends, it’s important to discern between genuinely novel developments and cyclical patterns. We should be careful about calling everything new.

Many of the trends we are witnessing in offices – grand entrance experiences, great coffee machines, biophilia – have existed before. They are more circular than people think.

By distinguishing between genuinely novel trends and cyclical patterns, investors can make more informed and nuanced decisions about where to allocate resources and capitalise on emerging opportunities. 

6. Don’t undervalue your partnerships

In navigating challenging conditions, a relationship built on trust with an investment-management partner becomes paramount. It seems increasingly important to seek out a partner with a strong background in active asset management, a proven track record, and a commitment to transparent communication.

Moreover, going the extra mile to cultivate strong, reciprocal partnerships and synergies with other industry players will significantly enhance outcomes in the long run.

7. Human interaction: the industry’s lifeblood

The objective of MIPIM remains the same as it always has: to bring the entire value chain together to network, intensify relationships, and forge deals. It remains an extraordinary forum for activity.

In a very short period of time, you can access the views and pulse of an influential and representative sample size of the market – investors, landlords, lenders, brokers, occupiers and service providers.

MIPIM is great for data, intel, and off-market deals.

While digital connectivity is now essential in the modern economy – human interaction remains the industry’s lifeblood.

8. 2024: A year of ‘musical chairs’

The London office market is on the cusp of a strong recovery after the turmoil of the pandemic and rising interest rates. People seem to be gearing up to get back in – especially offices, which have been out of favour for a while now.

At TSP, we are excited about the office sector; we’ve had an influx of people asking us to look at development and asset management projects for their offices. It seems that many landlords and funds are taking a proactive approach to raising their standards and getting to best-in-class.

Zac Goodman comments in RX MIPIM 2024 News:

“My personal prediction is that there will be significant investment in core London locations, with international investors sensing a bottoming of the office-investment market, as well as still benefitting from a relatively cheap pound.

The London office market is a £206bn behemoth – too big to be ignored for much longer.

The other alternative classes have all started to overheat, so it’s going to be an interesting year of musical chairs.”