Nothing is certain except death and taxes, they say. If you are in real estate and FDI, particularly in Europe, Mipim is another certainty. The annual European real estate gathering in Cannes is about to open its doors. Love it or loathe it, the hype, as always, is mounting. 

As thousands of investors, developers, policy-makers and investment attraction officials made their way to the Croisette, here are three things to keep an eye out for. 

Is it a buy for the UK? 

The UK has been in the eye of the storm for almost 10 years now. Brexit and Covid-19 threw the ruling Conservative elite into chaos. Liz Truss’s infamous Budget of 2022 wreaked havoc in bond markets and resulted in yet another prime minister. Relatively unscathed until that moment, even the UK real estate market headed for a correction. Mortgage rates have calmed down,  transactions are on the rise and prices have started to recover. Besides, it is not just London. Local authorities across the country made a virtue out of necessity. Neglected for years, local authorities have put together compelling public-private regeneration plans: look no further than Sunderland or Blackpool for a couple of examples. With more devolution powers and levelling-up money finally coming through, those visions may soon gain some traction. Last but not least, politics. Elections are widely expected in November. The country could benefit from new faces and ideas after years of confusion, mostly self-inflicted by the ruling Conservative party, now tracking far behind in the polls. Keir Starmer’s Labour party will likely inherit a country with many challenges and won’t have it easy. But change will help propel the country forward after years of being a shadow of itself. All in all, it may well be a buy this time. 

Post-industrialisation deals: is it a zero-sum game? 

We start again in the UK, but this matters across Europe. A couple of weeks ago Prime Minister Rishi Sunak participated in the groundbreaking ceremony of a £900m logistics park by Panattoni Park. The project will rise from the ashes of a former Honda plant, which produced cars and engines in Swindon for 30 years before shutting down completely in 2021. It is expected to employ as many as 7000 people, twice as many as Honda had when it closed. Savills’ European real estate logistics census published in September 2023 showed that demand for industrial and logistics land across Europe remains strong, although below the pandemic peaks. The restructuring of European value chains and the rise of ecommerce continue to be the driving forces behind the changes we are witnessing. In places like Swindon, and many others across Europe, that means less manufacturing, more logistics. Elsewhere, for example in the energy and automotive hubs in Germany, France, Italy or Spain, ageing facilities are trying to adapt to the new demands of electric mobility. Is it a zero-sum game? Transaction costs are high: Swindon turned around relatively quickly, but it takes years for industrial land to be cleaned up and repurposed. Often it is a bureaucratic and political headache. Demand is there, but it is much more concentrated. That means bigger but fewer projects. Plus, the quality of job creation will hardly match that of the highly unionised industrial communities that shaped up in the economic boom years. Back to the original question: is it a zero-sum game? At best. 

Follow the hot money: is Saudi glitter real gold?

Mipim has typically been a great proxy for hot money. In the 2010s, Russian exhibitors used to have the biggest pavilions and throw the biggest parties. Then Turkey made a splash and now it is the Arab countries showing off. Egypt and the UAE have featured prominently for a couple of years, but it is Saudi Arabia that is expected to catch eyeballs this year. In some ways, Mipim aligns perfectly with the way Saudi Arabia has gone about promoting itself in the past couple of years. It is all about the glitter, the vision, the opportunity. There is one stark contrast though. European real estate is all about regeneration, retrofitting, repurposing, making the most of existing assets. Net zero targets have pushed further the argument in favour of brownfield projects over greenfield or fully-fledged redevelopments. As such, it takes years for these projects to get off the ground. Clearing planning, permitting, getting the buy-in of local communities are all necessary steps that often hinder these projects. In Saudi Arabia it is the exact opposite. It is all greenfield, everything is being built from scratch, planning and permitting do not seem to be an issue because the nature of Saudi governance — in one of the last absolute monarchies on Earth — means that a policy input like Vision 2030 takes priority over anything else. Net zero, despite assertive market campaigns, is not an issue either. Not to mention the absurd scale and budget for some of these projects. In other words, they offer a dream scenario to any foreign construction company. As they say, however, not all that glitters is gold. Saudi contracting agencies are notoriously volatile. Contractors spend an awful lot of time chasing payments. And political risks remain very high because there are no checks and balances. Many contractors are taking the plunge, but there is more to it than the glitter that will be on full display at the Saudi pavilion.

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