MIPIM 2016 Preview magazine by RX REAL ESTATE SHOWS

FEBRUARY 2016

mipim

www.mipim.com The official MIPIM magazine

速

PREVIEW Housing the World

Hotels

Healthcare

Cities face the challenge of managing growth

Consolidation brings challenges for investors

Demographic changes open new opportunities

33 018_ISTANBUL CHAMBER OF COMMERCE_PV_PIM ADVERTISEMENT

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VOTE FOR PRIME SHOPPING! VOTE FOR AQUIS PLAZA! The all new Aquis Plaza in Aachen, Germany, realized by ECE and STRABAG Real Estate, has been shortlisted as “Best Shopping Center” nominee for the MIPIM Awards 2016. We think that’s a great choice! The spacious architecture includes highlights such as two-level shop fronts and a spectacular glass façade, making the center blend perfectly into the surrounding urban space. The tailor-made merchandise mix and various innovations such as multisensory elements and many digital services provide for a premium shopping experience. Please support us and vote for Aquis Plaza! Visit www.ece.com

us at MIPIM Stand P-01.H51

Für manche ist es ein kleiner Spielwarenladen im Erdgeschoss, für andere der schönste Ort der Welt: Seit 50 Jahren schafft die ECE einzigartige Einkaufserlebnisse. 1965 gründete Werner Otto das Unternehmen mit visionärer Kraft und großem Mut. Heute betreibt die ECE rund 200 Shopping Center in 16 Ländern und realisiert darüber hinaus maßgeschneiderte Büro-, Logistik- und Hotelimmobilien. Damit jeden Tag neue Lieblingsplätze entstehen. www.ece.de

Editorial WELCOME to MIPIM 2016 and this Preview magazine. The central theme of MIPIM is ‘Housing the World’ and in this Preview we’ll examine how cities can manage rapidly-growing populations by becoming denser and embracing mixed-use development. As urban development policy evolves, there is an increasing demand for smart buildings that combine environmentally-friendly technology and client-friendly elements. In addition, investors are looking at new real estate asset classes such as housing for students and senior citizens. With some international investors diversifying their portfolio away from the traditional sectors of offices, retail shops and warehouses, there is growing interest in healthcare properties as well as the hotel industry. Check out the stories on the investment possibilities, which will also feature significantly in the MIPIM conference programme and on the exhibition floor. With 21,500 delegates from 90 countries attending, including 4,800 investors, MIPIM continues to be the leading annual gathering of the world’s real estate industry. Today, MIPIM is a global network of property events with the main MIPIM in Cannes, MIPIM Asia in Hong Kong, MIPIM UK in London and last year’s inaugural MIPIM Japan in Tokyo. By developing the MIPIM portfolio we hope to provide you with the best business opportunity for your specific needs whether these entail a global expansion or a specific strategy to grow in the UK, Japan and Asia. Real estate continuously innovates and so does MIPIM. For the first time, we will be holding the MIPIM Startup Competition finals in Cannes this March. The competition will reward the most dynamic and promising international startups in real estate and urban management solutions. Four finalists have already been selected from entries made during MIPIM UK and MIPIM Asia. The last two finalists will be selected during MIPIM where the eventual winners will be chosen. Make a note in your diary for March 17 at 11:00 am to be in the Palais’ Grand Auditorium for the very first MIPIM PechaKucha! This Japanese-inspired pitching concept is fastpaced and fun. Each industry expert has to use 20 images to present his or her project with a maximum speaking time of 20 seconds per image. The projects that will be presented are mostly related to Housing the World, the main theme of this edition of MIPIM. Until then, I hope this magazine proves an interesting read and we look forward to seeing you in Cannes. Best regards Julien Sausset Director of MIPIM

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CONFERENCES & EVENTS PROGRAMME

Contents News New York. Berlin. Lagos. Lille. Edmonton. Dubai. Paris.

Projects

Belfast. Lisbon. Warsaw. Paris. Stockholm. Riga. Santa Cruz. Oslo. Moscow.

Special section

112

The evolving city

HOUSING THE WORLD

Density and Infrastructure Responsible property investment

34 38

Residential investment

Return On Investment Regional aspects

42 46

Building for the future Smart buildings Architecture and placemaking

50 50 54

Features Office trends

From startup factories in Berlin to coworking spaces in Manhattan, the space we work in is changing — so is the way we work.

Hotels

Consolidation is shaking up the hotel sector and analysts predict there’s more to come. What does it mean for investors?

Retail

Healthcare

Healthcare property is currently attracting huge volumes from investors looking for safer, longer-term bets underpinned by an aging population

Investors from around the globe are targeting large, dominant shopping centres in major cities as retailers gear up for international expansion

Logistics

As Europe’s logistics property portfolios expand the ability to adapt to the changing demands of occupiers and investors will be key

Debt

As new players enter the market real estate lending is picking up and the cost of debt is falling

Emerging assets

As investors look to diversify the European real estate industry is at the tipping point in terms of alternative investment

Awards

97 The MIPIM Awards celebrate the most exciting new projects from around the world of real estate

Tips & Services

109

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News REALOPEDIA AIMS TO OPEN DOORS TO REAL ESTATE REALOPEDIA, an online networking platform for B2B real estate professionals and B2C investors and end-user customers, is using MIPIM as a launch pad for growth. The real estate portal’s online platform features properties for rent, sale or investment internationally, a global directory of properties, and a full range of real estate professionals and services globally. Realopedia launched its real estate platform with crowdfunding opportunities, giving private investors the flexibility to fund diverse projects at lower risk, stimulating investor confidence. “Realopedia is the most efficient and economical way for customers and investors to connect to property professionals and service providers worldwide on a central platform,” CEO Laura Choueri said. “If you are an agent, broker or developer, you can efficiently reach out to investors through Realopedia. If you are supporting the real estate industry, whether as a mortgage lender, property manager, interior designer, architect or attorney, Realopedia provides you with the commercial intelligence that you need.”

CONFERENCES & EVENTS AT MIPIM

MIPIM CITY INVESTMENT FORUM NORTHERN POWERHOUSES

Tuesday 15 March – 14.30-15.30 Grand Auitorium, Palais 1

Newcastle International Airport Business Park

China leads global charge into Grand Paris projects CHINA’s decision to invest €1bn in the Grand Paris project has underlined the French capital’s status as a magnet for global investment. The deal to underpin the world’s largest infrastructure and economic development project was one of the major talking points when the Grand Paris delegation hosted a conference session at MIPIM Asia in December 2015. The China Investment Corporation sovereign wealth fund is to work alongside the French bank CDC to invest in the massive project to renew the city’s transport infrastructure with 200 km of automated metro lines. At the same time it will participate in some of the real estate opportunities opened up by the 68 new stations, including a dozen major new transport hubs. The strategic aim of the project is to maintain Greater Paris’s status as an attractive world-class capital region. It currently generates $800bn in GDP, and is third in the world for Fortune 500-company HQs. And in 2015, Paris was third in the world for attracting international investors. The city’s real estate market reflects this global role and a series of high-profile deals have maintained the flow of international capital through Paris. For example, Europa Capital together with local partner Balzac

The Grand Paris project is the world’s largest infrastructure and economic development scheme Real Estate Investment Management sold the 15,700 sq m Tour Vista in Paris to private UKbased investment group Alduwaliya Asset Management for in excess of €130m. And AXA IM - Real Assets has recently bought Tour First in La Defense — at 231 metres the tallest office building in France — from Beacon Capital Partners via a share deal. AXA managed the purchase on behalf of a club of investors seeking investments into core European real estate assets.

Newcastle highlights UK’s northern opportunities A PARTNERSHIP of representatives from Invest Newcastle, private-sector businesses and Newcastle City Council will be showcasing Newcastle’s investment offering at this year’s MIPIM. Newcastle is a core city in the UK’s Northern Powerhouse project, with development sites across the city centre and the wider region, including 80 ha in the Accelerated Development Zone and 70 ha of Enterprise Zones. Newcastle will bring a portfolio of opportunities to MIPIM’s international marketplace, demonstrating the strong partnership between

the public and private sectors in North East England. “The North East’s thriving economy, competitive prices and fantastic quality of life also provide a strong draw for developers and corporate occupiers,” said Catherine Walker, inward investment director at Invest Newcastle. The private-sector partners attending MIPIM with Newcastle include Highbridge Properties, FaulknerBrowns Architects, Adderstone Group, NE1, Port of Tyne, Quorum Business Park, Ryder Architecture, UK Land Estates, Arch — The Northumberland Development Company, Newcastle Science Central and The Hanro Group.

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SPOTLIGHT ON EUROPE „Acquisition is our Mission“: We have an extensive shopping list! Our wish list includes European office, retail,

healthcare and residential properties. Whether existing or new, core or core+, prime or secondary cities: We are targeting single properties or portfolios with single asset values worth more than €10 m. Are you able to offer us a suitable property in Europe? Please contact us at kontakt@corpussireo.com or telephone +49 221 39900-0

News KENNEDY WILSON ACQUIRES ITALIAN GOVERNMENT OFFICE PORTFOLIO KENNEDY Wilson Europe Real Estate (KWE), a specialist in direct real estate investments and real estate loans, has bought a portfolio of offices in Italy, all let to the Italian government as tenant, for a purchase price of €185.5m, reflecting a yield on cost of 6.3%. The deal covers nine office buildings occupied by Italian government ministries across 99,200 sq m of lettable space. The portfolio generates a net operating income (NOI) of €12.1m, subject to annual indexation of 75% of CPI. The properties are spread across Italy, from Milan and Trieste in the north to Reggio Calabria in the south, via Florence and Rome. The majority of the offices have been comprehensively refurbished. The unexpired lease term is 7.1 years, with all the existing leases expiring simultaneously in December 2022. Thursday 17 March 2016 is Italian day at MIPIM with an Italian conference in the morning, Italian lunch and presentations during the afternoon on the Italian stand at Riviera 8.

MIPIM startup competition gives global platform to innovation The inaugural MIPIM Startup Competition, sponsored by BNP Paribas Real Estate, has been running since 2015 and reaches its climax in Cannes at MIPIM 2016 with the final round of shortlisting followed by the announcement of the overall winner. Two rounds of voting have already seen four companies through to the final: OpenSensors.io from the UK and Standard Access from Ireland won the MIPIM UK round, while Parallax Technologies from China and Source Central from Singapore won the MIPIM Asia round. The third and final stages of the selection will take place at MIPIM 2016 in Cannes, with the announcement of the winner on Thursday, 17 March during the MIPIM Awards. And it’s clear that the competition is already opening doors for the ambitious entrepreneurs. Jason Wong, co-founder and CEO of Parallax Technologies, which transfoms unbuilt designs into immersive 3D experiences, said: “The exposure and reach of MIPIM’s platform is unparalleled. We established world-class networks as soon as we walked off stage. The impact of being on stage for 10 minutes beats having our team on the ground doing business development for months.”

Parallax Technologies emerged victorious in Hong Kong

MIPIM Director Julien Sausset said: “By welcoming new innovation players, MIPIM connects the traditional world of property to new ideas generated by startups. This year’s Startup Competition will spotlight companies offering the most interesting solutions for property professionals.” CONFERENCES & EVENTS AT MIPIM STARTUP COMPETITION

Wednesday 16 March – 14.30 - 16.00 Grand Auditorium

SNCF railway land turned into eco gateway to Paris SNCF IMMOBILIER, the real estate arm of French national rail carrier SNCF, is bringing back into use 6 ha of former railway land adjacent to the Gare du Nord in Paris’s 18th arrondissement. The Chapelle International project is a joint venture with developer Sogaris. The development will be a mixed-use and logistics hub, with the mixed-use element providing 56,000 sq m of residential, 33,000 sq m of offices, 6,000 sq m of public space and 800 sq m of business units.

The main focus of Chapelle International will be a sustainable rail/road freight hub covering 40,000 sq m, which will act as a prime logistics base and gateway to Paris. Linked to the rail network, the logistics facility is intended to encourage the mass arrival of goods into the heart of the city by train. Goods will be distributed to the local neighbourhoods using “clean” electric, natural-gas and hybrid vehicles. The result will be reductions

in the environmental impact of noise, pollutants and greenhouse gases. In keeping with its location in one of the most densely packed areas of Paris, the concept is based on bringing together a mix of logistics activities, craftsmen and tradesmen, and service-sector businesses in order to share the investment costs and re-introduce logistics into the heart of the French capital.

CONFERENCES & EVENTS AT MIPIM INNOVATIVE URBAN DEVELOPMENTS

Chapelle International: a mixed-use and logistics hub in the heart of Paris

Wednesday 16 March – 17.00 - 18.30 Green Room, Innovation Forum, Hall 1

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News THOR HAMMERS OUT MADRID DEALS THOR Equities has bought two retail plots in central Madrid: 11 Puerta del Sol and 9 Puerta del Sol. A corner building consisting of 1,144 sq m of retail space, 11 Puerta del Sol is currently occupied by department store group El Corte Ingles. Thor bought it for €70m. The adjacent 9 Puerta del Sol features 300 sq m of retail space. The buildings face the Casa de Correos (House of the Post Office) on Puerta del Sol, one of the busiest areas of Madrid for both locals and tourists. 11 Puerta del Sol features frontage on the pedestrian part of the square. The property is also adjacent to the pedestrianised Calle del Arenal, which features a variety of restaurants and shops. Among the retailers with flagship stores on Puerta del Sol are Apple Store, Top Shop, Sephora and Women’s Secret. The Spanish headquarters of Apple is also located on the corner of the plaza. Other retailers in the surrounding area include Zara, H&M, Mango and Bershka.

Slice of New York City history saved by $5.3bn investment

Stuyvesant Town-Peter Cooper Village: New York’s biggest apartment complex acquired by Blackstone and Ivanhoe Cambridge FUNDS managed by Blackstone’s Core+ real estate unit and Ivanhoe Cambridge have laid out a $5.3bn investment programme in New York City’s Stuyvesant Town-Peter Cooper Village, the largest rental apartment complex in the US. Situated in Manhattan’s East Village, the property consists of 11,241 units in 56 buildings on 32.5 ha (80 acres). Stuyvesant Town-Peter Cooper Village is part of New York City’s history. Constructed in the 1940s to provide middle-class housing, the complex fell on hard times through a series of ownership changes. Blackstone has reached agreement with New York mayor Bill de Blasio and the City of New York to

preserve the community’s heritage by providing 5,000 affordable units. De Blasio said: “This place means something special in the history of New York City because it was built for working people; it was built for the emerging middle class. The teachers, the firefighters, the police officers, the nurses, [the] everyday people who make this city great will be able to live right here in the middle of Manhattan.” Blackstone’s global head of real estate, Jon Gray, added: “The seller gets a full and fair price, the city maintains affordability, tenants are happy with who takes over and we can make a good investment on behalf of our own investors.”

EUs largest urban farm takes root in The Hague UF002 De Schilde: a multistorey urban farming enterprise in the heart of The Hague

WORK is under way on the construction of UF002 De Schilde in The Hague, the Netherlands. The UrbanFarmers’ rooftop farm development will be the largest commercial urban farm in Europe. UF002 De Schilde will house Europe’s largest commercial urban food-production facility, covering a 1,200 sq m rooftop greenhouse for specialty vegetables, a 370 sq m indoor fish farm and 250 sq m of integrated processing and packaging. The farm will also dedicate 250 sq m exclusively to events and tours. UF002 De Schilde is located in one of The Hague’s signature landmarks — the former Philips telecommunications building. The classic structure on Televisiestraat 2 is mostly vacant, but will now be repurposed into a multi-storey urban farming enterprise. The building will span two floors — the rooftop and sixth floor — and use the UF system for the sustainable production of fish and vegetables. The first produce cultivated on the farm will be sold in April 2016. The UF Consortium development partners are UrbanFarmers, Priva, Koppert Biological Systems and Rijk Zwaan.

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News TH Real Estate urges cautious investment in emerging cities A NEW document from TH Real Estate looks at future trends in worldwide urban office investment potential towards the year 2030. THINK Global: Offices - The Growth Of Emerging World Cities And Potential Target Markets For Institutional Investors describes key features of the shift in economic power from the West, detailing how rapid growth rates in emerging world cities have already created major new office centres in Asia and South America. It goes on to hypothesise

SEGRO SELLS OFF SLOUGH TRADING ESTATE OFFICES FOR £325M SEGRO is selling its portfolio of offices on the Bath Road in Slough for £325m (€425m) to clients of AEW Europe. The sale price represents a net initial yield of 5.6% and a toppedup net initial yield of 6.3%. The portfolio, which fronts the Slough Trading Estate, contains 90,000 sq m of office properties leased to national and international companies, along with one office building currently being developed on a speculative basis. Segro will continue to manage the development of the building under construction until practical completion. David Sleath, Segro’s chief executive, said: “The sale of the Bath Road offices is a key part of our strategy to focus on developing, owning and managing modern warehousing and light industrial property in and around major conurbations and at key transportation hubs. With this disposal, over the past four years we will have disposed of over £2.2bn of suburban offices and other non-core assets and invested over £1.7bn in the acquisition or development of new assets.”

how the world order might change further for the global office investor by 2030. However, while future growth prospects may appear enticing, a reality check is required, the report says. Emerging cities are fraught with risks for institutional investors, and a realistic assessment of future market transparency is required. The report concludes that the combination of market scale and transparency considerations results in a relatively short list of potential

target markets, even before other major risk factors are taken into account. Global megatrends are reshaping the world economic order, the report says, with rapid economic growth in emerging countries leading to mass urbanisation in cities across Asia, Africa and South America. As these cities undergo a gradual transition from production to consumer industries, and increase their financial and business services, opportunities will arise for global real estate investors. When the measures of scale, growth potential and transparency are taken into account, the report suggests a top-20 listing of potential investment target cities for 2030. Cities in China, South America, Asia and India lead the list.

Brookfield buys Berlin’s ‘iconic’ Potsdamer Platz

Berlin’s Potsdamer Platz: “one of the world’s iconic properties” ONE OF Brookfield’s subsidiaries has bought Potsdamer Platz in Berlin with its joint venture partner, an Asian sovereign wealth fund. The parties are not disclosing the purchase price. The mixed-used estate consists of 17 buildings, 10 streets and two squares covering an area of 270,000 sq m in the centre of Berlin. The buildings — a mix of 128,000 sq m of offices, 45,800 sq m of retail, 25,000 sq m of

residential, 41,500 sq m of leisure and a 12,800 sq m hotel — provide a base for 480 national and international companies. Ric Clark, senior managing partner and chairman of Brookfield Property Group and Brookfield Property Partners, said: “Potsdamer Platz is one of the world’s iconic properties and we are pleased to be adding it to Brookfield’s growing portfolio of world-class assets.”

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News

US set to recover appetite for commercial real estate THE LATEST report from the National Association of Realtors (NAR) — Quarterly Commercial Real Estate Forecast — predicts that sustained job growth throughout the US and improving credit conditions will help keep commercial real estate activity expanding into 2016. However, property prices are likely to cool off slightly after reaching their peak in some major markets.

BIG DEAL FOR GAW CAPITAL IN SINGAPORE HOTEL MARKET GAW CAPITAL Partners has bought the 308-room BIG Hotel in Singapore for $143m. JLL Hotels & Hospitality Group and JLL Capital Markets Singapore acted as advisors on the sale for owner ERC Unicampus. The 8,800 sq m hotel is located in central Singapore. Originally an office building, it was converted into a hotel by ERC Unicampus, which opened it in 2013. Facilities include a restaurant, bar, gym, car park and convenience store. The deal marks the first Singapore hotel acquisition for Gaw. It is the Hong Kong-based private-equity firm’s second significant hotel purchase in the last six months. In September, Gaw purchased the InterContinental Hong Kong for $938m — the largest ever single hotel transaction in the Asia Pacific region. JLL was also the advisor on that deal. Anthony Barr, regional director of JLL Capital Markets Singapore, said: “Singapore’s appeal as an investment destination remains strong with its stable political landscape and strong economic fundamentals. For this reason, we are seeing an increasing demand for Singapore properties from investors around the region, particularly those in Hong Kong.”

National office vacancy rates are forecast to drop by 0.8% to 14.8% over the coming year as continued job creation drives demand. The vacancy rate for industrial space is expected to fall 1.4% to 9.7%, and retail availability to drop by 1.3% to 11.3%. With new apartment construction projects coming through the pipeline in several markets, only multi-family vacancies are forecast to increase over the

next year, from 6.1% to 7.3%. NAR’s chief economist and senior vice-president of research, Lawrence Yun, says the outlook for the US commercial real estate sector continues to look bright, despite the headwinds that have held back the economy in recent months. “Temporary turbulence in the financial markets, a stronger US dollar hurting exports and economic weakness overseas chipped away at third-quarter growth last year and led to some deceleration in the pace of commercial investments,” Yun said. “The good news is that these deterrents are slowly receding, which should ultimately reawaken the appetite for commercial space heading into 2016.”

Nigeria’s new island city rises out of the Atlantic

Impression of the Grand Marina at Nigeria’s new Eko Atlantic island city EKO ATLANTIC is a planned new island city off the coast of Lagos in Nigeria, which is being constructed on land reclaimed from the ocean. The project is billed as “the gateway to Nigeria, West Africa and the continent.” On completion, the island is anticipating at least 250,000 residents and a daily flow of 150,000 commuters. Infrastructure road works and underground surface drainage have already been laid along the major routes across the new city. Piling works are also complete for the many of the bridges. The development will also have a positive environmental impact by halting the erosion of the Lagos coastline by means of the “Great Wall of Lagos”. The 8.4 km sea-defence revetment is being built more than 2 km offshore at 8.5 metres above sea level. It will protect the entire island project, as well as Victoria Island and the local coast, from further erosion. The wall will also retain the 90 million cubic

meters of reclamation sand fill that forms the foundation for the new city. Lying adjacent to Victoria Island, Eko Atlantic will be 10 sq km in size. The new city will satisfy the demand for financial, commercial, residential and tourist accommodation with a high-tech infrastructure built to modern environmental standards. The city’s residents will have access to advanced water, waste-management, security and transportation systems. Eko Atlantic will also have an independent source of energy generated for the city. The project is privately funded by South Energyx Nigeria, a subsidiary of the Nigeria based Chagoury group, as developer and city planner, in partnership with the Lagos state government, supported by the Nigerian federal government. Also involved are national and international banks, including Nigeria’s FCMB, First Bank, Guaranty Trust Bank, BNP Paribas Fortis and KBC.

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News INVESTMENT ACTIVITY RISES ACROSS THE PHILIPPINES INVESTMENTS approved by the Philippine Board of Investments (BOI), the industry development and investment promotion arm of the Philippines’ Department of Trade & Industry (DTI), reached $7.76bn (€7.17bn) in 2015, up 3% from $7.51bn in 2014. The aggregated investment approvals were generated from 358 projects. BOI expects a total of 58,252 new jobs when these investments became fully operational. The increase was attributed mainly to the approval of several big power projects. Energyrelated investment projects totalled $5.214bn from 55 projects with a total generating capacity of 2,096 MW. This topped last year’s record of $3.696bn in 37 power-related projects with a total generating capacity of 1,543 MW. The manufacturing sector also contributed to the increase, reaching $571.5m from $517.8m in 2014. The continued growth of manufacturing is an indication of the success of the Manufacturing Resurgence Programme, which aims to rebuild the existing capacity of industries, strengthen new ones and maintain competitiveness. Investment commitments from domestic sources reached $6.504bn, or 84% of the total investment approvals in 2015. The remaining 16% — $1.260bn — was generated from foreign sources, led by the Netherlands, with investments worth $565m, or a 45% share of total foreign investment during the period. Singapore came next, with an 18% share of investments totalling $228.5m, followed by Malaysia with $56.5m, South Korea with $51m and Taiwan with $50m, all with around 4% of the foreign investment total.

France sets eco agenda with energy-efficient data centres BY THE year 2020, data centres could consume as much as 10% of global energy output. As part of Northern France’s commitment to next-generation energies, companies in the region have been developing lower energy data centres in recent years. Since 2003, OVH — the number one internet hosting company in Europe and the number three worldwide — has been working to make its data centres more energy efficient. Since 2010, all new OVH centres have followed the equation: 30% air cooling + 70% water cooling = 0% air-conditioning. Air and water cooling combine to create an innovative system that eliminates the need for air-conditioning. In Lille and Valenciennes, CiV’s data centres host eco-friendly next-generation servers, using high-performance technology and pooled hosting to cut environmental impact in half. Naturally cool air is injected into the system, lowering indoor temperatures and providing over 260 days of free cooling annually. In

Companies in Northern France lead the way in energy-efficient data centres winter, the system warms the building by capturing the heat generated by IT equipment. Decima’s data centre in Arras, located in a converted gunpowder magazine in the city’s historic citadel, is the first commercial building north of Paris to be ISO 50001-certified for energy management. This is down to geothermal technology, which allows the facility to consume two to three times less energy than a conventional data centre. The facility also features smart-grid technology, allowing Decima to track and manage all the energy consumed by the building.

Residential land buys offplan in London’s Fulham RESIDENTIAL Land has “There’s an opportunity while completed a major off-plan Asian markets cool for us to reresidential purchase in west place that Far Eastern buyer London, after taking advanwith investor money, PRS montage of a lull in the Asian forey, rather than ‘export money’.” ward-sales market. The deal is Ritchie’s first offBacked by Canadian penplan purchase with Ivanhoe sion-f und giant Ivan hoe Cambridge and comes afCambridge, the private rentter the latter invested in a ed sector (PRS) specialist fifth Residential Land fund has forward purchased Chase in February. The new £650m New Homes’ scheme at Palace Residential Land’s Bruce Ritchie: “an fund is focused on a broader Wharf in Fulham at £1,250/sq opportunity while Asian markets cool” area of prime central London. ft (£13,455/sq m), in a deal worth around £37m Its upper price point for investment has in(€49m) in total. The site has planning permiscreased from £1,500/sq ft to £1,650/sq ft. sion for 27 residential units, consisting of five CONFERENCES & EVENTS AT MIPIM townhouses and 22 flats. RESIDENTIAL INVESTMENT PORTFOLIO: “To fulfil our stock requirements, we need THE BEST IS YET TO COME to be buying new as well as existing stock,” Thursday 17 March – 16.00-17.00 Orange Room, Palais -1 said Residential Land CEO Bruce Ritchie. preview magazine I February 2016 I www.mipim.com

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â&#x20AC;&#x153;The pessimist complains about the wind, the optimist expects it to change, the realist adjusts the sailsâ&#x20AC;&#x153; (William A. WARD)

Realistic solutions to perform in real estate within a moving economic environment t h re e st o n e s c a p i t a l .c o m

News

Top names throw weight behind 2016 Canada Day WEDNESDAY, March 16 will see a series of Canadian-themed sessions and many of MIPIM’s Canadian participants will be hosting or sponsoring events. The city of Edmonton is sponsoring a business-case session on the ICE District and sustainability as part of the Innovation programme on March 16. The ICE District is Canada’s largest mixeduse sports and entertainment area, now taking shape on more than 10 ha in the heart of Edmonton. Phase one includes Rogers Place, the first NHL (National Hockey League) facility in Canada designed to meet LEED Silver standards. It will be ready to accommodate a 18,500-strong ice-hockey crowd by the third quarter of 2016. Edmonton is also

ACREST ADDS TO JLL GERMANY’S ‘SUCCESS STORY’ REAL estate consultant JLL has bought ACREST, the German retail real estate asset-management business, following approval from Germany’s competition authority Kartellamt. ACREST manages €5.1bn of assets, comprising some 900 properties totalling more than 5 million sq m of leasable retail space. The company,

Edmonton’s 272-ha former airports site at Blatchford is being transformed into a sustainable neighbourhood sponsoring the VIP Lounge in the main exhibition hall. Developer Ivanhoe Cambridge is sponsoring Conference Canada: Live, Work, Play – Redefining Living Spaces, which will examine which is based in Berlin, employs 160 people. ACREST will continue to operate from its current Berlin office, and will be fully rebranded as JLL after a transitional period. Frank Porschke, CEO of JLL Germany, said: “This acquisition will expand JLL’s retail services to include a highly professional and well-established asset-management capability. We will be able to offer breadth and depth retail advice and services to our clients

how these trends are shaping the future of real estate. In what ways are tomorrow’s buildings reflecting the ever-changing needs of today’s progressive workforce? What kind of life environment are millennials seeking? What should companies be offering and how does it affect real estate investment and development? These are some of the issues covered by speakers that include Ivanhoe Cambridge’s Arthur Lloyd and Meka Brunel. The province of Ontario and the cities of Montreal and Edmonton are sponsoring the Canada Cocktail that follows Conference Canada. Ontario comes to MIPIM with 10 communities under its banner, including the major cities of Toronto, Ottawa and Hamilton. Montreal, meanwhile, is bringing 12 organisations to Cannes. CONFERENCES & EVENTS AT MIPIM

CONFERENCE-COCKTAIL CANADA: LIVE, WORK, PLAY – REDEFINING LIVING SPACES

Wednesday 16 March – 16.30 - 17.30 Verrière Grand Auditorium, Palais 1

across Germany.” ACREST’s joint shareholders Stefan Zimmermann and Matthias Schmitz will lead the new JLL Retail Asset Management group in Germany, reporting to Jorg Ritter, JLL’s German management board member for retail. Schmitz said: “We are looking forward to ACREST playing a full part in JLL’s continuing success story in the future and, in turn, to benefitting from JLL’s global presence and platform.”

Indonesian scheme sets out tourism ambitions TANJUNG Lesung on the island of Java in Indonesia has 1,500 ha and 13 km of coastline to be developed as a world-class international tourist destination. Tanjung Lesung lies on the west coast of Java in Banten Province, a three-hour drive from Indonesian capital Jakarta. The major projects being developed in the Tanjung Lesung Resort SEZ are a marina, with a terminal for cruise boats, a yacht club, commercial outlets and a village; a hotel and residential elements, consisting of three-, four- and five-star hotels offering a total of 10,000 rooms; two 18-hole courses, facing the beach, with a clubhouse; and a theme and water park. Investors in Tanjung Lesung SEZ will gain

benefits on fiscal and non-fiscal incentives and all licenses will be processed through a streamlined one-stop service office located in Tanjung Lesung. Tanjung Lesung SEZ will be supported by a comprehensive modern infrastructure, including electricity, telecommunications, roads, sewers and drainage, waste, a wastewater treatment plant, landscaping and an airstrip. The Indonesian government is investing in toll roads, and the reactivation of the railway and South Banten Airport. Tanjung Lesung is a gateway to the famous volcano island of Krakatau (Krakatoa) and the UNESCO natural heritage site Ujung Kulon National Park, known for its

Tanjung Lesung, Indonesia one-horned rhinos. Nearby Panaitan Island, meanwhile, is reputed to have some of the best surfing in the world.

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News AEW EUROPE’S LOGISTIS FUND HITS €2BN AEW EUROPE through its Logistis fund has acquired Corridor, a €200m French logistics portfolio, from a fund managed by GLL Real Estate Partners. JLL was the advisor for the sale of the Corridor portfolio. The acquisition brings the total Logistis investment in 2015 to €1bn across 16 assets and increases the total asset value of the Logistis platform to €2bn. The Corridor portfolio comprises eight multi-tenant logistics assets totalling 280,000 sq m situated in locations around Lille, Le Havre, Paris and Lyon. The growth strategy for the Logistis fund is focused on building a portfolio of grade-A logistics parks in prominent locations across the main distribution hubs in Continental Europe. Logistis fund manager Remy Vertupier said: “Following the acquisition of Corridor, we have now allocated 80% of Logistis’ investment capacity and have reached a 99% occupancy rate in the existing investment portfolio. We will continue to grow the Logistis platform through 2016 to ensure its position as a one of the leaders in the European logistics real estate market.”

Eagles Hills pushes forward with Marassi Al Bahrain mega-project EAGLE Hills, the Abu Dhabi-based private real estate investment company and developer, has opened an office in Bahrain, where it is developing the Marassi Al Bahrain mixed-use project in partnership with Diyar Al Muharraq. Spearheaded by Eagle Hills board member Mohamed Alabbar, Marassi Al Bahrain will draw on his two decades of experience in creating mega-projects around the world. Alabbar’s landmarks in the UAE include Dubai Marina, one of the world’s largest luxury waterfront communities; Downtown Dubai, the flagship mega-development crowned by Burj Khalifa, the world’s tallest building; and the Dubai Mall, the world’s largest and most-visited shopping and entertainment destination, which brought in 80 million visitors last year. Alabbar said: “We see great potential in Bahrain as it is one of the key markets for Eagle Hills in the MENA region. Through our strategic partnership with Diyar Al Muharraq, we strive to share the knowledge and expertise of Eagle Hills’ experienced team to successfully deliver Marassi Al Bahrain.” The first phase of the project is Marassi Residences. “Residents will have the best shopping, entertainment and outdoor-living experience at their doorstep, which no other residential development in the country currently offers,” Alabbar said. “They will have

Eagle Hills’ Mohamed Alabbar: “great potential in Bahrain” quick access to a two-kilometre beach and an adjacent waterfront promenade, as well as several world-class amenities, including one of the Gulf’s most innovative shopping concepts, the 178,00 sq m Marassi Galleria.” The location offers a community consisting of luxury hotels and restaurants, high-end residential apartment buildings, business centres, leisure and entertainment facilities, a harbour dock for cruise liners, a central garden and a traditional souq. Positioned as a major tourist attraction, the development covers 190,000 sq m of beachfront shopping and entertainment.

Orestad raises the bar on work-life balance COPENHAGEN’s planned urban district of Orestad is entering a new phase. The new borough of Orestad on Amager Island is divided into four districts: Orestad Nord, Amager Fælled Kvarteret, Orestad City and Orestad Syd (South). Orestad extends 5 km from the centre of Copenhagen to the Kalvebod Fælled nature reserve. Orestad Syd will become its southernmost extension. Now, Orestad Syd and neighbouring Orestad City are expanding, with over 400,000 sq m of commercial floor space up for sale. Other

attractions include an efficient infrastructure, allowing Copenhagen airport to be accessed in six minutes and the city centre in 10 minutes. Orestad Syd is a modern and dense urban district that provides opportunities for an active and social lifestyle as well as providing the basis for an internationally oriented business community. Part of the attraction of Orestad Syd is that it strikes a balance between a dense urban environment and the adjacent green amenity of the Kalvebod Fælled reserve.

The Orestad district is entering a new phase

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JOIN THE MIPIM TEAM AT STAND P -1 C32 ELIE YOUNES Executive Vice President & Chief Development Officer

ROMAIN AVRIL Vice President Western Europe, Northern Africa & Turkey

DAVID JENKINS Vice President Russia & CIS

GIANLEO BOSTICCO Senior Director Southern Europe

At Carlson Rezidor, we believe in successful long term relationships based on trust, responsibility and transparency. This enables us to excel in unlocking sustainable value to our partners and shareholders. Top line, bottom line â&#x20AC;&#x201C; whichever way you look at it â&#x20AC;&#x201C; at Carlson Rezidor, personal, trustful and mutually beneficial relationships with our owners and developers are a firm part of our philosophy and make us stand out from the crowd. We maintain a dynamic business model with a pragmatic, simple yet creative deal structures.

VALERIE SCHUERMANS Director Benelux & Poland

MATHIJS VAN DALSEN Coordinator Business Development

Our success recipe is simple: our network of 100,000 rooms and presence in 80 countries in EMEA, our development expertise, value engineered technical approach, procurement benefits, revenue engines, sales support, digital know-how, operational excellence and, above all, the 40,000 similes of our hosts who go the extra mile to serve your guests. In other words, we do things right & we do the right thing. Meet us at MIPIM stand P -1 C32 and discover how we can add value to your investments.

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Our growth continues to focus on strengthening our leading position in Europe and accelerate our presence in the emerging markets of Central & Eastern Europe, Middle East and Africa.

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News Japanese investors head overseas in search of growth

JAPAN’S property sector is becoming more outward-looking and its major real estate companies are accelerating overseas investment, according to new research from Nikkei Real Estate. Trophy assets in New York and London are top of their shopping list. According to Jun Homma, head of international services at Nikkei Real Estate, this new approach reflects concerns about the home market. “In 03_VENTAS_PV_PIM

light of the domestic market saturation expected to follow the Tokyo Olympics, Japanese money is once again headed overseas,” said Homma. Homma calculates that Unizo Holdings spent $834m on five building in New York. And Mitsui Fudosan announced it would be taking part in Hudson Yards, one of the US’s biggest-ever regeneration schemes while Tokyu Land commissioned Norman Foster

to design a new building on Park Avenue. Hitoshi Uemura, president of Tokyu Land, summed up the pressures felt by many Japanese investors to widen its investment exposure. “Japan’s real estate market is sure to shrink in the future, so if we are to take measures – the sooner, the better,” he said. In the UK, Japanese developers are making their presence felt in the financial district of the City of London and in emerging districts. For instance Mitsui is backing Stanhope’s redevelopment of the BBC Television Centre in west London. And Nikkei’s Homma believes an even bigger wave of Japanese investment is still to come. Reform of Japan’s public pension system is expected to ease restrictions on institutional investment in real estate. Already the 137.5 trillion yen ($1.1 trillion) Government Pension Investment Fund of Japan and the 21.1 trillion yen ($170bn) Pension Fund Association for Local Government Officials are putting structures in place ahead of the rule changes. “With this in mind it would not be strange if well-endowed public pension funds were eyeing global investment from the start,” said Homma.

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Diamond brings the world to Japanese real estate MITSUBISHI affiliate Diamond Realty Management was one of the first movers into Japanese real estate asset management and today it has about $4bn of Japanese real estate under management in the retail, logistics and offices sectors — about 84% in Greater Tokyo — as well as a strong presence in the mezzanine debt market. This diversity reflects the wide-ranging activities of DREAM’s parent company, explained president and CEO, Takashi Tsuji. “Since our parent company is a trading firm and retail and logistics are important to their global business, we have our strength in managing logistics and retail properties.” And he believes this lack of reliance on a single sector puts DREAM in a better position in the current Japanese economic climate. “Five to ten years ago, real estate assets se067_JLL_PV_PIM curitized were mainly in office buildings,

but since then the market has expanded to include retail properties, logistics, and now hospitality and health care properties,” he said. “One of the more successful aspects of Prime Minister Shinzo Abe’s economic plan is the big increase in tourism, which spurs investment in the retail and hotel sectors” Historically low interest rates and a favourable exchange rate mean Japan is attractive to foreign investors. “There’s a lot of cash flowing in from overseas,” said Tsuji, pointing out that last year 22 percent of investors for the real estate market were from outside Japan, mainly other Asian countries. Consequently, Diamond Realty is hosting a Japanese Breakfast event on March 15 at MIPIM. “We’ll have a panel discussion about the Japanese market,” says Tsuji. “And then we’ll show case studies of some of

DREAM’s president and CEO, Takashi Tsuji

our projects.” Tsuji also thinks that he can help Japanese investors who are interested in properties overseas. “Diversification: That’s the key word.”

Bringing new ideas to life This is the Edge At JLL, we combine thinking on new models of healthcare with expert financial advice and property knowledge to give our clients the edge in the healthcare sector.

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MIPIM MIPIM â&#x20AC;˘â&#x20AC;˘ Palais Palais Des Des Festivals Festivals--C14 C14 www.istanbulmipim.com #istanbulMipim #istanbulMipim www.istanbulmipim.com

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All All roads roads lead lead to to İstanbul İstanbul at at MIPIM MIPIM İstanbul, İstanbul,the theheart heartof ofthe theworld worldsince sincethe theancient ancient times timesisisnow nowat atthe theheart heartof ofthe thepremium premiumleague leagueof of MIPIM, MIPIM,thanks thanksto toİstanbul İstanbulChamber Chamberof ofCommerce… Commerce…

İbrahim İbrahim ÇAĞLAR ÇAĞLAR President President İstanbul İstanbul Chamber Chamber of of Commerce Commerce

İstanbul; İstanbul;the thecity cityat atthe theheart heartof ofthe theworld… world…This This unique uniquecity citythat thatmelts meltsthe theenergy energyof ofAsia Asiaexperience experience of ofEurope Europeand andpotential potentialof ofthe theMiddle MiddleEast, East,all allinin one onepot, pot,provides provideseasy easyaccess accessto to1.5 1.5billion billionpeople people and andaacombined combinedmarket marketof ofUSD USD24 24trillion, trillion,all allwithin within aafour-hour four-hourflight. flight.The Thelong longstanding standingcapital capitalof oftree tree different differentcivilizations civilizationsincluding includingthe theEast EastRoman Roman Empire Empirelives livesup upto toits itslegacy legacyas asthe theauthentic authenticowner owner of ofthe thesaying saying“All “Allroads roadslead leadto toRome” Rome”as asmaintains maintains its itsposition positionas asaahub hubfor for8500 8500years, years,uninterrupted. uninterrupted. Organically Organicallylive liveand andon on24/7, 24/7,the thecity cityhas hasan an awe aweinspiring inspiringcommercial commercialpotential potentialat atpar parwith withits its historical historicalsignificance. significance.Its ItsGDP GDPof ofUSD USD250 250billion billion surpasses surpassesthat thatof ofmany manycountries countrieswithin withinthe theEU. EU.Its Its unprecedented unprecedentedopportunities opportunitiesoffer offerinvestors investorsmuch much more morethan thanaalocal localcenter centerof ofoperation; operation;İstanbul İstanbulisisaa unique uniqueregional regionalhub hubfor fortourism, tourism,finance financeand andreal real estate. estate. The Theappeal appealof ofinvestments investmentsininreal realestate estatehas has particularly particularlygone gonebeyond beyondthe theborders bordersattracting attracting USD USD5.5 5.5billion billionof offoreign foreigncapital capitalper perannum. annum. AAlarge largepart partof ofthese thesereal realestate estateinvestments investmentsisis based basedininİstanbul. İstanbul.İstanbul İstanbulisisalso alsohome hometo tosome some landmark landmarkmega megaprojects: projects:the theUSD USD10 10billion billion“Kanal “Kanal İstanbul” İstanbul”connecting connectingSea Seaof ofMarmara Marmaraand andthe the

Black BlackSea, Sea,the thegigantic giganticthird thirdairport airportthat thatwill willbe be able ableto toaccommodate accommodate150 150million millionpassengers passengersand and “Marmaray”, “Marmaray”,the themodern modernday daysilk silkroad, road,isisonly onlyaa few fewof ofthe themany manysuch suchexamples. examples. The Thefascinating fascinatingcity’s city’sbusiness businessworld, world,represented representedby by İstanbul İstanbulChamber Chamberof ofCommerce, Commerce,works worksrelentlessly relentlessly with withthe thestrength strengthof ofits its400 400thousand thousandmembers membersand and the theexperience experiencethrough through134 134years yearsof ofoperation, operation,to to make makenew newopportunities opportunitiesof ofinvestment investmentpossible. possible. İstanbul İstanbulChamber Chamberof ofCommerce Commercewill willbe betaking taking İstanbul, İstanbul,the theheart heartof ofthe theworld, world,to tothe theheart heartof of MIPIM MIPIMthis thisyear. year.We Wewant wantto tomake makethe thesights sightsand and sounds soundsof ofİstanbul İstanbulcome comealive aliveininthe the600 600square square meters meters“İstanbul “İstanbulReal RealEstate EstatePromotion PromotionPavilion” Pavilion” and andthe the96 96square squaremeters meters“Living “Livingİstanbul İstanbulModel” Model” and andhighlight highlightthe theopportunities opportunitiesoffered offeredby bythis thisgreat great city cityfor forthe theattention attentionof ofthe the20,000 20,000real realestate estate professionals professionalsexpected expectedat atMIPIM. MIPIM.İstanbul İstanbulPavilion Pavilion will willalso alsobe behosting hostingvarious variousB2B B2Band andbilateral bilateral meetings meetingsduring duringthe theevent eventthat thatwill willpave pavethe theway wayfor for further furthercooperation. cooperation. İstanbul İstanbulChamber Chamberof ofCommerce, Commerce,inincooperation cooperation with withthe thePrime PrimeMinistry MinistryHousing HousingDevelopment Development Administration Administration(TOKİ), (TOKİ),the thepioneer pioneerof ofplanned planned urbanization urbanizationininTurkey, Turkey,and andthe the700 700strong strong delegations delegationsfrom fromthe thereal realestate estateindustry industryisisready readyto to leave leavethe themark markof ofİstanbul İstanbulat atMIPIM. MIPIM.

Turkey’s Turkey’s largest largest real real estate estate investment investment company company Real Real Estate Estate Residential Residential REIT, REIT, aims aims to to make make sales sales of of 11 11 thousand thousand independent independent sections sections in in its its projects projects in in 2016. 2016. Turkey’s Turkey’slargest largestreal realestate estateinvestment investmentcompany companyReal RealEstate Estate Residential ResidentialREIT REITcontinues continuesto tobuild buildthe themost mostinnovative innovativecities citiesof of this thisperiod periodand andwith withthe thesize sizeof ofwhich whichwill willgive giveits itsname nameto tothe the neighborhood neighborhoodwhere whereititis. is.Real RealEstate EstateResidential ResidentialREIT REIThas hasexecuted executed approximately approximately121.000 121.000independent independentsection’s section’stender tenderduring during1212year yearperiod periodsince since2003. 2003. Real RealEstate EstateResidential ResidentialREIT REITwhich whichisisabout about9.9 9.9million millionsquare square meters metersof ofland landininvalue valueof of3.5 3.5million millionpounds, pounds,undeveloped undevelopedthe the project projectinintheir theirportfolio portfoliohas hashigh highexpectations expectationsfor for2016. 2016. Real RealEstate EstateResidential ResidentialREIT REITgrowing growingwith withthe thepublic publicoffers offersfurther further strengthened strengthenedits itsplace placeamong amongTurkey’s Turkey’smost mostpowerful powerfulcompanies companies with with3.8 3.8billion billionpounds poundspaid-in paid-incapital. capital.Real RealEstate EstateResidential Residential REIT, REIT,targets targetsindependent independentsections sectionsexpected expectedthe thesales salesininits itsprojects projects ongoing ongoingand andintended intendedto todevelop developinin2016 2016will willreach reachaatotal totalsalable salable area areaof ofapproximately approximately1.5 1.5million millionsquare squaremeters metersand andtotal totalsales sales

value valueof ofall allthe theindependent independentsection sectionwill willbe beapproximately approximately7.6 7.6 billion. billion.Real RealEstate EstateResidential ResidentialREIT REITenvisages envisagesthat thatnet netprofit profitwould would be be1.5 1.5billion billionpounds. pounds. Real RealEstate EstateResidential ResidentialREIT REITwalks walkswith withpowerful powerfulstep stepto tothe thefuture futureas as of ofthe theincreasing increasingmomentum, momentum,people-oriented people-orientedcorporate corporatephilosophy philosophy and andits itsposition positionsince sinceits itsfoundation. foundation.ItItapproaches approachesaalittle littlebit bitday dayby by day dayto togoal goalof ofbecoming becomingaaglobal globalplayer playerto tobe beproudly proudlyreferred referredfor for this thiscountry. country.

Projects

The future

in 3D From city-centre regeneration schemes through luxury hotels to futuristic eco-cities — the depth and breadth of projects on display at MIPIM offer a snapshot of the future of the built environment. Here, we profile a selection of the schemes that will be generating interest in Cannes

CULTURAL HUB, Belfast, UK WITH a well established and growing cruise-liner business,

Belfast is poised to further strengthen its city-centre offer. Titanic Belfast already pulls in over half a million visitors a year. Now, the city wants more visitors to extend their stay and take in what the rest of the city has to offer. The Cultural Hub will fill this gap by showcasing the best of Belfast. It will tell the ‘Belfast story’ through visual arts, film and news media to provide a distinctive, powerful and unforgettable experience for residents and visitors. Due for completion in 2020, the Cultural Hub will sit between the new University of Ulster city-centre campus, the city’s creative district and City Hall. It will also complement Belfast’s North East Quarter, a new retail and leisure scheme featuring a new department store.

WATER CITY, Lisbon, Portugal WATER City will create a new downtown area south of Lisbon,

overlooking the Portuguese capital at Lisbon South Bay. The scheme is also situated close to the international airport and a 20 km beach. Promoted by Portuguese state-owned company Baia do Tejo, which manages business parks in the Lisbon and Oporto metropolitan areas, Water City’s approved masterplan includes residential, office/commercial, cultural, leisure and mixed-use space in a total of 630,000 sq m alongside a 2 km waterfront. The development comprises two main projects. The multitransport river terminal will cater for nine million passengers per year and serve a hinterland of 300,000 inhabitants. The terminal will connect travellers to Lisbon’s downtown area in a journey of about eight minutes. Lisbon South Marina, meanwhile, will exploit the infrastructure of a former shipyard and its location in a densely populated area, as well as views of Lisbon and natural conditions such as riverbed stability to create a successful marina.

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COME LEARN ABOUT TODAY'S JAPAN!

Events and Talks

Tuesday 15 March 12:00 OfďŹ cial opening ceremony 16:00 Japan real estate investment market Grow with Osaka Wednesday 16 March 11:30 Introduction to investment in Japan 15:00 Grow with Osaka 16:30 Time to focus on Tokyo Thursday 17 March 10:30 Future of Japan 11:30 Japan's tourism boom 15:00 Let's start business with Japan

http://japanatmipim.com info@japanatmipim.com

* Programs are subject to change.

MIPIM JAPAN - ASIA PACIFIC 2016

8-9 SEPTEMBER 2016

OSAKA

Projects Q22, Warsaw, Poland Q22 IS a 155 metre-high office building in the business centre of

Warsaw that will provide over 50,000 sq m of leasable office space. It is being developed by Echo Investment. While the ground floor provides a glazed lobby, office space is located on the second to 14th and 18th to 39th floors. Meanwhile, floors 14 to 17 are earmarked for special functions and will include a conference centre, fitness club and restaurant area. A 348-space underground car park is being constructed on five basement levels. The building will be modern and bright. It has also obtained a BREEAM interim Excellent sustainability rating, achieving a score of 79.1% — Poland’s highest mark in this category. Q22 has been designed by architectural studio Kuryłowicz & Associates in co-operation with Buro Happold Polska. Construction is scheduled for completion in the first quarter of 2016, and the project is valued at €115m.

JARDINS DE L’ARCHE, Paris, France THE JARDINS DE L’ARCHE neighbourhood, located at the foot of the

Grande Arche in Nanterre, is currently under construction. It will be home to a major social and entertainment hub, the 40,000seat Arena Nanterre La Défense, slated for delivery in late 2016. This new neighbourhood will feature 33,000 sq m of offices and the first residential developments in La Défense in 30 years (Skylight and One), as well as the creation of a campus for IESEG, a leading business school, and the construction of a 170-room CitizenM boutique hotel.

THE WINERY HOTEL, Solna, Stockholm, Sweden THE LAST plot along the E4 highway in Solna has been one of the

most problematic in Stockholm, with traffic noise and power lines among the obstacles to development. But legendary hotel director Ejnar Soder has come up with a creative solution. The concept for his latest boutique hotel includes an urban winery with influences from Brooklyn factories and Tuscan vineyards. It features brick materials for the facade and rustic materials inside, including polished concrete, spruce flooring, wrought iron and brick. The project has also been successful in speeding up the construction period. Much of the material is prefabricated, including the facade, bathrooms and interior walls. The Winery Hotel has been rated as Very Good by BREEAM-SE.

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Projects SKANSTES, Riga, Latvia SKANSTES is a rapidly developing new district in Riga, which has

been designated as a priority development area for the Latvian city. The district is multifunctional and comprises several office and residential buildings, the Olympic sports centre and the Arena Riga. Additional major projects are being developed, including residential, commercial and public buildings, as well as a tramline connecting the area to the city centre. ELL Real Estate plans to develop a modern business complex, including five class-A office buildings with a total gross area of 60,000 sq m and a six-floor parking garage for approximately 1,000 cars. Mixed-use public space will also be created. The first phase of development will be twin 11-storey office towers providing 30,000 sq m gross. ELL will launch the project during 2016.

THE WEDGE, Oslo, Norway THE BARCODE project is the largest urban development in Norway

and provides headquarters space for large, internationally oriented companies. Its final phase is the low-energy office building, The Wedge, aimed at small and innovative firms. The 12 storeys of The Wedge include retail at ground level, open office floors for coworking and a communal restaurant on the top floor. Both the building’s name and architecture are a product of the wedge-shaped plot on which it stands. It has a length of 70 metres but a width ranging from 4 metres to 10 metres. A columnfree interior will make The Wedge’s office space flexible and enable adaptation to suit the shifting needs of different tenants. Architect A-lab designed The Wedge and the developer is Oslo S Utvikling.

NEW SANTA CRUZ CITY, Santa Cruz, Bolivia NEW SANTA CRUZ city is the first ever mega new-city development

in South America. Designed by Bolivian real estate holding company Lafuente Business Group and Korea Land & Housing Corporation (LH), the 6,000 ha project will house 450,000 people in a futuristic human-centred smart city, where technology will ensure a better quality of life for all residents. The $2.5bn project aims to adopt the essence of modern urban planning theories and trends. Designed to be self-sustainable, it will show how a new city can address urban problems.

I-LAND MASTERPLAN, Moscow, Russia CHAPMAN Taylor has prepared a masterplan for a new 570,000

sq m garden city within Moscow. Designed on behalf of Leader Invest, the project is described as “a regeneration place-making project, aimed at a new generation of Moscovites looking for a contemporary living environment”. The plan envisages a mix of business space and residential apartments, as well as a kindergarten, school, medical centre and local retailing. Its landscaping will feature a boulevard and riverside promenades interacting with the river Moscow. An initial feasibility study has been completed and a detailed concept will follow.

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China becomes the largest foreign investor into the US Source: The fDi Report 2015

The fDi Report 2015, the annual assessment of global crossborder investment, is out now.

Download your complimentary copy

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HOUSING THE WORLD

Population growth, mass migration and the changing nature of the workplace and commerce are presenting unprecedented challenges to cities around the world. MIPIM 2016 will see a programme of debates looking for new solutions.

IN THIS SECTION: The evolving city

Density and Infrastructure 34 How do cities, regions and countries meet the needs of an increasing population? Responsible property investment 38 How does private development interact with wider social objectives?

Residential investment Return On Investment 42 What are the investment demands of different types: multifamily residential; luxury residential; affordable housing; student housing and what are investorsâ&#x20AC;&#x2122; preferred investment structures? Regional aspects 46 Where are the opportunities and what are the regional characteristics?

Building for the future Smart buildings 50 What are the characteristics of smart buildings? Can it be retrofitted to existing property stock? Architecture and placemaking 54 Top trends in architecture for the cities of tomorrow

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HOUSING

The evolving city

THE WORLD

DENSITY AND INFRASTRUCTURE

Upwards or outwards? The 21st century could be described as the Urban Age. For the first time, more than half of humanity lives in cities — and it’s a trend that’s gathering pace. So how are cities adapting to handle the sheer weight of numbers? Graham Parker reports

HE UNITED Nations (UN) estimates that May 23, 2007 was the day when the urban population exceeded 50% of the total global population, up from 34% in 1960. Since then, the proportion has grown to 54% and the UN expects this massive migration from the country to the city to continue. Indeed, it predicts that the urban population will grow by 1.84% per year between 2015 and 2020, 1.63% per year between 2020 and 2025, and 1.44% per year between 2025 and 2030. To accommodate all these new arrivals, cities can either spread outwards or they can become denser. And since the model of suburban sprawl that was so popular in the AngloSaxon world during the 20th century is largely dependent on the motor car and is therefore

seen as unsustainable, urbanists have latched on to densification as the preferable solution. Rosemary Feenan, director of global research at JLL, has led a major piece of research into the subject at the Urban Land Institute. She explains: “The efficient, effective and responsible use of land is a goal that would be a winwin for all cities, their businesses and their citizens. The key question, though, is how cities can achieve this while quickly absorbing the

“Good density will mark out the next generation of winning cities” Rosemary Feenan

significant increases in population that are flowing from the world’s continuing rapid urbanisation. Densification may be an obvious answer, but how to deliver successful densification is not so obvious and is one of the most important topics of this urban decade. Good density will mark out the next generation of winning cities.” There are already models of successful densification upon which to draw. Earle Arney, CEO and managing director at Melbourneand London-based architects Arney Fender Katsalidis, points out that Monaco houses 18,475 people per sq km, Singapore 7,620 people and Hong Kong 6,570 people — and all are seen as attractive places to live. But other places — Mexico City has 9,800 people per

Nine Elms on the south bank of the river in London

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THE WORLD sq km, for instance — seem to have achieved density at the expense of quality of life. “If London was built out to the same density as Paris, it could house 30 million people,” Arney notes. So what makes densification successful? Keith Griffiths, chairman of the Hong Kong-based global architectural practice Aedas, says the historic zoning system, with building plots or even entire districts allocated to a single use, has to go. “Density requires flexible buildings that can be adapted,” he says. “We need multi-use towers with hotels, apartments and restaurants in the same building.” And Griffiths sees this already happening in his main region: “China is already exploring much more flexible building frames. Shanghai and Beijing are already seeing more flexible,

“We’re very confident that growing vertically will end up being as common as growing horizontally” Temoor Ahmad

more dense schemes.” Temoor Ahmad, associate at Grimshaw Architects and UK representative on the Council on Tall Buildings and Urban Habitat (CTBUH), is convinced that building upwards is essential to meet the requirement for density in the future. “As designers, we have to address the issue of sprawl,” he says. And on behalf of CTBUH, Ahmed has come up with a novel concept that might achieve this aim: buildings that can grow upwards incrementally as demand for space increases. The

Arney Fender Katsalidis’ Earle Arney initial phase would have to be big enough to contain the infrastructure necessary to support later phases, but Ahmad is convinced further storeys could be added to buildings in response to demand without disrupting the existing occupiers. “We’re used to buildings sitting part-empty,” he says. “But why not build what you need at the time and, when the market demands more, build more?” This idea is beginning to gain traction, Ahmed says: “We’re very confident that growing vertically will end up being as common as growing horizontally.” But although urbanists and designers are advocating densification, nothing will happen until investors and occupiers buy into the concept and city leaders get behind it. From an investors’ point of view, densification has a lot to recommend it, according to Graham Parry, group research director at Grosvenor. And he sees two trends driving this change. “Technology is enabling higher density with smart grids, driverless cars and so on,” he says. But the more powerful force

is social change, Parry believes, with a new generation emerging with different expectations. “There is growing competition for global talent in the knowledge-based economy,” he adds. “The creative class are the innovators and the places that attract them — vibrant places that can offer work/life balance — are the ones that are outperforming.” But are city leaders yet able to deliver these flexible multi-use buildings that urbanists describe? An emerging new district in London implies that they are. Nine Elms is a former industrial district stretching for 3 km along the south bank of the Thames from Vauxhall to Battersea. Now it is being redeveloped with 20,000 new homes, 600,000 sq m of new business space and several landmark buildings. These include the refurbished Battersea Power Station, which will become a retail and cultural destination; the new US embassy and a new building for the Covent Garden wholesale market. The project is so big that it straddles two of L ondon’s boroughs, Lambeth and Wandsworth. Ravi Govindia, leader of Wandsworth Council, is co-chair of the joint body set up to oversee the Nine Elms project. He believes that, without density, it would not work. “Nine Elms could only be delivered if we had massive investment in hard and soft infrastructure,” he says, pointing to the £1bn cost of the new London Underground line serving Nine Elms and the huge sums necessary to rebuild the derelict Battersea Power Station. “To make these finances work you had to have quantum — it’s a chicken-and-egg thing.” CONFERENCES & EVENTS AT MIPIM URBAN POLICY & HOUSING: COLLABORATING FOR LIVEABLE CITIES

Thursday 17 March – 16.00 - 17.00 Ruby Room, Palais 5

Singapore, a city with a current density of 7,620 people per sq km

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The Enterprise office center – a recently constructed new landmark in Prague’s most prominent business district Praha 4 – Pankrác. The attractive modern architectural design by Architect Vladimír Krátký emphasizes the landmark position of the new building and upgrades the urban structure of the location.

gy consumption and thus provide for very low operating costs. Enterprise’s prominent location in a developed business district offers a complete infrastructure including all civic amenities and excellent public transport connections – the Pankrác Metro station is just 100m away. Enterprise is also perfectly accessible by cars directly from the trunk road at the start of the D1 Motorway.

The Enterprise office center provides 30,000 m2 of modern A+ office space meeting the highest quality standards as well as 400 underground parking spaces and a generous floor plate size of up to 3,000 m2. The developer, Erste Group Immorent, takes care of high user standards providing flexible and effective room space for tenants with a 3m clear height throughout the whole floor. Triple glazed windows with openable ventilation wings provide an excellent daily illumination standard and thermal comfort for the occupiers. The BREEAM EXCELLENT certificate has confirmed the highest sustainability and top environmental solutions. External sunblinds and the extraordinary thermal insulation standards of the building shell minimize ener-

Enterprise office center has become the new headquarters of AVAST – the worldwide No. 1 free antivirus provider – which has leased 15,000 m2. As confirmed by Tomáš Velemínský, head of Project Development Division of Erste Group Immorent, the full occupancy of the project based on current negotiations with other tenants, will be reached during the next few months.

developed by

www.enterprise-prague.cz

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Doing good while

doing well COP21 amplified the message that buildings are one of the major culprits of climate change. Paul Strohm discovers a growing realisation that responsible property investment is not just corporate brand speak but a shrewd business decision

N EARLY December 2015 the real estate sector took its place on the world stage at the COP21 summit in Paris, joining what looked like the world’s last-ditch attempt to restrict global warming to just two degrees Celsius. The statistic that more than 30% of global greenhouse gas emissions are building related has registered more widely now. There also appears to be an acceptance that “responsible property investment” is more than just part of the corporate branding armoury. Day four of COP21 was designated Buildings Day, which served to emphasise the significance of the part that property must play in reversing climate change. Hence the launch in Paris of the Global Alliance for Buildings and Construction, whose aim is to scale up low-carbon development in the built environment. Sixteen companies pledged to develop nearly zero energy buildings (nZEB), setting target dates of 2020 for newly built space and 2030 for refurbished quarters. Notably, only some of these companies are real-estate businesses. While their roll call numbers British

Land, Hammerson, JLL, Land Securities and Skanska, non-property companies taking the pledge include energy business Acciona, Ferrovial, Doosan, Gla xoSmithK line, Kingfisher, Philips, and Sky. Paris-headquartered AXA group was a sponsor of COP21 and fielded a number of speakers at ancillary events. AXA Investment Management Real Assets’ Ralph Wood says: “We rebranded everything about three years ago. Up until then, it was all talking the talk and developing mission statements.” Woods says it is now time to “walk the walk”. Altruism and the need to save the planet are considerable motives for paying greater attention to all aspects of corporate social responsibility (CSR) and responsible investment, but they can be good for business too. AXA’s global head of asset management and transactions, Anne Kavanagh, says that a building’s green credentials may not increase the rent or reduce the cap rate, but they can reduce leasing risk. “If you look at most corporate occupiers, an increasing number are very focused on

sustainability,” she says. “It’s a key part of their search when they report back to boards about the buildings they propose to take.” The scope of responsible investment is broader than energy use and CO2 emissions. Paris-headquartered property investment manager AEW Europe has a system for taking other issues into account, including wellbeing. This encompasses a range of factors, some measurable, some less so, such as the distances people working in a particular building have to walk to access public transport, the health of occupants, biodiversity and access for disabled people. “Social issues overlap green issues quite a lot. For example, leisure facilities, cycle parks and other amenities provide both social benefits as well as having a positive environmental impact. When undertaking investments, we increasingly take these into account,” says AEW sustainable manager Thierry Laquitaine. M&G Real Estate also looks hard at welfare issues. “For us, quite a key component of what we do in terms of responsible investment is around tenant engagement,” says Nina Reid, M&G Real Estate’s director of responsible property investment. Reid explains that this is a case of understanding whether tenants are happy with the service provided by looking at less easily measured factors, such as the health and wellbeing of occupiers. This is a “tricky and emerging area”, Reid acknowledges. She says the question is: “What can you, as landlord, take responsibility for through

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“If you are having to comply with legislation, that’s quite a powerful driver. With social issues, it becomes a little bit more difficult — whatever you can measure you can tackle” Ursula Hartenberger good building design? A basic part of a responsible investment programme is getting feedback from stakeholders. It gives quite a good insight into how we can better manage our properties. There is an overlap in that regard.” But while there is more to corporate social responsibility and to responsible investment than saving energy and reducing CO2, those retain the higher profile. “The sector is more in its comfort zone with environmental measures,” says Ursula Hartenberger, global head of sustainability for RICS (Royal Institution of Chartered Surveyors). The growing body of environmental laws and regulations also help to ensure that the business is paying attention. “If you are having to comply with legislation, that’s quite a powerful driver,” Hartenberger adds. “With social issues, it becomes a little bit more difficult — whatever you can measure you can tackle.” Germany-headquartered Union Investment Real Estate’s head of sustainability Jan von

Mallinckrodt agrees that sustainability has economic, social and environmental dimensions. “Only when these three are all in place does the building have ‘sustainability’,” Von Mallinckrodt says. Union Investment Real Estate has a sustainable management system that takes into consideration these three aspects and is used to monitor all the buildings in its portfolio. The system also forms part of due diligence when a potential new acquisition is being assessed. Every building in the portfolio is reassessed each year using the system to “ensure that buildings are developed to their full potential”, Von Mallinckrodt adds. Existing and older assets provide the real obstacles for responsible investors who need to obtain an adequate return on investment following an upgrade to current standards. New buildings may receive accolades for the triumphs in energy saving that architects and engineers now regularly achieve. These are the low hanging fruit. “The challenge is always ‘the rest’,” AXA’s Kavanagh points out. “At the moment we have got 70 projects on with an end value of over €10bn,” she adds. “That is an area where we can make sure we are taking a responsible approach. The challenge is looking at rest of portfolio.” T he widespread adoption of L EED, BREEAM and other building-energy and sustainability rating systems is testament that property investors, developers and

The interior of AEW’s Le 23 Roosevelt owner-occupiers are increasingly in tune with the need for responsible energy use. AXA is setting targets with a long-stop date of 2030, by which time it expects to have 75% of its assets under management certified using rating schemes such as BREEAM or LEED. Von Mallinckrodt says Union relies substantially on its sustainable management system and certifies buildings selectively. “We won’t ‘greenwash’ the portfolio,” he says. “We do it when there is a benefit.” Improving portfolios will remain a challenge, but at least there is scope for change. AXA’s Wood points out that one of the advantages of property is that it provides an opportunity to actively manage assets that is not available with equities and bonds. “Real estate is the one asset class where active management really does make a difference,” he adds. CONFERENCES & EVENTS AT MIPIM

ACHIEVING <2 DEGREES CELSIUS: HOW CAN THE REAL ESTATE INDUSTRY RESPOND TO MEET NEW CLIMATE CHANGE PLEDGES?

Thursday 17 March – 14.30 - 15.30 Blue Room, Palais 3

AEW’s Thierry Laquitaine

“Social issues overlap green issues quite a lot. When undertaking investments, we increasingly take these into account” Thierry Laquitaine

The public area outside mixed-use development Central Square, in UK city Leeds

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Residential investment

RETURN ON INVESTMENT

A good home run

Bath in the south west of the UK is using residential development to drive its waterside regeneration

The residential property market continues to grow, with massive sums now moving into well-configured apartment blocks and student accommodation. Steve Killick reports

ANY working in the commercial property sector must be shaking their heads in disbelief. During the last three decades of the 20th century, investment in commercial property was where the big beasts of the jungle hung out. Huge deals in the retail and office markets were what made the headlines. How times have changed. Today, no self respecting investment company fails to consider opportunities in the residential sector. With migration continuing into the major centres of Western Europe, skilled, youthful workers are looking for places to rent because of sky-high sales prices. This is creating opportunities for funds to invest and run secure, well-maintained property capable of delivering yields that the commercial sector cannot match. “The change in the attitude to residential investment is because only relatively

recently has the asset class reached a high enough standard,” says Adam Challis, head of JLL’s residential research team. “And that is mainly about construction levels.” Challis points to the well-configured, 120-150 apartment developments in venues such as London, Vienna, Berlin and Helsinki that have attracted tenants looking for high-quality amenities and who are prepared to pay a premium

“The change in the attitude to residential investment is because only relatively recently has the asset class reached a high enough standard” Adam Challis

rent. “These occupiers want to make the place their home,” Challis adds, “‘not treat it like a stepping stone before moving on to somewhere better. This is how the market has matured and why the institutions have got involved.” Alex Greaves, head of M&G Real Estate’s residential investment team, has just tied up a £25m deal in the centre of Bath in western England to create 97 new private rental homes fronting the River Avon. This forms part of a wider deal to regenerate the city’s riverside area. M&G will be partnering institutional house builder and developer Crest Nicholson in what is believed to be the first transaction of its kind. Greaves says: “The attraction in the residential sector is that there is less volatility than in the commercial market and the demand for quality stock to the supply side is absolutely compelling. It’s vital that we continue to champion quality. We hope that the involvement of

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HOUSING

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Residential investment

institutions like ours will lead to more homes coming on tap and higher standards.” Shortage of quality stock is not just a problem to be found in the UK. In a report recently released by the German-based fund Patrizia, Marcus Cieleback, group head of research and group executive director, says: “Overcoming the housing shortage in the urban centres of Europe is currently one of the greatest challenges on European residential markets.” The report says that, while construction volume has been rising steadily in Denmark and Sweden since 2013, the number of new homes available in Italy, Spain and Ireland has dropped by a staggering 80% on the 2000 volume. The performance of residential markets also varies greatly from country to country. Cieleback notes that, since the turn of the millennium, the UK and Sweden have posted the highest annual total returns at 12% and 10% per year respectively, driven by very strong performance. At 5%-7%, the total return in Germany, Austria and the Netherlands was almost half that level, although Patrizia still pulled off one of the year’s biggest deals in Germany when it sold a portfolio of 13,500 apartments to property company Deutsche Wohnen for around €1.2bn. The majority of the units are in Berlin, Kiel, Cologne/ Dusseldorf, Munich, Hamburg and Frankfurt. While the UK is showing the highest returns in residential investments, it is also leading the way in the increasingly competitive sector of student accommodation. Agency Savills has reported that total investment volumes in the UK student-housing market reached record levels in the first three quarters of 2015,

Student accomodation is a booming sector, especially in the UK

Savills’ Yolande Barnes

“The student housing market has come of age. Record levels of institutional investor activity are testament to its global potential” Yolande Barnes

exceeding US investment volumes for the first time. Focusing on big-ticket deals of €7.5 million-plus and excluding land sales, the UK saw investment of €6bn, compared to just over €2.5bn in the US. Savills’ World Student Housing report states that the UK record has been driven by foreign investment, led by North America, which was

the source of 80% of all cross-border deals in the 12 months to September 2015. Significantly, all the top global student investment deals in 2015 have been into the UK, led by the Canada Pension Plan Investment Board’s purchase of the Liberty Living portfolio for £1.1bn (€1.45bn) and Greystar/PSP’s purchase of the Nido London portfolio for £600m. Yolande Barnes, Savills’ director of world research, says: “The student housing market has come of age and is no longer a specialist or alternative investment class. Record levels of institutional investor activity are testament to its global potential as a mainstream real estate asset and we now anticipate that it will become increasingly well-established in a variety of countries.” After the UK, Barnes cites the Netherlands, with its English-language education offer, emerging as a highly attractive proposition. “The Netherlands has seen average annual investment of $200m in the last three years, the majority of which has come from private domestic capital, but foreign investment is growing,” she says. Marcus Roberts, director of student investment and development at Savills, adds: “This is the first time the UK has outpaced the US in student housing investment, which is quite remarkable given their disparate sizes. North American, Middle Eastern and Russian investors have led the charge into the UK. We expect continued global competition for stock, combined with limited opportunities, to lead to further yield compression in the near term. But with the UK remaining the second most popular destination for international students, top-tier university cities with low supply, such as London, Bristol and Edinburgh, still offer potential.” There are currently 539,200 purposebuilt bed spaces in the UK, according to agency Cushman & Wakefield’s Student Accommodation Tracker — an increase of 19,400 on the previous year. Studio bed spaces have proved especially popular, up 41% on 2014. Mike Mitchell, a senior investment director in Cushman & Wakefield’s education team, says: “This has been a ground breaking year for the UK student accommodation sector. It is thriving, with liquidity driving investment volumes higher than ever before.” CONFERENCES & EVENTS AT MIPIM

STUDENT HOUSING: A NICHE WITH GROWTH POTENTIAL

Thursday 15 March – 14.30 -15.30

RESIDENTIAL INVESTMENT PORTFOLIO: THE BEST IS YET TO COME

Thursday 17 March – 16.00 - 17.00 Orange Room, Palais -1

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Residential investment

RESIDENTIAL HOTSPOTS

Europe’s residential

front-runners How the residential property market is performing depends on where you look and what you want to spend. But for those European cities willing and able to meet changing market demand, the future looks bright, writes Steve Killick

O WHAT’s the property market doing? There is still no easy answer to the question asked by hapless journalists trying to extract pearls of wisdom from industry insiders. The problem is that there are so many different markets and each one has a different story to tell. So in the interests of brevity, let’s consider a few global hotspots, where the prime residential market has reacted robustly to the vagaries of the economic downturn, the weakening or strengthening of currencies and some of the key drivers. Yolande Barnes, director of world research at Savills, has no diffi culty in pointing out the number-one market when it comes to prime property. “London stands out as the world leader and is different from every other city,” she says. Given that back in the 1980s, the UK capital was suffering from a double whammy of depopulation and the perception that it was not a fashionable place to be, its rise has been stratospheric — and even more so when seen against a backdrop of severe recession in the early 1990s and, again, in 2008 through 2009. “London has now reached a high plateau,” Barnes says. “The reform of stamp duty has most defi nitely acted as a brake, as has a strengthening pound, which has squeezed some potential overseas buyers.” Nevertheless, 70% of the UK’s homes worth over $1.5m are still to be found in London, despite forming only 8% of all households in the capital. “In terms of being a magnet for high-networth international figures, London remains very much the place to be,” Barnes adds. “However, the important trend to look for now is a shift from old prime areas to new

prime as the source of London’s wealth shifts from the baby boomers in financial services to the millennial generation in tech.” The digital revolution has spawned a whole new generation of technology workers post the credit crunch, many of whom are young, affluent and moving to those cities across the globe where their work is best rewarded. In London, this has resulted in the emergence of new prime markets at the eastern fringes, in locations such as Bermondsey, Surrey Docks and the Greenwich peninsula. Identifying hotspots on mainland Europe is more awkward, albeit not as hard as some of the more sensationalist reports would suggest. However, there is most definitely a multi-speed market where some centres have performed considerably better than others.

Paris has not done well — fi nancial institutions are concerned about the situation under French president Francois Hollande — but both Madrid and Dublin have performed strongly. Agency Knight Frank in its Madrid Prime Residential annual report says the shortage of newly built grade-A stock has been one of the key reasons, with virtually no newly built property coming on to the market. Over $7.67m worth of top-end accommodation was on the market in 2014. That had dropped to below $5.48m by the end of the third quarter, resulting in a 5.2% increase in prime prices. Madrid also outperformed London over the course of the year in the process. The Madrid market is still dominated by wealthy locals, with 70% of this year’s sales being to Spaniards. The bulk of the remainder has gone to Latin American buyers, who focus on Madrid for investments or second homes. Last year also proved to be a pretty good one for the Republic of Ireland, which has suffered a roller coaster ride over the last few years. Forecasts at press time were predicting that the country could well be the strongest performer in the eurozone. A devalued euro has most certainly helped expand the Irish economy. The volume of sales across the board in Dublin rose by 24%, accounting for almost a third of all the property transactions in the Republic. However, at the top end there are fears that the market is again becoming slightly overheated, with a greater availability of homes coming on to the market in the $870,000 to $1.3m range. A quick round-up of the residential scene elsewhere in Europe shows that a declining and

One reason Madrid is identified as a hotspot is a shortage of newly built grade-A stock

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“Living near facilities in vibrant urban areas will be more important than the size of the property”

HOUSING TENURE

IN EUROPE

Justin de Gier

ageing population has hit wealthy Swiss centres, Geneva and Zurich, and a number of the more affluent German cities, with the exception of Berlin. However, Germany is still looking a good deal more robust than Portugal. Demographic changes have also affected the Dutch housing market, with an increasing number of buyers looking for one- and two-bedroom properties rather than family homes. Similarly, a decreasing reliance on the car among the young is also leading to changes in the configuration on new developments. Justin de Gier, partner of capital markets in Cushman & Wakefield’s Amsterdam office, says: “Living near facilities in vibrant urban areas will be more important than the size of the property. As a result, new developments and transformational projects in urban areas have a significant potential to focus on relatively small premises.” While Savills’ Barnes expects the next wave of dynamic activity to occur in the US on the back of the digital revolution, over the last 10 years Europe’s residential sector has comfortably outperformed commercial. Capital values are higher now than they were before 2007 and the start of the worst recession since the 1920s. Moreover, an annual capital growth of 2.4% per annum has been achieved over the last decade. The future for the residential market at the top end is clear. The focus of activity will be urban based with easy access to business clusters, particularly those active in the high-tech markets. Good quality transport facilities providing ease of access to airports in an everburgeoning global economy are also crucial. Wealthy purchasers will increasingly look to acquire statement property in the world’s leading centres, while enjoying the fi nancial comfort of being far better placed to avoid the trials of recession. For those cities capable of responding speedily to demand through streamlined planning procedures and able to deliver top-notch accommodation, the future looks bright.

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37,7%

27,1%

17,1%

18,1%

IRELAND

34,8%

33,8%

16,1%

15,4%

FRANCE

31,3%

33,6%

19,3%

15,7%

SPAIN PORTUGAL

35,5%

39,4%

32,1%

12,4%

46,7%

12,1%

12,7%

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FINLAND

43% 30%

10,9%

16%

SWEDEN

61,3%

7,9%

30,4%

0,4%

DENMARK

49,5%

13,8%

36,6%

0,1%

NETHERLANDS

59,2%

7,7%

32,6%

POLAND 0,4%

GERMANY

26,6%

BELGIUM

42,9%

29,1%

10,8%

25,8%

39,6%

72,7%

4,3% 12,3%

Distribution of population by tenure status, 2014 (% of population)

19,3%

Source: Eurostat 2014 TENANT

OWNER

8,7%

LOAN

OUTRIGHT

MARKET RENT

SUBSIDISED RENT

ITALY 17,3%

55,8%

14,3%

12,6%

BULGARIA

2,7%

81,5%

2,6%

13,2%

GREECE

13,3%

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60,7% 20%

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HOUSING

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Building for the future

The Edge in Amsterdam

SMART BUILDINGS

Smart ideas “Smart” is now applied to many everyday items, including phones, cars, cards, objective-setting, electricity meters and IT systems. But when the word is attached to an entire building, what does it mean and what are the implications? Peter Clucas finds out

T THE headquarters of a major French car manufacturer, the external motorised blinds have been programmed to respond to the degree of sunlight falling on the windows. The aim is to reduce solar gain and save on air conditioning, while letting in the sun on cold days to save on heating. But on a windy, bright day, the blinds are almost constantly on the move, noisily whirring up and down as they try to keep up with the conditions. Occupiers say it takes about a month to get used to it and after that they don’t notice. A good effort but hardly “smart”. The Edge in Amsterdam, meanwhile, has been hailed by Bloomberg as the world’s smartest building and it could well deserve

this accolade. It is partly occupied by management consultants Deloitte and was created by Dutch developer OVG, which also now occupies the building. It achieved the highest possible environmental BREEAM rating — Outstanding — with a score of over 98%. But what makes The Edge truly smart? Its environmental credentials have been achieved with solar and geothermal power, rainwater recycling, exemplary thermal performance and low energy lighting. But these features are to be found in many modern buildings throughout the world. Here in Amsterdam, smart is also about how occupiers interact with a building. The Edge gets to know each member of staff, understanding and remembering how and

where they like to work and even their preferences when it comes to refreshments. From the moment they drive their (preferably electric) cars into the car park, employees are hooked up to the building via an app on their smartphones. The app records and controls each person’s preferences, such as lighting levels, food options and work spaces — and the building remembers the selections made. Total flexibility means that workers only book workplaces when needed. The result of this is 200% occupancy — a building with 1,250 workspaces is home to 2,500, making huge real estate savings. The Edge was originally designed before the global downturn. Development of the

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THE WORLD

Building for the future

“Two thousand six hundred of the building’s low-voltage LED light fittings are powered by the ethernet. Each one senses lighting levels, temperature, movement, humidity and CO2” Ron Bakker proposed building was put on hold when the recession hit. When it was resurrected in 2010, PLP Architecture took on a redesign. To make it viable in the new economic environment, it needed to be more energy efficient and, with Deloitte as the main occupier, it was also to be a showpiece in smart-building technology. Deloitte is, after all, an advisor on such new ways of working and how to transition into the digital age. PLP founding partner Ron Bakker explains: “These guys [Deloitte] are competing with each other for talent and the idea that the building itself would be a substantial part of what they would offer staff was something that began to live in their minds.” Bakker describes how The Edge works: “Two thousand six hundred of the building’s lowvoltage LED light fittings [50%] are powered by the ethernet. Each one senses lighting levels, temperature, movement, humidity and CO2.” This enables the building management system not only to optimise the air quality, but also to determine which areas of the building have been used the most intensively and therefore where it is most in need of cleaning. So the cleaners can see immediately on their iPads where they need to go to work on the heavily trafficked areas. On Wednesdays, Amsterdam’s schools are closed in the afternoon, so many people take the day off. The building automatically closes a wing down on Wednesdays, reducing heating and maintenance costs. Only with a totally flexible workspace can this be achieved. “The evolution [of the smart systems] hasn’t stopped,” Bakker says. “New things are always being developed.” For example, the system knows where each employee lives and whether they are in the building. It will advise each staff member whether it is a good time to leave for home, taking into consideration the hours they have already worked and the traffic conditions

London’s 7 Air Street holds a BREEAM Outstanding rating

The atrium of Amsterdam’s The Edge — notoriously bad around Amsterdam. “Sometimes leaving it 30 minutes might save time in the long run,” Bakker adds. The Edge’s smart systems were born out of the necessity to create a viable scheme that would be appropriate for its major occupier, Deloitte. In contrast 7 Air Street, just off London’s Regent Street, was refurbished speculatively — a decision that has subsequently been vindicated by a letting to international consulting and professional services firm, Eden McCallum. The building is listed as being of historic significance, so all the alterations were subject to close scrutiny. Despite these restrictions, 7 Air Street has achieved a BREEAM Outstanding rating. It is the UK’s fi rst listed building to reach this target and widely recognised as the country’s most sustainable historic building. The 4,275-sq m office refurbishment forms part of The Crown Estate’s £1bn investment in its Regent Street portfolio. Following the

“We’re committed to running a highly sustainable business and 7 Air Street fits perfectly with that ambition” Liann Eden

announcement that Eden McCallum was to take space in the building, Hayley Turley, asset manager for The Crown Estate’s Regent Street portfolio, says: “This letting demonstrates the value that leading businesses place on great quality office headquarters where there is also an innovative approach to things like carbon reduction, energy efficiency and biodiversity.” Eden McCallum founding partner Liann Eden confi rms this view. “We’re committed to running a highly sustainable business and 7 Air Street fits perfectly with that ambition,” she says. “The scheme will ensure our staff and clients benefit from high-quality modern offices, as well as the transport links and many amenities, shops and restaurants that make this part of London a great place to do business.” Most noticeable about the refurbishment is the ecological roof incorporating flowers, vegetation, grasses and habitats for insects, birds and bats. This is part of The Crown Estate’s ecology masterplan, which will result in the delivery of a hectare of new green space across its West End portfolio in Central London. The building also features a central energy centre, powered by cutting-edge fuel-cell technology, which saves around 350 tonnes of carbon-dioxide emissions each year while providing power for commercial and residential accommodation on Regent Street, including the world-famous Hotel Cafe Royal. These two exemplary projects demonstrate high levels of “smartness” in a new building and a complex refurbishment. The extension of smart technology to other areas will continue apace, held back only, perhaps, by the desire for staff to keep at least some of their lives private.

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HOUSING

THE WORLD

Building for the future

ARCHITECTURE AND PLACEMAKING

Creating cities fit for the future

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Regent Street in London

With economies picking up globally, what are architects and planners doing to think beyond their individual commissions and take a wider view of the urban environments they are creating? Peter Clucas reports

ITIES are growing at an inexorable rate. So fast is the growth that it can be measured in “population expansion per hour”, according to the LSE Cities’ Urban Age programme. Berlin comes in at a modest one person per hour, London at nine and New York at 10. In contrast, New Delhi comes in at 79 and Lagos, which does not even have the status of a capital city, at 85. In the development of cities four trends occupy the minds of governments, developers and citizens: connectivity (putting in place the right information technology); mobility (ensuring the transport infrastructure can cope); sustainability (ensuring cities are green); and community (involving people in policymaking and in their cities).

This year saw Google launch its Sidewalk Labs initiative, which aims to “improve life in cities for everyone through the application of technology to solve urban problems”. Naturally, Google is focusing on technological solutions. With Dan Doctoroff, the former CEO of Bloomberg and deputy mayor of economic development and rebuilding for the City of New York at its helm, it has the right credentials. A nother corporate giant, Toyota, has launched the Connected Mobility Initiative in association with the New Cities Foundation “to address the critical need for metropolises worldwide to enable the efficient and viable movement of people”. A spokesperson for The New Cities Foundation says: “Urban mobility is evolving rapidly in a world where

one million people move to cities every week. Change is also being driven by other factors, such as technological innovations, increased constraints on energy use, deep changes in the structure of urban economies, shifting lifestyles and new ideas about urban design.” As long ago as 1994 the Aalborg Charter on sustainability was ratified. It noted: “We have learnt that present levels of resource consumption in the industrialised countries cannot be achieved by all people currently living, much less by future generations, without destroying the natural capital.” Back in 1994, sustainability was only just coming into sight. Now, 21 years later, sustainability is high on the agenda for cities.

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HOUSING

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Building for the future “Like trees, cities grow organically, influenced by internal and external factors. These influences are not only rules and policies, but also culture, economy, trends, money and density” Yui Fan Law

Lagos, the world’s fastest-growing city, is masterplanning for new growth The European Green Capital initiative has gathered pace. George Ferguson, mayor of Bristol — European Green Capital 2015 — shared a stage with French president Francois Hollande at the recent United Nations COP21 climate change summit in Paris. Such is the importance now placed on the environment. But is the future all about electronic connectivity, transport and sustainability? For sure, this might help cites run better, but how they feel will be up to architects, planners and the local authorities that are responsible for them. Yui Fan Law is responsible for the Hong Kong office of Bogle Architects. “Cities are formed by buildings and the spaces between them,” he says. “Just like trees, they grow organically, influenced by internal and external factors. These influences are not necessarily only the rules and policies defined by government, but also culture, economy, trends, money and density.” Yui adds: “If the city is a tree, the infrastructure are the branches, buildings are foliage, and architectural gems are fruits and flowers.” He notes that cities have different influences and different meanings: “The key is to balance, take pride and do what’s right.” The Smart Cities initiative in India aims to improve people’s quality of life by enabling localarea development and harnessing technology

— “especially technology that leads to smart outcomes”. The defi nition of smart depends on the individual city. Kruti Desai, associate director at planning consultants Terence O’Rourke, is looking to expand the firm’s work into international projects, particularly through the Smart Cities initiative. “We take socio-economic, cultural and environmental harmony as a guiding tool and, therefore, offer a suitable skill set to design new future-oriented cities,” she says. “The process of city design is facing the increasing challenge of providing high-quality urban life for the growing urban population worldwide.” Desai says she follows the Cambridgeshire Quality Charter for Growth’s four Cs – Community, Connectivity, Character and Climate — when working on urban development projects. “In my experience, these important aspects are key to achieving socially and culturally cohesive design solutions,” she adds. This cultural cohesion is key. At the New Cities Foundation, architect Norman Foster notes that China has a “tremendous sense of civic pride”. Commenting on the speed at which his practice’s Beijing airport project has been delivered in comparison with the endless delays over decisions on London’s airport expansion, he says that development of cities is not all about money, but rather about attitude. So where does this lead us? Back to technology.

Vehicles like Toyota’s I-Road will change the shape of cities

“We take socio-economic, cultural and environmental harmony as a guiding tool” Kruti Desai Social media means that people are quick to share their thoughts, good or bad, about what is going on in their city. Oddly, the majority of public consultation is via public meetings and on websites. This would appear to exclude the young citizens of our future cities from participating in the development of the very places of which they will be a part. CONFERENCES & EVENTS AT MIPIM

HOW TO CREATE VALUE IN ARCHITECTURE BY ART AND DESIGN? REAL CASES!

Wednesday 16 March – 11.30 - 12.30 Green Room, Innovation Forum, Hall 1

INNOVATION DISTRICTS: A NEW URBAN DEVELOPMENT MODEL EMERGING IN THE UNITED STATES

Wednesday 16 March – 16.00-18.00 Ruby Room, Palais 5

LITTLE THINGS MEAN A LOT JOHN Rushton, chairman of placemaking design consultants Small Back Room, believes it is the little things that make the biggest difference to cities. “How people find their way around greatly influences how they feel about their visit,” he says. “We can see immediately when a city is genuinely proud of what it has to offer. Clear, unambiguous signs are a good start, but even that takes skill. When good wayfinding is combined with great branding, things really start to sizzle. Our work with the Crown Estate on the Regent Street area [of London] has really helped bring back a sense of place and identity to this world famous destination.”

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The Hong Kong Observation wheel. A Dutch Wheels giant wheel , in operation since December 2014

iant wheels continue to be a popular attraction, offering joy and excitement to its passengers while at the same time being a very good business opportunity for its owners. Ferris wheels were originally associated with carnival, travelling fairground or attraction parks. With the famous London Eye, a change has been initiated for the giant wheel business and a giant wheel is now more and more considered a standalone attraction. Dutch Wheels has recognized this trend and developed a portfolio of products to suit a wide range of specific business opportunities.

of all ages and backgrounds an experience they are unlikely to forget. “Turning the wheel into a destination” is key to make it a success. Additional amenities will make visitors “hang around”, spend more money and attract more people. A wheel should be integrated in its environment so local authorities support the project, instead of opposing it reasoning that they do not want to turn their city into an attraction park! In order to achieve this potential, it is important to understand why “turning the wheel into a destination” is critical. A wheel should not be seen as just an attraction in which people can turn rounds and enjoy the view. Offering additional amenities that will make people “hang around,” spend more money and attract even more people. Ensuring the wheel project integrates in its environment will also help local authorities to support a project. The integration of a wheel in a

Asiatique the Riverfront, Bangkok, Thailand

Our mission is to create awareness with local entrepreneurs, real estate project developers, urban designers and local (tourism) authorities, of the enormous potential a giant wheel has to offer. The potential to attract tourists, the potential to generate an impressive return on investment, or the potential to offer people

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mixed use or leisure development, creates a synergy that will benefit both the wheel operator and the real estate development A good example is the National Harbor, mixed use development in Washington DC. The project itself opened in 2008 and

SkyWheel Myrtle Beach, Myrtle Beach SC, USA

the giant wheel in 2014. We understand that the wheel significantly and positively impacted the visitor numbers of the development and as such is doing extremely well as an investment itself. Another interesting example is the SkyWheel in Myrtle Beach, SC, situated on the boardwalk, overlooking the ocean. This wheel is part of a small development including a restaurant, a surf shop and a merchandising area making this an interesting and fun destination. In case you are interested to discuss what a giant wheel can do for your project, city, or capital, do not hesitate to contact Dutch Wheels or visit our stand No. P-1. L67

Office trends

Goodbye office, hello workspace

Offices aren’t what they used to be. From the Factory Berlin start-up campus to the WeWork offices on Broadway in Manhattan, the space we work in is changing — so is the way we work. Ben Cooper reports

NEW generation of graduates, entrepreneurs and businesses is rethinking its approach to work. Everything from the type of lease occupiers want, the type of space they need — even the neighbours they share it with — all are factors that landlords need to consider in 2016. But ultra-modern tech companies move very fast and property isn’t always as flexible. So is global real estate ready to talk about the next generation? With the waves of job losses that swept through every economy in the West, competition for positions was fierce and graduates faced a harsh reality from the moment they finished their studies. And as always, tough times led to new, pragmatic, enterprising ways round the problems — not least because the downturn happened to come amid the birth of a new era for workplace technology and human communications. There was too much

change in the air for the entrepreneur to be kept down by wider economic problems. Not that it is ever easy for small companies and sole traders to get started. And in global cities such as Berlin, New York, Paris and Shanghai, where space is at a premium, the costs of office space alone can be prohibitive in themselves. Cue the rise of a new generation of offices. For occupiers all over the world, new spaces are springing up that offer flexibility and, crucially, less of a commitment than would ever have been available in the traditional office market. Serviced office space, co-working environments with short-term leases and virtual offices — all are a new reality in real estate. Already some leaders are emerging. In five years of operation, US-based shared workspace provider WeWork has established 63 sites in four countries, covering 3.5 million sq ft (325,000 sq m). It also has big plans for expansion under way.

WeWork global head of real estate, Patrick Nelson, says that shared workspace is attractive not just because it is financially flexible. “It’s about membership and community as well,” he says. “People want the flexibility you get in the short-term lease; they don’t want to get locked into a five-year period. But a lot of the trend is driven by millennials who don’t want to work in a cubicle. They don’t want to be in a space that is so distant from the rest of their life.” Nor, Nelson adds, is it only small companies and freelancers that are drawn to WeWork. With larger clients, including CocaCola and McKinsey, taking up to 400 desks, he says that the pull factor is universal. Richard Morris, chief executive of Regus UK, says this is a key difference between the office market of today and that of yesterday, both for landlords and occupiers. “Companies of all shapes and sizes are beginning to adopt flexible workspace solutions as a core way of fulfilling space requirements,” he says. “We are

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Office trends “People want the flexibility. But a lot of the trend is driven by millennials who don’t want to work in a cubicle” Patrick Nelson moving away from the days when procuring office space was an arduous cash-consuming activity. More landlords and property-owners are wanting to participate in this. We enable them to leverage their assets into this flexible attitude. Landlords want buildings to be vibrant places; occupancy feeds occupancy.” Anyone who has ever set up a business from scratch will know how intense — and precarious — those early days are. Success often depends on whether you meet the right people or not. Which leads on to another hidden benefit of co-working. Morris explains: “Customers will be helped with networking and collaborating by being close to other customers who are like them. There’s this community, and that’s a

WeWork in the Meatpacking District of New York big attraction to small-size companies and freelancers. There’s an opportunity for relationships and chance conversations. People will move in specifically because of this opportunity.” It is not just small companies and freelancers that are driving the change, however. For even the largest companies, there are whole new ways

of thinking about workspace to grasp and new opportunities to embrace. It’s what Tom Carroll, director of EMEA and UK corporate occupier research at JLL, describes as the “convergence between HR and real estate”. Corporations are taking a fresh look at their office space and thinking about how it can work for them.

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Office trends Carroll says: “They are seeing it more as a way to deliver growth performance and productivity across their portfolios. There is an increasing proximity of functions, like HR and real estate, within corporations. Cost remains very high on the agenda and there has also been a shift in the way real estate is viewed. It’s being taken increasingly seriously at the C-suite level.”

“The days are fast disappearing when a workforce is issued with standard devices and technology. Workers like to use the devices and software they own” Richard Howard

And rightly so: real estate is more important than ever when it comes to the whole identity of a business and in the way it attracts talent. In CBRE’s latest European Occupier Survey, “employee attraction and/or retention” overtook “cost savings” as the main priority for businesses’ workplace strategies. The report found that 67% of all European occupiers surveyed listed recruitment as a priority, followed by “increasing employee productivity”, which is also now ahead of cost savings. This shift might simply be a sign of the more optimistic economic times — or as Ken Raisbeck, EMEA head of occupier consulting at CBRE Global Workplace Solutions, says, it could be more fundamental: “In recent years, cost saving has been the primary goal in corporate organisations. But that has

recently become a second priority after how to serve and create relationships and collaborations with customers. It’s having those collaborations that is a step-change here.” Considering all of these new ideas when you are looking at new office space is one thing. But what if you are an occupier half way through a 15-year lease and you want to give your workspace and working environment a bit of an update? Colliers’ head of strategy for EMEA corporate solutions, Ed Neild, suggests this is where the personal touch comes in. “One of the ways to look at this concept is health and wellbeing,” he says. “People are thinking more about what’s good for the employee, even down to providing healthier food in the workplace and using technology to reduce stress. There is wearable technology you can use that will give you insight into things like the amount of stress people are under and what’s triggering it.” In fact, data is not just a means of monitoring staff wellbeing — it is at the core of modern office management, whether you’re an occupier or a landlord. With so many more ingenious ways to understand what makes an office tick, smart new solutions are emerging to many long-standing problems. Raisbeck notes that the “big-data agenda” is

“People are thinking more about what’s good for the employee, even down to providing healthier food in the workplace and using technology to reduce stress” Ed Neild

presenting a wealth of opportunities for everyone in the sector. “There has been a big rise in the volume of data available, such as security access control-sensor technology, cost data and IT data,” he says. “There are so many different channels of data that the question is how you use that to drive insight and knowledge. You can get a real-time view of what space is being used and how it is being used, and that can help drive consolidation.” He adds: “If you have real-time data of what is being used and consumed in your building, you can make decisions about how to drive the value agenda.” And even if you have some way to go on a lease, the advances in technology can be applied to many businesses, for their own benefits as well as for the good of their staff. As Cushman & Wakefield senior director Richard Howard says: “The days are fast disappearing when a workforce is issued with standard devices and technology. Workers like to use the devices and software they own. If it’s true that work and life are converging in the real world, it’s certainly true of the virtual world, where a single, preferred device is used for all tasks and recreation.” A new generation of technology is changing the way companies do business and the way people like to work. The trends for 2016 are already emerging — and the opportunities for the right landlords are just as clear. CONFERENCES & EVENTS AT MIPIM

HIGH RETURN ON CREATIVE INVESTMENT: COWORKING 2.0

Thursday 17 March 16.00 – 17.00 Blue Room, Palais 3 FLASH MOB FUTURE TALENT

Wednesday 16 March – 17.30-18.30 Innovation Forum, Hall 2

THE THREE MAIN CATEGORIES OF NEW-GENERATION SPACE Serviced offices Tenants can take space in fully serviced offices, usually on a desk-by-desk basis. Used by companies of varying sizes, these flexible environments offer plenty of fringe benefits, including facilities and meeting areas. They also allow companies to increase or decrease their space requirements in line with their business cycles. Tenants pay rent on a variety of terms, usually to the company that owns the freehold, for some or all of the building.

Virtual offices Co-working Tenants pay a membership fee to gain access Virtual offices offer a flexible space to small to a site — or multiple sites — where they can companies and entrepreneurs who do not use desk-space on a pay-as-you-go basis. This have a fixed working environment but need a fixed address for client meetings and fee usually takes care of everything, correspondence. Depending on the manager including wi-fi, meeting rooms and or operator of the space, a range of invitations to events held on options and facilities are site. Co-working is ideal available. Extra space for small companies or can usually be hired on freelancers who travel an as-needed basis. around and need to find a home-fromhome in a number of cities. © Photo: iStock.com/ksyu_deniska

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Explore the MIPIM Innovation Forum, a pavilion gathering all innovation stakeholders to showcase the most innovative solutions and practices Networking events and around-theclock program with presentations

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EXHIBITORS AND PARTNERS

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Logistics

Europe’s shed

revolution Logistics has gone from one of the least glamorous asset classes to one of the hottest. But as Europe’s logistics property portfolios expand, the ability to adapt to changing demands, both in terms of buildings and investors, will be key, writes Paul Strohm

OGISTICS property used to be real estate’s geeky friend — the one lurking at fashionable parties that none of the cool kids could remember inviting. But suddenly, property’s fashionistas are starting to think the distribution sector has a certain charisma and, on reflection, they don’t mind its somewhat functional appearance either. More party invitations are tumbling on to logistics’ doormat than it can possibly accept. “It’s very nice that we are the flavour of the month. It has taken 34 years to get this far — that’s how long I’ve been in sheds. Finally it’s glamorous,” says Ian Worboys, Prague-headquartered developer and investor P3 Logistic Parks’ (nongeeky) chief executive officer. Worboys says there are a number of reasons for the sudden ascendancy of the logistics sector, but first among them is its performance as an investment. “The recession showed that, if you look back over a longer period, warehouses actually outperform offices quite dramatically. While warehouses showed total returns of 8%, offices were around 5%. That made investors think, ‘Wow!’.”

“It’s very nice that we are the flavour of the month. It has taken 34 years to get this far — that’s how long I’ve been in sheds” DHL Express’ 3,492 sq m facility at P3 Prague D8 logistic park, approximately 10 minutes from Prague city centre, serves as DHL Express’ main hub for the Czech Republic market and incorporates fully automated parcel sorting and handling systems

Ian Worboys

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“As we go into 2016, there is an increasing shift to speculative development and risktaking by some investors” Mo Barzegar

FOCUS ON

LOGISTICS & INDUSTRIAL PROPERTY 400m2 of exhibition area A dedicated networking area and a signature bar and lounge A conference programme of experts See floor plan and programme for details

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This wow factor helped the sector to a record year in 2014, with an investment of €21.7bn in Europe. By the third quarter of 2015, a further €14.3bn had been spent on distribution assets, leading Cushman & Wakefield researchers to forecast “another record year”, while JLL was predicting record occupier demand of 16 million sq m following the strongest first three quarters for 10 years. Worboys believes that another attraction of logistics property is that, when a recession does occur, office occupiers downsize to smaller space quite quickly, in contrast to warehouse tenants, who do not relocate as readily because they have stock to move. Similarly, Worboys adds, even when someone does move out, “you don’t have to change the ceiling tiles, the carpets or the lighting, and take down lots of partitioning, so the capital expenditure is much lower and the marketing is less”. But, more than anything, Worboys says, it is the emergence of e-commerce that has made distribution “glamorous”. “With e-commerce, people suddenly realised that the box they are looking at is storing goods that go to shops and that, when they buy online, they must be cutting out the cost of the bricks-and-mortar retail units, which is why those goods can be cheaper. All of this has combined to make warehouses much more visible,” Worboys adds. E-commerce has also helped P3, which is owned by TPG Real Estate and Ivanhoe Cambridge, to accumulate 145 warehouses, totalling more than 3 million sq m across nine countries. Logicor, US company Blackstone’s European logistics platform, has rapidly built its portfolio to 9.1 million sq m of warehouse space in 13 countries. Chief executive officer and president Mo Barzegar agrees that e-commerce has given the asset class a boost. “It has helped investors and fund managers realise there is a permanent structural shift in the way that consumers are shopping,” Barzegar says. “Because of that, people realise that the demand side of the equation for this asset class looks pretty healthy going forward.” Supply is under control, which is healthy too. Barzegar says that, at the last market peak in 2007, about 90 million sq ft (8.4 million sq m) of space was completed in Europe, of which 80% was speculatively developed. “In 2015, about 56 million sq ft will be delivered to the market and, in 2016, it will maybe hit 65 million sq ft,” he adds. “The supply side is much more controlled than in 2007 and development is leaning much more heavily toward built-to-suit projects than was the case in the last cycle. Today, probably 70% to 80% of what we have seen being developed is built-to-suit and therefore preleased.” This could be about to change, but Barzegar thinks that is no bad thing either: “As we go into 2016 — and as we have begun to see in 2015 — there has been an increasing shift to speculative development and risktaking by some investors, especially by investors with operating companies and experience in development. Some funds are also forward funding local developers. It is increasing speculative development but, frankly, we need it. The market is under supplied. Compare Europe with the US and, on a per capita basis, we are about 30% off where the

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Logistics US numbers are, so we still need to catch up.” The indications are, then, that there is still room for the more recent market entrants. Among these count Logistis, the logistics property fund established by Natixis subsidiary AEW, which made two high-profile acquisitions in December 2015: a site within Amsterdam’s Schiphol Airport for a 100,000 sq m logistics park and a similar sized built-tosuit project near Marseille. Both are being developed with local partners. “Roughly 25% of our programme is built-tosuit, 25% is standing assets and the rest are developments of standalone buildings and logistics parks,” says Logistis fund manager Remy Vertupier. Logistis was created in 2012, but the fund had

P3’s Ian Worboys: Sheds are glamourous — finally

“E-commerce works with two types of asset: the very large ones and the smaller cross-dock assets, from which parcels are delivered to clients” Remy Vertupier

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a head start achieved by the merger of three existing logistics funds in the AEW fold. Then, in December 2014, AEW raised equity of €835m, which Logistis is now investing in Europe. Around €1bn has been committed this year. “At the end of 2014, our portfolio size was about €800m. Today, it is around €1.3bn,” Vertupier says. On completion of developments already in hand, the portfolio will expand to about €2bn, with some 3 million sq m of space. E-commerce generates a large proportion of the demand for the fund’s property. “What maybe is a bit new for the market is the size of the assets,” Vertupier says, highlighting one recent trend — the polarisation of interest at two ends of the scale. “E-commerce works with two types of asset: the very large ones, typically of 100,000 sq m and sometimes more, and the smaller cross-dock assets, from which parcels are delivered to clients. We developed our first cross-dock assets 10 years ago in 2004 — one for TNT and the other for DHL — and, since that day, we have progressively increased the proportion of cross-dock

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Logistics

ID Logistics (IDL) 46,230 sq m new bespoke facility at P3 Mszczonów park near Warsaw. It is the largest logistics building that P3 has developed in Poland and it was handed over to IDL in October 2015 assets in our portfolio.” Vertupier adds that these comprise roughly 15% of the Logistis portfolio by value. Cross-dock assets, which target the “last mile” of the supply chain, tend to be smaller buildings on proportionately larger sites to allow for goods vehicle movement and storage. They are also located in, or very close to, urban areas. The Logistis strategy is very simple, Vertupier says: “We want to be present where our clients are, in the sought-after locations in continental Europe.” This year, the fund has bought space in Germany, the Netherlands, Poland, the Czech Republic and France, and plans to buy in Spain and Italy. Critical mass is crucial. Vertupier says that a GLA of about 500,000 sq m is required in a country before a permanent presence is warranted. And in some cases, such as Germany, that number is higher. The increased popularity of logistics assets is making acquisition a more competitive process. “Clearly, it is harder to buy because more people are willing to acquire logistics assets and, meanwhile, the possibilities on

the market have not increased that much,” Vertupier adds. One advantage that Logistis has is that it is not a developer but works with developers, thus widening its access to opportunities. “We can provide equity back up on development projects. Against this, developers share their pipeline with us and this really boosts our sourcing capacity,” Vertupier explains. In September 2015, Germany-based Patrizia established a logistics division as part of its diversification from a residential focus. The new division is headquartered in Amsterdam and based around Patrizia’s acquisition of an advisory division run by Roger Peters, Arthur Tielens and Octavian Cristea. Peters says Patrizia, too, is unwilling to step on developers’ toes. “We will focus more on co-operation with developers in different local markets, and can do pre-leased or speculative schemes,” he says. “We focus on those developers that have a local knowledge and a proven track record.” The challenge for all logistics investors and developers will be to anticipate the changing demands of e-commerce — an increasingly

important business sector which seems likely to morph into different shapes as competition and the demands of the consumer place different demands on the business. For instance, an entire new branch of e-tailing has grown up because consumers choosing items such as clothes and shoes are now ordering the same model in different sizes or colours, fully intending to return the ones that do not fit. This trend is almost creating a demand for a new kind of building because of the large staff requirements that are needed to service the volume of returns. Amazon is understood to be looking at a 45,000 sq m P3 building at Horni Pocernice, Prague, which will house 3,000 people dedicated to dealing with Amazon returns from across Europe. The requirement is awaiting government approval because of the exceptional staff requirement and a road network that envisaged only a few hundred staff. CONFERENCES & EVENTS AT MIPIM FLASH MOB LOGISTICS & INDUSTRIAL

Wednesday 16 March – 15.00 - 16.00 Networking zone, Palais -1

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THE REAL ESTATE WORLD We hope to see you at our next events 8-9 September 2016 Osaka, Japan

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Hotels

Finding consolation

in consolidation Consolidation is shaking up the hotel sector — and analysts predict there’s more to come following the epic Marriott Starwood merger in November 2015, which has created the world’s biggest hotel company. Chris Bown reports on the ripple effect

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FTER months of rumours and a feeling that the momentum for change was growing, a landmark hotel-company merger was finally signed in November 2015, with Starwood Hotels & Resorts agreeing to a takeover by Marriott International. The $12.2bn deal was significant not just from a financial point of view. It also resets the global league table of the biggest hospitality players, with Marriott firmly in the top spot. The merged corporation will have more than 5,500 hotels, offering 1.1 million-plus rooms across some 100 countries. Just as the sector was digesting the likely impact of the combination, news came of another major deal, with French group AccorHotels acquiring FRHI, giving it the Fairmont, Raffles and Swissotel brands. The $2.9bn transaction gives AccorHotels, which is strong in the economy and mid-market segments, a much greater presence in the higher end of the hotel marketplace. The many impacts of these deals are only now beginning to be explored and understood, but one key consequence is that property owners

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“Greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, and enhance longterm value to shareholders” Arne Sorenson

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are bound to see changes. And investors, who have been piling into hotel assets due to their growing revenues, will hope the consolidation does not promote further new supply into the sector. In a boom year, 2015 recorded around €20bn of hotel investments transacted in Europe, as early investors took profits, while finding plenty of buyers keen to purchase individual hotel assets, as well as larger portfolios. At Marriott and Starwood, all but a handful of the hotels operating across the group’s 30 brands are owned separately by property investors — and they will be concerned to see what the enlarged Marriott plans to do next. Marriott now clearly heads the sector globally, beating Hilton into second place in a count of opened hotel rooms. InterContinental (or IHG) is in third place, with just over 700,000 rooms, followed by Wyndham Worldwide, AccorHotels and Choice. “This is an opportunity to create value by combining the distribution and strengths of Marriott and Starwood, enhancing our competitiveness in a quickly evolving marketplace,” said Marriott International president and CEO Arne Sorenson as the deal was announced. “This greater scale should offer a wider choice of brands to consumers, improve economics to owners and franchisees, increase unit growth and enhance long-term value to shareholders.” A rationale for consolidation in the hotel sector had been established for some time. None of the global hotel-brand operators holds a dominant position, and industry analysts, comparing the hotel sector against other industries, were of the opinion there was logic in merging. A larger player, they argued, would have not only greater scale economies, but also stronger bargaining power in the battle against online booking platforms such as Booking.com and Expedia, which have grabbed a large slice of online hotel bookings in recent years. In addition, agitating shareholders had declared that hotel mergers made sense. In late 2014, investor Marcato Capital bought shares in IHG, and started demanding the board look at a merger or takeover. The investor’s managing partner Richard McGuire declared: “Our analysis demonstrates that a combination could result in immediate, significant and abiding shareholder value.” IHG’s board stood firm and has remained independent. For AccorHotels, the FRHI acquisition transforms its portfolio, as well as its global reach. FRHI’s 115 hotels include 70 Fairmont hotels, many of them in the US and Canada, where AccorHotels has no presence to date. A dozen Raffles hotels and 32 Swissotel properties add a luxury presence in Europe and Asia. “We are positioning ourselves as a key player in the current industry consolidation process while maintaining substantial leeway to implement our transformation plan,” says Sebastien Bazin, chairman and CEO of AccorHotels. While AccorHotels has bought three new brands, and the operational staff behind them, the deal did not include many property assets, with most of the Fairmont, Raffles and Swissotel properties held separately. A consequence of any merger will be cost cutting and rationalisation, and owners of hotel properties running under Marriott and Starwood

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Hotels brands will be worrying about the potential for closures and rebrands. With the hotel sector globally approaching all-time highs in occupancy levels, there are likely to be few closures. But the scope for rebranding to improve the spread of the Marriott-Starwood brands is more likely — and this inevitably requires property owners to spend money on refits. Marriott operates as an asset-light hotel group, owning barely a handful of the hotel properties it operates. Starwood has been moving towards this set-up and selling properties. Yet despite disposing of more than $800m of properties in 2015, it still owns more than 20 major properties across the US, Central America and Europe.

“We are positioning ourselves as a key player in the current industry consolidation process” Sebastien Bazin

“You’ve got four brands that we members of the public would struggle to tell the difference between. I think you’ll end up seeing a consolidation” Marc Finney

“Marriott surprised us all,” says Marc Finney, head of hotels and resorts consulting at Colliers International, who nevertheless sees logic in the Marriott Starwood combination: “There’s some brand fit there, but there’s always the potential for cannibalisation of the brands.” One area where there may be scope for amalgamation is in affiliate brands. Most large hotel groups have created an affiliate brand in recent years, allowing independent hotels to sign up for the benefits of the big brand’s sales and marketing machine without needing to refit their hotels in a specific brand colour scheme. Marriott and Starwood were no different, with Marriott having launched Autograph as its “collection brand” and Starwood promoting Tribute, and there appears little logic in

one company having two affiliate brands. The affiliate route remains an attractive one for owners of independent hotels who struggle to fill their hotels profitably. “I would expect to see more coherence around the four- and five-star offering,” Finney says. In this space, the new group has Marriott, Sheraton, Westin and Le Meridien. “You’ve got four brands that we members of the public would struggle to tell the difference between,” he adds. “I think you’ll end up seeing a consolidation.” Finney also expects the Marriott team to give more impetus to some of its new acquisitions. “Starwood has some great products,” he says, pointing to W and Aloft as innovative brands. Ahead of Marriott’s winning offer, several other potential buyers were being mentioned

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Hotels In January 2016, Marriott launched the rebranded Madrid Marriott Auditorium Hotel & Conference Centre, its largest hotel in Europe with 869 bedrooms.

as possible buyers of Starwood Hotels. USlisted Hyatt and three Chinese investors were all named as likely bidders — and they will now be on the lookout for other consolidation opportunities. With external investment restrictions cut, the Chinese have been keen to make international moves and have been buying stakes in hotel groups, as well as hotel property directly. Anbang Insurance set the scene in late 2014 with a $1.95bn winning bid for the landmark Waldorf Astoria hotel in New York. Others have followed. Last year saw French economy hotel group Louvre receive a takeover from Chinese group Jin Jiang, putting the Asians in command of the Campanile, Kyriad and Tulip brands across Europe. Since that deal, Jin Jiang has continued to be acquisitive, most recently buying a portfolio of 25 hotels in Germany. And among the three spurned Chinese buyers was said to be HNA, a travel group that owns airlines and has already bought into Spanish hotel group NH. It recently acquired a stake in the US Red Lion Hotels chain. One challenge for hotel groups is defining a new style to suit changing guest demands, with the result that so-called “lifestyle” brands are

making headway. Typically, they have smaller bedrooms, but larger shared spaces — and they make more effort to create bars and restaurants with a local rather than a chain feel. The large groups are busily acquiring, or creating, their own lifestyle brands. Speaking recently, Tim Walton, vice-president of international hotel development at Marriott, claimed: “Without exception, all our brands introduced over the last five years have been in the lifestyle space.” Marriott has created the Moxy brand, with a wow factor promised in the common areas, which opened its first property at Milan’s Malpensa airport. Working with European development partners, it is rolling out the brand and has launches in several German and UK cities planned for 2016. Marriott is also rolling out AC Hotels by Marriott, a stylish modernist brand it acquired in 2011. The concept was developed by Spaniard Antonio Catalan and already has a strong presence in the Spanish market. As well as taking the brand to the US, Marriott also recently signed two properties in Birmingham and Manchester to launch it in the UK. Also coming to the European market in 2016 is Kimpton, a boutique US brand acquired by

IHG in late 2014 for $340m. The chain came with 62 hotels across the US and Andrew Shaw, IHG vice-president of development, UK and Ireland, recently confirmed it is set to enter Europe. “We are actively trying to find a pipeline in Europe,” Shaw said at a recent conference session, adding that the news had been well received by landlords. “We have an owner base that is very excited about Kimpton.” According to Shaw, his company is also looking to accelerate the growth of its Indigo brand, which now has 62 hotels open globally and a further 64 in the development pipeline. CONFERENCES & EVENTS AT MIPIM

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Wednesday 16 March – 10.00-11.00 Orange Room, Palais -1 FLASH MOB HOTEL & TOURISM

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Thursday 17 March – 10.00 - 11.30 Orange Room, Palais -1

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Retail Retail sales across Europe were robust last year, prompting investors from around the globe to acquire sites. A number of large schemes also opened, as retailers gear up for international expansion. Mark Faithfull reports

Worth buying into

HE THEMES are hardly new but the mood has changed. While retail is still largely being shaped by the ongoing impact of the 2008 crash on consumers’ psyche and shopping habits, the increasing influence of online and the growing desire for entertainment, leisure, and food and drink while out shopping, retail development is picking up. However, these seismic changes are still polarising the way European shoppers engage with retail and when, where, why and how people want to shop. Development and retail expansion has been boosted by retail sales in the European Union, which are up 3.3% in the third quarter of 2015 compared with the same period in 2014, according to Eurostat. The highest annual increase in eurozone retail sales since 2008 was in 2014, when the increase was only 1.3%. Increasing retail demand is translating into higher rents in key locations and, with stability returning, the largest European developers are increasingly targeting capitals and other major cities for very large lifestyle schemes. According to Cushman & Wakefield’s Main Streets Across The World research, New York’s Upper Fifth Avenue is the world’s most expensive retail street at nearly 50% more expensive than Causeway Bay in Hong

“Improving employment prospects, rising real wages and healthier consumer confidence are set to offer more positive momentum for the retail sector” Justin Taylor

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Retail 29 Via Torino in Milan

Kong, the world’s second most expensive location. But after that, the big guns are mostly European. Avenue des Champs Elysees in Paris retained its crown as the most expensive retail location in the EMEA region, followed closely by London’s New Bond Street. Strongest rental growth across 2015 was recorded in Dublin’s Grafton Street and Covent Garden in London, as well as in top high streets in Milan and Rome. Justin Taylor, head of EMEA retail at Cushman & Wakefield, says of the findings: “Improving employment prospects, rising real wages and healthier consumer confidence in advanced economies are set to offer more positive momentum for the retail sector. From an EMEA perspective, despite any economic and political uncertainties in certain countries, the retail market is expected to see further improvements.”

“Italy is firmly back on the radar screens of panEuropean investors” Cameron Spry

Madrid’s Plenilunio, recently acquired by Klepierre

While European investors are active and, increasingly, pan-European, the continent is also attracting attention from the US, Australia, Canada, the Middle East and Asia. The prime gateway city for retail investment is London. On Oxford Street, the number of stores owned by Hong Kong (HK) investors alone now amounts to 9.7% of the total, according to data from property consultant Savills, with the number of shops owned by HK investors rising by 188% over the past two years. Major transactions last year included Emperor International Holdings’ purchase of 25-27 Oxford Street for £35.5m in May and the acquisitions by a private Hong Kong investor of 175-179 Oxford Street for £58m in March, said Savills. Jonathan O’Regan, Central London investment director at Savills, says: “Hong Kong investors have been very aggressive in their pursuit of prime assets on Oxford and Bond Street. We believe this appetite will continue, particularly given the current economic situation in China and the effect on rents on luxury streets in Hong Kong.” In a separate report, CBRE noted that highnet-worth individuals in China have been preview magazine I February 2016 I www.mipim.com

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Retail spending more in the world’s gateway cities in recent years. “Retail property investment requires a high level of operational expertise, particularly with shopping centres, and therefore it is not easy to shift from one market to another market,” says Ada Choi, senior director of CBRE Research. Overall, Europe’s big-five markets continue to dominate the investment picture. But beyond Germany, the UK and France, Spain and Italy were standout markets in 2015, as were the Nordics. German developer and management company ECE Projektmanagement has been particularly active in Italy after setting up a subsidiary in Milan. It recently took over a 42,000 sq m, 130-store shopping-centre project in the Italian city of Verona, due to open in 2017. This is the second ECE investment in Italy following the acquisition of Megalo shopping centre in Chieti by the ECE European Prime Shopping Centre Fund I at the end of 2011. Another major deal saw Tristan Capital Partners acquire four retail assets for €122m TENNIS_PV_PIM in033_RM its first major foray into the Italian property

Seville, Spain’s AireSur, bought by CBRE Global Investors

market. The European asset manager bought the neighbourhood shopping centres for its EPISO 3 opportunity fund from listed French developer-investor Altarea. “Italy is firmly back on the radar screens of pan-European investors and Tristan has been looking to make its first major move in the market for some time,” says Cameron Spry, head of investments at Tristan Capital. “So

when the chance arose in an off-market deal to acquire these shopping centres at attractive yields and with solid cash flows, we seized the opportunity.” Meanwhile, M&G Real Estate paid an estimated €70m-€80m to Italian developer PRIA for 3,745 sq m of retail space on the junction of Via Torino and Via Della Palla in Milan, upon which Italian retailer Teddy has signed two

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Retail leases for its Terranova and Calliope brands. Simon Ellis, director of investment at M&G Real Estate, says: “Investor interest in Italy’s retail sector is on the rise, but it isn’t widespread. The focus is on core locations with stronger economic growth. Tourism plays a significant role in this, particularly in Milan, which is world famous for its acclaimed shopping scene.” Spain, like Italy, has enjoyed a resurgence in demand over the past 18 months. Investor sentiment towards both economies has improved, says Alice Breheny, global co-head of research at TH Real Estate: “While yields have moved quite markedly over the course of the past year, it is still possible to find long-let covenant-strong assets in these markets… and they still offer the chance to capture the full rental recovery cycle. With rents having fallen sharply, they offer potential for strong growth over the medium term.” As a result of this renewed optimism, investors in Spain have moved beyond Madrid and Barcelona in their search for returns. CBRE Global Investors, for instance, bought AireSur in Seville, Andalusia, for €76.5m. Klepierre, meanwhile, snapped up Plenilunio, a 70,000 sq m shopping centre located in Madrid. With a large and updated fashion offer and a prime location, the 230-store Plenilunio is one of the major shopping centres in the region around Madrid. “Italy has always been a very strong retail market so it shouldn’t come as a surprise to see it make a comeback,” says Grosvenor’s Parisbased chief investment officer Giles Wintle. “We have been there since 2005 and we didn’t exit the market during the downturn.” However, it is in the Nordics that Wintle sees many of the opportunities, pointing to the activity from players such as UnibailRodamco, Tristan, Citycon and AEW. “We entered the market in 2011 and we have seen a very significant increase in awareness among both retailers and investors,” he says. “Sweden tends to be the gateway, but the real key has been to see the region as one — including Norway, Sweden, Finland and Denmark. That takes it from being a collection of small markets to a much more attractive marketplace.” Indeed, European giant Unibail-Rodamco launched its Mall of Scandinavia scheme in November 2015. This year it will focus on the commencement of the Mall of Brussels, adjacent to the Belgium capital’s

“Sweden tends to be the gateway, but the real key has been to see the region as one. That takes it from being a collection of small markets to a much more attractive marketplace” Giles Wintle

Mall of Scandinavia, launched in November 2015 Heysel Stadium, and the Uberseequartier Hamburg Port project. The projects represent new city markets for the company, which is primarily concentrating on cities with strong economies and populations of 400,000-plus in capital and other important locations around continental Europe, especially the eurozone, according to chief operating office Jean-Marie Tritant. “There is still a wide range of potential cities for us to develop or invest in,” Tritant adds. “We were delighted to win the mandates for Brussels and Hamburg but, of course, development takes a long time and can be very complicated, so we will also look at acquisitions.” Elsewhere, Br ussels-based mi xed-use scheme Uplace is stepping up its leasing efforts as the developer hopes to be on site early this year, once final planning permissions are signed off, with completion then due in late 2018. Uplace has secured a number of local retailers for the scheme, including food anchor Delhaize, but is now initiating a second leasing phase to attract international retailers. Bram Thomas, chief operating officer at Uplace, says that, during the lengthy planning phase for the scheme, the developer

felt Belgian consumers had “evolved towards” the concept of an all-in-one destination combining new retail concepts, leisure and public space. Similarly, continuous reinvention is also the strategy at developer Westfield, according to head of development John Burton. Citing the “demand-driven” expansion of Westfield London, which will increase in size by 61,780 sq m by early 2018, Burton says that developing existing assets, as well as building new schemes, is at the heart of Westfield’s activity in Europe. Despite the upturn, it is unlikely that a huge raft of mothballed schemes will be reignited in 2016, but rather that those with potential but lacking in the capital for investment will be acquired and redeveloped. Mid-sized schemes still have a place in many markets, but it is the mega-schemes and mixed-use projects that are likely to gain the most attention — and traction — as Europe’s retail renaissance slowly gathers pace. CONFERENCES & EVENTS AT MIPIM

DIGITAL INNOVATION IN REAL ESTATE: FOCUS ON RETAIL AND OFFICE

Tuesday 15 March – 17.00 - 18.30 Green Room

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Debt Dundrum fashion quarter, Dublin, Ireland

A healthier balance Lending is picking up, the cost of debt is falling as new players enter the market and banks are getting to grips with the legacy of historic loans. All told, the omens are good, writes Graham Parker

HE STATE of the real estate debt market is a bellwether for the health of the wider investment market. Investment activity is increasing again after the crash of the last decade, but the debt market supporting it has changed markedly, with new lenders playing an increasingly important role. “There’s definitely more non-bank debt available,” says Nigel Almond, head of capital markets research at Cushman & Wakefield, pointing to the continuing success of property debt funds in raising capital and placing it in the market. “Some of them are now on their third raise,” he notes. These have attracted a range of investors from around the world, Almond adds: “Debt has become a broad market and one that’s been accepted by institutional investors.” Illustrating this breadth of demand, the first week of 2016 saw the final close of UBS’ Participating Real Estate Mortgage Fund, which raised a total of £241m (€319m) from nine international institutional investors from Japan, the Netherlands, Germany and the UK, including UBS and Mitsubishi Corporation.

But Almond concedes there is still a way to go — especially in Europe, where non-bank lending has risen from 1% to 5% of the market since 2007. “The new players are still only scratching the surface,” he says. “But as we move forward, we’ll see more resilience in the market.” Almond points out that it is not just a desire to fill the vacuum left by the banks’ reluctance to lend that has driven other institutions into the lending game. “For insurance companies, the Solvency II regulations mean that debt is more efficient than equity,” he says. At the peak of the credit crunch at the tail end of the last decade, the sheer weight of non-performing property loans was bringing financial institutions to their knees, and governments feared irreparable harm to the wider financial system. Several resorted to setting up so-called ‘bad banks’ — a system pioneered in Scandinavia during an earlier banking crisis in the 1980s, under which the government bought non-performing loans in return for government bonds, and warehoused them in a new institution tasked with working them out in an orderly fashion.

In 2009, the Irish government put €88bn of loans into the National Asset Management Agency, or NAMA. In the ensuing six years, NAMA has returned €32.7bn in cash, with almost €10bn generated in 2015 alone, and it has redeemed €22bn of bonds. NAMA’s highlight of 2015 was the €1.8bn sale of the Project Jewel portfolio to a joint venture between Hammerson and Allianz Real Estate. The portfolio was made up of the 140,000 sq m Dundrum Town Centre, Ireland’s pre-eminent shopping and leisure destination, as well as stakes in two other Dublin shopping malls and two development sites. As the Irish market has improved, NAMA has started to take a pro-active role in promoting new development, particularly in the Dublin Docklands’ SDZ area, where of a total of 350,000 sq m of commercial space is planned. It also funded the development of more than 2,300 new homes up to the end of 2015. Similarly, the Dutch government has taken advantage of the improving market to close its own bad bank, Propertize. At the end of 2015, the Dutch finance minister announced that Propertize would be put up for sale after making

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Debt strong progress in winding down the loan and real estate portfolio it had inherited in 2009. In the first nine months of 2015 alone, Propertize’s net exposure decreased from €4.9 bn to €3.9bn. And as other markets are moving towards winding up their bad banks, Italy has finally managed to form one. The National Resolution Fund has been launched with €750m of real estate-related non-performing loans and it is expected to inherit further soured loans over the next 24 months. Federico Montero, head of loan portfolio transactions in Cushman & Wakefield’s EMEA corporate finance division, says: “Following the success of other European asset-management agencies such as NAMA, the Italians have a

good illustration of how best to maximise recoveries. With reforms to enforcement legislation now in place, the Italian market is set to grow further over the upcoming years.”

Having surveyed a range of leading players, Colliers International is predicting a more balanced lending market for 2016. Peter Cosmetatos, CEO of the Commercial Real Estate Finance Council Europe, told Colliers researchers: “After the credit drought which followed the financial crisis, 2013 and 2014 saw the market turn remarkably quickly in London and other major centres, with lenders falling over themselves to lend. After two years of a borrowers’ market, a new equilibrium has emerged since the summer, with margins stabilising or even ticking up.” But Cosmetatos warns: “While this relative “After two years of a equilibrium in the major investment markets could persist for some time, it could be rocked borrowers’ market, a new by interest rates taking an unexpected turn, equilibrium has emerged, or by geopolitical events. The survey suggests with margins stabilising or that the biggest current areas for concern are even ticking up” around macro and geopolitical risks, rather than either the occupier market or a return to Peter Cosmetatos 024_RM ONLINE DATABASE_PV_PIMreckless lending.”

“We have seen a fundamental reshaping of property debt. What has emerged is a more stable environment and a greater number of participants sharing risk” Madeleine McDougall

Madeleine McDougall, head of institutional clients at Lloyds Bank Commercial Real Estate, agrees: “We have seen a fundamental reshaping of property debt over the last five years and what has emerged is a more stable environment and a greater number of participants sharing risk.” And she forecasts: “Increased appetite for real estate is understandable given its historic outperformance of other asset types. Debt will continue to play a crucial role over the next few years, particularly in the financing of new developments, which has fallen behind demand.”

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Healthcare

An excellent prognosis A central theme at this year’s MIPIM, healthcare is currently attracting huge volumes from investors looking for safer, longer-term bets. Liz Morrell reports

Private hospitals are attracting new investment

EALTHCARE is a market in which demographics play a huge role, driving the requirement for both change and investment. “The population in Western countries is growing older so there is more need for care and acute care, and this is driving the need for such facilities. In a low interest-rate environment, investors are also looking for alternative ways to diversify their portfolios,” says Hideki Kurata, head of alternatives and special situations at AXA Investment Managers – Real Assets, which has an alternative fund with around €300m of healthcare assets. It recently made its first acquisition in Italy with the €180m purchase of a portfolio of eight acute-care hospital facilities in the north of the country. “Healthcare is a demand-push rather than a supply-pull sector that’s driven by demography, state regulations and government spending,” says Douglas Edwards, managing director of Corpus Sireo International, a German-based company that has around €800m gross value in healthcare assets, predominantly in the nursing-home sector.

“It’s estimated there is £6bn of private-sector capital that is ready to invest in the UK healthcare real estate sector” Melanie Leech “There is increased demand for services in this sector across all areas of healthcare, but it’s also a stable investment opportunity that doesn’t correlate with the other asset classes so allows you to mitigate risk in your portfolio.” The market is particularly strong in the US, both in terms of senior housing and medical buildings. “People are getting older so there is more demand, but people now also have the wealth to go into these sorts of facilities,” points out Jeffrey Cooper, executive managing director and group head of Savills Studley. The introduction of the Affordable Care Act ago has also attracted extra investment into the US in last two and a half years, Cooper adds. “That has brought more people into the healthcare system because now they are insured. That’s resulted in more people using physicians and healthcare facilities and more

demand for outpatient facilities too,” he says. John Goodey, senior vice-president, international, at healthcare and senior housing REIT Welltower, says change is imminent. “Health systems now know that they must evolve from the current hospital-centric model. They’re looking for alternative real estate capital solutions to fund the development of integrated treatment and care solutions in outpatient, lower-acuity settings,” he says. “In the US, we are seeing a lot of consolidation, particularly in the not-for-profit arena,” says Edward Aldag, chairman, president and CEO of Medical Properties Trust, a healthcare REIT that focuses exclusively on hospital real estate in the US and Western Europe. “Many of the not-for-profit hospitals are finding they cannot compete in a competitive environment and are ending up selling out to forprofit systems.”

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Healthcare Internationally, Aldag adds, the private sector is strengthening. “Many countries are beginning to understand that, in order to have a thriving government system, they need a vibrant private system to augment it,” he says. As a result, a number of investors are now looking at the opportunities available in Europe, especially companies from the US like HCP and NorthStar, which having initially targeted the UK are now looking at the rest of Europe too. “In the past, the healthcare market didn’t have the depth, the liquidity or the profile it now has,” Corpus Sireo’s Edwards says. “Regulators are unwinding some of the red tape that allows people to come into the market.” This is particularly true in Germany, he adds, observing that this tends to be the market of choice after the UK. The German healthcare system also has a number of changes in the pipeline, which will create extra demand for investment in the market. In the UK, Melanie Leech, chief executive of the British Property Federation, says there is huge potential for growth. “With an aging

An aging population is driving demand for healthcare facilities

population and a National Health Service that is feeling the pinch from increasingly constrained public finances, the UK has a pressing need to deliver new facilities that

support those with high care needs,” she says. “It’s estimated there is £6bn of privatesector capital that is ready to invest in the healthcare real estate sector.”

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Healthcare “Healthcare offers higher rates of return than multi-family rental housing or office, and has more attractive yields” Jeffrey Cooper

FOCUS ON

“The UK market is still an attractive market because of its liquidity,” says AXA’s Kurata. “France is also a large market and has been professionalised for a while now. And then Germany is a pretty hot market, with Italy and Spain a little behind.” Europe’s aging population will particularly drive demand in the senior-housing market, according to Savills Studley’s Cooper. “They have the same demographic trend as the US and there will be more demand for places for people to go — particularly if they need a higher level of care,” he says. Such trends are also apparent in Asia, particularly in China. “There is a very large growth in senior housing in China because China had a onechild-per-family mandate. Normally, children would take care of the elderly, but there’s not enough children so there has been huge demand for senior housing,” Cooper adds. However, Corpus Sireo’s Edwards warns companies to proceed with caution when looking at expanding into Europe and beyond. “While we have similar market push factors, we don’t have the same regulations, so it’s not always easy to understand [local markets]. You need to have a partner that understands the market,” he says. AXA’s Kurata agrees: “It’s a difficult and complex market to invest in and, if investors cut corners, they will make bad investment decisions.” And yet, despite the challenges, all agree there is still plenty of potential in the healthcare market yet. “Everything is demand driven so it’s all positive,” Edwards says. “The only thing that will prevent it in the short term is the availability of stock.” Cooper agrees: “Healthcare still offers higher rates of return than multi-family rental housing or offices, and has more attractive yields. And I think that’s going to remain constant.”

HEALTHCARE REAL ESTATE 800m2 of exhibition area A dedicated networking area A conference programme of experts See floor plan and programme for details

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Emerging Assets

Self storage, a growing alternative sector

Europe reaches tipping point When core property gets expensive, niche or specialist market sectors start to look attractive. Doug Morrison explains why the European real estate industry is at the tipping point in terms of alternative investment

N THE annual Emerging Trends In Real Estate Europe survey of over 550 leading property professionals, as many as 41% say they are thinking of investing in the alternative sectors in 2016 — a sharp increase on the 2015 figure of 28%. Published jointly by PwC and the Urban Land Institute, the research highlights sectors including hotels and healthcare, but also covers the more left-field “alternatives”: data centres, self-storage facilities and parking. It is evident from the report that the so-called megatrends — demographic and technological changes as well as urbanisation — are working in favour of sectors that lie outside the commercial property mainstream, particularly residential in most of its forms: private rental, student accommodation and retirement housing. Investors are drawn by the fact that such sectors capture the way lifestyles and societies are changing. This is not to say the industry has given up on offices and retail in Europe’s gateway cities. Far from it — they will still attract the lion’s share

of capital in 2016. But the Emerging Trends Europe research suggests that some of these specialist asset classes could become something more significant than interesting niches. Another factor in their favour is the continuing lack of prime assets available to satisfy the global capital allocated for European real estate. More than 40% of the Emerging Trends Europe respondents expect availability to worsen during 2016. As a result of that trend, the report reveals that pricing is a concern across Europe, or as one respondent claims: “We are close to the top… the end of the yield-compression story.” Damian Harrington, Colliers International’s head of EMEA research, says: “There’s just so much money out there that investors have to soften their attitudes to investment. One thing we’ve seen in the last year is a rise in funds that have got a more value-add strategy. That in itself tells you that, though it is probably the same investors behind them, the money is moving into different structures and opportunities.”

For Harrington, that means that infrastructure, for instance, must come more into the reckoning. For many of the Emerging Trends Europe respondents, the move into new sectoral territory links to their search for stable income and returns. When it comes to the report’s ranking of investment prospects for 2016, high-street shops lead the field but retirement housing and data centres are next. Indeed, eight out of the top 10 places are taken up by what would be considered non-core real estate. Data centres have been on the real estate map since the dotcom boom at the turn of the century and they epitomise the complexity of issues facing investors who want to venture beyond traditional asset classes. The degree of expertise required to manage data centres means that, even now, they are not considered viable options for some investors. And yet such high barriers to entry have reinforced their investment prospects. One institutional fund manager that has taken the trouble to invest in both assets and

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Emerging Assets expertise is AXA Investment Managers – Real Assets, which has €200m of data centres under management, spread across Italy, France and the UK. For AXA, the underlying attraction lies in the fact that “data provision for business is just exploding”, says Hideki Kurata, head of alternatives and special situations. Kurata points out that there are national barriers to entry in terms of “what you should be putting in data centres” and where they are located. “Therefore, a lot of people will shy away from this because there is only going to be a limited number of opportunities,” he says. “You need to understand the dynamics of your tenants and the tenants are extremely specialised players in the telecommunications sector, which is why [at AXA] we have specialists with a telecoms background.” Kurata stops short of suggesting that AXA has a first-mover advantage here: “It’s an industry that is moving very fast with privateequity players also very active. Sometimes it’s also good to have second mover’s advantage, because you can let the first wave of players

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make mistakes. That’s how I would characterise our presence in data centres.” As well as data centres, AXA’s strategy for non-core assets includes healthcare and forestry, and totals €2.7bn, with as much as €500m invested in such assets in 2015 alone. Kurata says AXA is also considering student housing although nothing is off limits. “It really is on a case by case basis,” he says. One unifying theme in this disparate collection of assets is stability of income, which offsets the operational risk. “The yields should floor at a level that is going to be significantly higher than mainstream prime yields,” Kurata adds. “At the end of the day, what makes a good alternative investment is one’s ability to underwrite the underlying business, which is why AXA has recruited teams of specialist professionals.” Such non-traditional sectors account for about 5% of AXA’s real estate under management, but research by Bilfinger GVA indicates that in the UK — where the pricing of core property is more of an issue than on the continent

— institutional allocations are higher still. The consultant says the share of such sectors within the general property-investment universe has increased to more than 13% compared with less than 8% a decade ago. That said, Bilfinger GVA’s research covers an even more disparate collection of sectors than Emerging Trends Europe, including leisure, automotive dealerships, motorway service stations, energy and waste management. It could be argued that one investor’s niche interest is another’s core business. But as Mark Beaumont, Bilfinger GVA’s senior director and national head of investment, says: “It’s clear that investment levels in alternative sectors have increased in recent years as investors look to diversify their portfolios and secure longer leases. If we talk of relative performance, as well as perhaps initiating a greater appetite for risk, some alternative sectors are outperforming the more traditional investment classes.” CONFERENCES & EVENTS AT MIPIM

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The Jury

Awards

Barbara KNOFLACH BNP PARIBAS Real Estate Deputy Chief Executive Global Head of Investment Management Germany Martin J. BRÜHL FRICS RICS President United Kingdom Madeleine COSGRAVE GIC Real Estate Managing Director, Real Estate Investment United Kingdom Serge FAUTRE AG Real Estate Chief Executive Officer Belgium

John FORRESTER Cushman & Wakefield Chief Executive Officer EMEA United Kingdom Paolo GENCARELLI Unicredit Head Group Real Estate Italy

Frank KHOO AXA Real Estate Global Head of Asia Singapore

Global reach for 2016 MIPIM Awards MIPIM’S jury of international real estate professionals has selected the 44 finalists for the 2016 MIPIM Awards

HE 2016 MIPIM Awards will once again celebrate the brightest and the best of the real estate world. The jury of high-profile real estate experts has sifted the entries down to a shortlist of four finalists in each of 11 categories, and each one can already count themselves among the most outstanding and accomplished projects, completed or yet to be built, around the world. But which are the best of the best? All finalists will be submitted to an on-site vote at the MIPIM Awards Gallery located in the heart of the exhibition area. From 09.00 on March 15 to midday on March 17 MIPIM delegates will be invited to vote for their favourite projects in each of the 11 categories.

This vote will be combined with the jury’s vote to choose the category winners, which will be revealed at the prestigious MIPIM Awards Ceremony to be held on Thursday 17 March, 2016 in the Grand Auditorium of the Palais des Festivals.

Since 1991 the MIPIM Awards have seen: More than 2,400 submissions 155 trophies given to winners 88 countries represented Official Sponsor Official Press Partner

Sergey KUZNETSOV City of Moscow Chief Architect Russia

Ralf NIEBERGALL Federal Chamber of German Architects Vice President Germany Denis VALODE Valode & Pistre Architect and Co-founder France

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Awards Best Healthcare Development

Agenda