MIPIM 2011 Wrap-up by François Ortalo-Magné


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  • from high unemployment rate, housing double-dip, state/local governments fiscal problems, lack of progress on the federal deficit problem
  • And so as an outside observer to the real estate industry, to our government process, I feel that out of the sunset brought about by the financial crisis is emerging a bright new day for all of us who work and live in the urban environments that you all create for us. And for this I am most grateful.So thank you for a great MIPIM. I look forward to seeing you if not at MIPIM Asia in Hong Kong in November, at least here in Cannes next year. Have a great year!
  • MIPIM 2011 Wrap-up by François Ortalo-Magné

    1. 1. MIPIM 2011<br />Prof. François Ortalo-Magné with the Real Estate MBA students of the Wisconsin School of Business<br />
    2. 2. Last year’s wrap-up keynote<br />Investors: Focus on the real estate<br />Work above the NOI line, the cash flows<br />Transparency toward investors<br />Cities – Regions: Looking forward to a new reality<br />Sustainability beyond CO2 emissions<br />Public Private Partnerships no longer a dirty word<br />We could see the sun rising<br />
    3. 3. How is your business activity this quarter compared to same quarter last year? <br />
    4. 4. How has MIPIM changed your outlook?<br />
    5. 5. What is your perspective on your real estate market compared to same time last year? <br />
    6. 6. 2011: Already high noon in core markets<br />The wall of money is back<br />Chasing safety<br />Chasing yield from core-plus assets<br />Macro strategies<br />UK, US, France, or rather<br /> Washington D.C., New York City, London, Paris,<br /> Betting on the US gvt and the global economy<br />Moving to Germany – history of stable yield<br />
    7. 7. Or is it already past noon in core markets?<br />Sub 5 cap rates<br />But what were we saying in 2009?<br />Strong history of German yields<br />But what about the history of negative growth?<br />Weary of macro – momentum strategies<br />But capital must be deployed<br /> Tough execution environment<br />
    8. 8. Roubini’s keynote: half full<br />Accelerating global economic recovery<br />Lower risk of major shocks: deflation, double-dip recession, break-up of EMU<br />Strong corporate performance<br />Growing emerging economies provide diversification of sources of growth<br />The worst of the real estate/housing bust in many economies is behind us<br />Risk is on, and risk aversion is lower now<br />
    9. 9. Roubini’s keynote: half empty<br />Painful deleveraging in mature markets<br />High and rising budget deficits and public debt<br />Serious chronic problems of the Eurozone periphery<br />Risk of a double-dip in the US<br />Food, oil, and commodity inflation in emerging world<br />North-Africa/Middle-East turmoil<br />“It is a G-Zero World rather than a G-20 World”<br />
    10. 10. And the risks you told us about<br />Real estate debt markets<br />Political risks in mature economies<br />Regulatory risks: <br />Solvency II, Basel III, AIFM, EMIR, UCITS<br />Commercial real estate as a tax target<br />Inflation risk<br />
    11. 11. Strategies for today<br />Emerging markets<br />Continued growth in appetite for Asia<br />Growing awareness of the diversity of Asia<br />Many markets beyond the BRICs at MIPIM, including North African countries<br />
    12. 12. Which emerging market would you consider first for investment?<br />
    13. 13. Strategies for today<br />Emerging markets<br />Balancing strong fundamentals and country risks<br />
    14. 14. Strategies for today<br />Emerging markets<br />Balancing strong fundamentals and country risks<br />Mature markets<br />Moving to core plus 200/250 basis points<br />
    15. 15. Is now the time to invest beyond core/safe real estate assets?<br />
    16. 16. Strategies for today<br />Emerging markets<br />Balancing strong fundamentals and country risks<br />Mature markets<br />Moving to core plus 200/250 basis points<br />Taking advantage of the functional obsolescence of the existing stock<br />
    17. 17. Functional obsolescence<br />The greening of real estate<br />Fast technological progress leading to lower costs<br />No longer an option (exit strategy concerns)<br />Strong dissatisfaction with the standards<br />The “brown discount”<br />And the next wave…<br /> When human resources talk to corporate real estate<br />
    18. 18. Boris Johnson’s keynote<br />Cities are the single most brilliant invention<br />People live longer<br />Better educational outcomes<br />Better productivity<br />Less pollution per capita<br />Greater opportunities for reproduction<br />His secret: keep putting the village back into the city<br />Sense of trust and neighborliness <br />
    19. 19. Competition across cities<br />Fierce competition to attract<br />Population <br />Economic activity<br />National public investment<br />Private investment – global!<br />
    20. 20. What do you consider the biggest impediment to investment in your city or region?<br />
    21. 21. What competitive advantage did you emphasize here at MIPIM to make your city attractive to investors? <br />
    22. 22. Moving forward requires new strategies<br />Cooperating with nearby cities<br />To compete against the large metro areas<br />To compete for private public funds<br />Reaching across national borders<br />In policy-making and regulatory processes<br />Success of MIPIM’s Mayor Think Tank<br />Innovations to capture the windfall profits from public investments and zoning changes<br /> A major change for the developers<br />
    23. 23. Real Estate Investment Post-CrisisWhat have we learned? What next?<br />The value of transparency<br />The value of true leadership<br />
    24. 24. Lesson 1: Transparency<br />2010: Driven by the investment community<br />2011: Reaching further<br />To learn from each other <br />To overcome history of corruption<br />Supported by the increased availability of data (Private providers working with public authorities)<br />Supported by the expansion of professional accreditation organizations<br />
    25. 25. Lesson 2: Leadership<br />Long term thinking<br />Developers and investors: smart building designs to preserve market value over time<br />Cities and regions: smart communities to maintain attractiveness and vibrancy of urban environment<br />Educating our partners<br />National governments: regulation/funding<br />Voters to see beyond the election cycles<br />Private sector ↔ Public sector<br />
    26. 26. Lesson 2: Leadership<br />Beyond financial carrots and sticks<br />Toward new financial/regulatory relationships<br />Toward new processes for interactions<br />Toward developing a shared visions, and <br />fostering synergies from our diversity<br />Both in the private and the public sector,and in the way we engage the broader community<br />
    27. 27. A bright new day for the city!<br />