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CONTENTS
Rounding off the second day of MIPIM, a packed Grand Auditorium was wowed by a performance entitled Legends of Moscow Opera
5 NEWS
STAT
Egypt set for growth; Greece targets tourism; IOC unveils new HQ; Prologis looks to the last mile; and more...
OF THE
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62 FULL CONFERENCE PROGRAMME 69 FEATURES Hospitality: brands face down Airbnb threat
MIPIM 2019 has welcomed 3,600+ visitors under the age of 35, coming from 57 countries.
THE TOP 10 JOB CATEGORIES ARE:
Healthcare: demographics and tech drive investment
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NEWS 3 Thrusday 14 March 2019 www.mipim.com
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THE MIPIM NEWSROOM IS LOCATED IN THE MEDIA HUB, PALAIS –1
EDITORIAL DEPARTMENT Editor in Chief Graham Parker News Editor Doug Morrison Sub Editors Clive Bull, Julian Newby, Joanna Stephens Proof Reader Debbie Lincoln Reporters Adam Branson, Ben Cooper, Mark Faithfull, Isobel Lee, Mark Moore, Liz Morrell, Head of Graphic Studio Herve Traisnel Graphic Studio Manager Frederic Beauseigneur Graphic Designers Muriel Betrancourt, Véronique Duthille, Carole Peres Head of Photographers Yann Coatsaliou / 360 Media Photographers Christian Alminana, Phyrass Haidar, Olivier Houeix, Sébastien Nogier Editorial Management Boutique Editions PRODUCTION DEPARTMENT Publishing Director Martin Screpel Publishing Co-ordinator Veronica Pirim ADVERTISING CONTACT IN CANNES Mylene Billon mylene.billon@reedmidem.com Reed MIDEM, a joint stock company (SAS), with a capital of €310.000, 662 003 557 R.C.S. NANTERRE, having offices located at 27-33 Quai Alphonse Le Gallo - 92100 BOULOGNE-BILLANCOURT (FRANCE), VAT number FR91 662 003 557. Contents © 2019, Reed MIDEM Market Publications. Publication registered 1st quarter 2019. Printed on PEFC Certified Paper.
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• 14 March 2019
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MIPIM Startup Competition: And the winner is… Spaceti A PROPTECH product that helps improve building environments, boosting productivity and profitability, has won the fourth MIPIM Startup Competition. Spaceti co-founder Aakash Ravi’s passionate pitch convinced the illustrious panel of judges to pick the Praguebased startup out of the six finalists. Spaceti, which was founded in 2016, has already spread its footprint to cities including New York, Stockholm and London. It provides integrated solutions via its own sensors, which interact with mobile devices to map
how building environments can be improved. “The system can monitor building usage, ranging from air quality to demand for meeting spaces, to help landlords and occupiers understand how internal layouts can be improved, if materials need to be replaced or greenery added,” Ravi said. “Why is this so important? Because corporate culture has changed. Previously, companies used to focus on metrics such as energy and traffic. Now, they’re interested in talent retention and productivity.” Ravi added that Deloitte, Skoda, Cushman & Wakefield, Zalando,
CBRE, Skanska and Invesco are already satisfied customers. The six finalists had made it to MIPIM after winning their respective heats during MIPIM PropTech Europe 2018, MIPIM PropTech New York 2018 and MIPIM Asia 2018. The top two winners from each event — representing some of the most promising and innovative startups from around the world — had just 10 minutes to tell the jury why they should win a year-long brand-exposure package across MIPIM’s stable of exhibitions. In second place, modular build-
Judges and finalists celebrate at the fourth MIPIM Startup Competition
MIPIM News 3 •
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• 14 March 2019
ing startup Tatami impressed the judges with its cross-laminated timber-construction panels, which are manufactured offsite and are ideal for affordable housing. In third place was USbased startup onTarget, which improves building-site safety and accuracy via hardhat sensors and badges. The other finalists included London-headquartered tenant-experience app District Technologies, Hong Kong AI hotel concierge Neoma and Berlin-based Sensorberg, a vertical hardware-to-software solution that can open doors and streamline workspace experiences. The next wave of startups will have the chance to compete for future recognition during MIPIM PropTech Europe 2019, which takes place on July 1-2 in Paris.
news
Egypt’s building programmes Prologis plans to re-focus are real, ‘they’re happening’ on big-city urban logistics THE CREATION of comprehensive urban networks to help reduce costs and simplify lastmile delivery alongside “leveraging innovation” to improve operations and introduce new revenue streams are at the top of the global agenda for logistics giant Prologis. Francois Rispe, managing director, southern Europe, said that the company has set out a strategy to act as the “middle man” between technology innovators and customers and is trialling many of the initiatives at an active test facility in San Francisco. The intention is to roll out the most successful projects across the portfolio which, said Rispe, “is possible because we have the size to scale-up”. Rispe said that the company wanted to enhance its entrepreneurial culture by becoming “even more ambitious” in terms of how it rethinks its buildings and operations, effective working practices, inclusivity and diversity. In the area of sustainability, projects include Solar Smart,
Egypt’s Khaled Mahmoud Abbas: “economic and financial stability”
THE YEAR’s MIPIM sees Egypt’s first-ever pavilion showcasing the country’s urban development programme and investment opportunities. “There are challenges, certainly, in Egypt now,” deputy minister Khaled Mahmoud Abbas told MIPIM News. “But we’re well on course to achieving the necessary goals in terms of housing, utilities, urban redevelopment, infrastructure and employment.” Abbas is Deputy Minister for Monitoring National Projects within Egypt’s Ministry of Housing, Utilities and Urban Communities. He spoke of the challenges and solutions facing Egypt’s housing and urbanisation programme. “We have to run fast to keep ahead,” Abbas said. “We’re a young country. We have a threetier structure of social-housing programmes. And we are looking to work with private developers where we will sell them the land in various sized plots and they take on the developments from there.” The key thing, he said, was that the programmes are real:
“They’re happening. They’re not just hopes and plans. We are actively driving the programmes forward.” Social programmes for low-income housing are being built at the rate of 350,000 units a year; middle-income housing is being built at 300,000 units a year. “In total our housing programme is the largest such programme in the world. The key to investing in Egypt is that things happen. They don’t just stay on the drawing board.” Over the next five years, around 3.5 million young Egyptians are projected to join the labour force and this presents a challenge, Abbas said. “However, this also creates a tremendous opportunity for faster growth; we can support the emergence of a strong and vibrant private sector to productively employ this emerging generation of workers.” The deputy minister said the signs look good for Egypt. “Our reforms, which began in 2014, have created economic and financial stability. Our message at MIPIM is: The best investment opportunities now are in Egypt.” MIPIM News 3 •
involving fitting solar panels onto logistics buildings and selling the green energy to the occupiers, and the installation of LED lighting to reduce energy consumption and to share the savings between landlord and tenant. “In terms of solar power this is very important because as distribution moves further towards robotics and automation, the demands for electricity are going to become higher and higher,” he said. Rispe said that the priority was not to expand beyond its current 19 markets, four in the Americas, 12 in Europe and three in Asia. Instead he said that the focus would be on urban logistics, especially in the largest cities such as Los Angeles, New York, Shanghai, Paris and London. “These are the cities with the most affluence in the new age of e-commerce and where we see the important need to help our clients find the best ways to reduce costs in their last mile delivery,” he said.
Prologis’ Francois Rispe: “even more ambitious”
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3 LONDON OFFICES | BIRMINGHAM NEW YORK | WASHINGTON DC JAMESANDREW.CO.UK
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Acquisition of a recently completed freehold block on behalf of Consensus Group from Regal Homes comprising 119 luxury residential units
Acquisition of an iconic 175,000 sq ft office building on behalf of WPP for their new Group HQ
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^ EASTGATE HOUSE 40 DUKES PLACE LONDON EC3
Former Financial Times HQ comprising 200,000 sq ft jointly acquired on behalf of WPP for their own occupation
40,000 sq ft self contained office building acquired on behalf of UKCBC for their own use as a business college
^ 21 SOHO SQUARE LONDON W1
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28,000 sq ft self contained office building acquired for WeWork
Sale of 14,000 sq ft freehold office building on behalf of private clients
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18 months. An interactive map will allow sites to be searched geographically and provide key details and plans. We’ve also speeded up decision making, cutting the approvals process for land disposals by around eight weeks. We’re working with ambitious local authorities to bring forward sites and help create great places to live. For example, a strategic site in Sussex, the Northern Arc at Burgess Hill, had stalled for more than a decade. Using our expertise as a Master Developer, working closely with local partners and with funding from our Land Assembly Fund, we have acquired the site and started to create the infrastructure and commercial opportunity to deliver a high quality new community for 3,500 homes, schools and leisure facilities. Above all, we’ll listen, building relationships and forging innovative partnerships that unlock developments, increase certainty for investors and developers and deliver more homes in places where people want to live. To learn more about working with Homes England to make homes happen, join us at the UK Government Pavilion.
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YOUNG LEADERS
Young Leaders Summit debates findings of future city research
THE RESULTS of a survey of MIPIM delegates and a public consultation were unveiled yesterday by Axel Dauchez, founder and president of Make.org, as part of the Young Leaders: Convergence Or Divergence panel discussion, which kicked off the Young Leaders Summit. The session aimed to get a glimpse of the city of tomorrow with an inter-generational discussion on the emerging requirements. The survey results centred around the idea of a city as an advanced laboratory of new ecological practices. As a whole the proposals were grouped around three expectations: a city that was more pleasant to live in, easier to move around in and one that rethinks its urbanism, functions and its way of building.
Axel Dauchez, founder and president of Make.org
“Real estate is not just numbers”
THE WORLD of real estate needs to do more to provide would-be entrants with a more holistic understanding of the sector, according to Bernardo Asuaje, managing director of Grupo Attia. Asuaje, who was involved with MIPIM’s first ever Young Leaders Summit yesterday at MIPIM, established his company Grupo Attia in 2015 after beginning his career in investment banking. “I realised I wanted to go from something intangible to something more tangible that could endure the test of time so decided to explore real estate,” he said. He established his company, with a co-founder, to bring senior housing and high-impact developments to Latin America, where he’s originally from, with a focus on Colombia. “I wanted to be in the shoes of the developer,” Asuaje said. However, he said the move required him to learn a number of disciplines from
sales and marketing to engineering. “A lot of people I’m hiring are going through the same journey of learning from many disciplines but there’s no book on this. For me it was a lot of self-learning. There’s not enough information out there for young people to learn, and for me I would put on lots of different hats,” he said.
Part of the solution, he believes, is for entrepreneurs like himself to give something back through university and school programmes to better educate students, “that can teach them about real estate because many courses are just focused on finance. Students need to understand that real estate is not just numbers.”
Bernardo Asuaje, managing director of Grupo Attia
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news
Greece upgrades tourism offer to stimulate global investment TOURISM helped to pull Greece through “not just a financial crisis, but a social crisis too”, said George Tziallas, Greece’s secretary general for tourism policy and development, as he outlined plans to encourage further investment and development in the sector across the whole country. Speaking ahead of yesterday’s conference session on Mediterranean Europe, Tziallas said that, with tourism up to 33 million visitors annually and revenues of €16bn representing around a quarter of the country’s GDP, the Greek government is focused on extending the holiday season and encouraging development away from traditional destinations, such as Athens. “Helped by funds from the EU, we have updated the road network to connect the country and we have also introduced flights from many more cities, including New York and the major Chinese cities,” Tziallas said. “We have also provided incentives and made legislation simpler to encourage an increase
Greek tourism ministry’s George Tziallas: “Over 50,000 beds were added last year”
in bed numbers for tourists. Over 50,000 beds were added last year, of which 30,000 were four- or five-star.” While Greece is keen to encourage overseas investment, the government has also been conscious that over 95% of domestic businesses are SMEs. As a result, local efforts have been targeted at helping these companies to upgrade and improve their offer. Acknowledging that bureaucracy remains a challenge, Tziallis said that the government had been working hard to create “an attractive environment for investment from the private sector”. He also stressed that Greece intends not only to broaden its geographical offer, but also to encourage a range of amenities, including luxury resorts, spas, golf courses and wellness centres. Tziallis added that he expected tourist numbers in Athens to reach six million this year, up from 5.5 million in 2018, meaning that hotel capacity would be running at nearly 100% yearround. As a result, Greece has become the first country to regulate Airbnb nationally, in order to ensure that the government receives tax revenue and that the home-sharing service can help to ease the capacity burden.
Helsinki carbon neutral by 2035 THE CITY of Helsinki is at MIPIM to identify investors and other partners to help it in its goal to become carbon neutral by 2035, according to Anni Sinnemaki, deputy mayor for urban environment Helsinki has been growing at a rate of 1.2% a year for the last decade, but the city authority wants to ensure that growth can be accommodated in a sustainable manner. “We have raised the bar in terms of our climate-change targets and we are to be carbon neutral by 2035,” Sinnemaki said. “It’s pretty am-
bitious, but we have a good action plan. At MIPIM, what we have been saying to investors, construction companies and developers is that we don’t know how to do it alone. We need partners — and we need innovative partners. Sinnemaki added that the real estate industry has a pivotal role to play if Helsinki is to hit its carbon-reduction target: “The real estate sector is crucial when it comes to carbon targets. Traditionally, it’s not been the most innovative sector, but I see real change. I’ve had really interest-
ing conversations about lowering the carbon footprint of concrete, green roofs and energy efficiency. I think that climate policy can be a driver, making the whole real estate and construction industries more innovative.” Sinnemaki also made a broader pitch for the Finnish capital as a destination for investment: “Helsinki is a vibrant, fast-growing city. We are doing really interesting and meaningful things and trying to tackle the challenges of growth in a sustainable and innovative way.”
MIPIM News 3 • 11 • 14 March 2019
Helsinki’s Anni Sinnemaki: “We need innovative partners”
Cannes by day
Walking to work
Seeing is believing
Nothing beats face-to-face meetings
MIPIM News 3 • 12 • 14 March 2019
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Turkey is braced for a busy market
Cosying up at Groupe Duval
Super models are Cannes regulars
Looking into the future
Water works
Delegates enjoy the sunshine
MIPIM News 3 • 13 • 14 March 2019
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Investment opportunity
WWW.ECOESTRELA.COM
in the latest destination of award-winning Hotel, Resort & Spa management company Six Senses’ (part of InterContinental Hotels Group).
ença Lic
Gremi International SARL, an international holding company based in Luxembourg (operating in Luxembourg, Netherlands, Brazil, Poland, USA) is developing the “Eco Estrela” project in Baia Formosa, Brazil. It is a new world-class, prestige tourism destination comparable to exotic, luxury locations such as Porto Cervo, Sardinia (Italy), Sotogrande (Spain) and Mayakoba (Mexico). The “Eco Estrela” project will encompass several hotels, resort facilities and luxury residential units. The extraordinary site features 6.5 kilometers (4.1 miles) of Atlantic beachfront and covers an area of 2571 hectares (6,353 acres). The nearest international airport to Eco Estrela Baia Formosa is Natal (99 km by highway). Its proximity to Europe and Africa make it the shortest and most fuel-efficient destination for aeroplanes crossing the Atlantic. The project will be implemented using a phased development approach and has a masterplan (prepared by EDSA) that allows up to 2,641 units to be built. Most importantly, Gremi International holds the final Installation License allowing to start construction, issued on December 31, 2018 by Environmental Agency of the state of Rio Grande do Norte. The resort’s interior and exterior are expected to be completed in 2022. In January 2019, Founder of Gremi International, Chief Investment Officer at Gremi and General Manager initiated the establishment of RAIF (Reserved Alternative Investment Fund) in Luxembourg. This structure is the optimum investment vehicle for the Eco Estrela project as it will simplify and accelerate the development of the project. RAIF gives investors security as it is managed by an authorised AIFM. At the same time RAIF will help project gain more visibility as it benefits from the European passport granted by the AIFM Directive for marketing to professional investors in the EU.
Distance to the New Airport approx. 99 km
Natal
Federal Highway (BR) 101
Pipa
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Natal - Baía Formosa (1 - hour drive on BR101)
João Pessoa - Baía Formosa (1 - hour drive)
ã
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On the 13th of February, 2019 IHG (InterContinental Hotels Group) announced the acquisition of Six Senses Hotels Resorts and Spas. IHG purchased the award-winning hospitality and wellness company from private equity fund Pegasus Capital Advisors for USD 300 million. IHG is one of the world’s leading global hotel companies with a growing number of luxury brands including InterContinental Hotels & Resorts, Regent Hotels & Resorts and Kimpton Hotels & Restaurants.
Recife - Baía Formosa (2.5 - hour drive)
For detailed investor / developer information please visit our stand at MIPIM 2019 (P-1.A20, P-1.B19) Lisbon Miami
6h Natal
Mr. Piotr Maj - Head of EcoEstrela Project E: p.maj@gremi.pl T: +48 609 501 195, +55 84 99686 0330 Mr. Dariusz Bąk - General Manager E: d.bak@gremi.pl T: +48 502 456 659
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Biggest hospitality project in South America (Brazil)
FĂ TIMA BEZERRA With the investment of about US $ 1.5 billion and the creation of approximately 400 direct jobs and 4,000 indirect ones these will be the greatest legacies that the Eco Estrela Resort Project will leave in Rio Grande do Norte. By themselves these numbers already guarantee the strong support of the state government for the implementation of the project. Along with this is the tourist promotion of the destination of Formosa Bay and the entire region, bringing the tourism of excellence and great investment opportunities for Brazil. This is the first investment of the group Six Senses in South America and starting from Rio Grande do Norte brings perspectives of other investments such as the Eco Estrela Resort to our state. As governor, I can assure you that we will not measure efforts to carry out this and any other project that brings benefits to the people of Rio Grande do Norte.
FĂĄtima Bezerra Governor of Rio Grande do Norte state in Brazil
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news
VIPs at MIPIM French Secretary of State Julien Denormandie toured stands in the Grand Paris Pavilion
Warsaw Mayor Rafal Trzaskowski told a MIPIM conference session yesterday that Poland is the star performer among transition countries
Marat Khusnullin, Deputy Mayor of Moscow, took to the stage before the performance by the Moscow Opera
Etienne Schneider (left) Deputy Prime Minister of Luxembourg, with Lydie Polfer, Mayor of the City of Luxembourg, Martine Schommer, Luxembourg’s ambassador to France and Carlo Thelen, director general of the Luxembourg Chamber of Commerce at the opening of the Luxembourg stand
MIPIM News 3 • 17 • 14 March 2019
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Swiss Life launches European fund targeting high-end hotels A NEW pan-European hospitality fund has been announced at MIPIM by Swiss Life Asset Managers aimed at international institutional investors with a target volume of €1bn. The fund, which is managed by Swiss Life Fund Management and advised by the Swiss Life Asset Managers Hotel Competence Centre located in Paris, will focus on three-star and four-star hotels located in dynamic European cities. Swiss Life Fund Managers said that the plan is to build up a European portfolio and that the fund will focus on the main European hotel markets, such as France, Germany, and the Netherlands, as well as southern Europe, due to the fact that the markets offer high potential for growth in average revenue per available room. The company added that the fund will target well-designed assets that match the demand from price-conscious travellers. Swiss Life Asset Managers has a total of 79 hotel investments, representing more than €1.4bn of assets under management. It has acquired 17 hotels in the
past 18 months. “We have been active in the hotel segment since 2013 and this is the fourth fund we have launched for this asset class, which is highly appreciated by our investors,” said Frederic Bol, CEO Swiss Life Asset Managers France. “This fund will benefit from Swiss Life As-
set Managers’ expertise in hotel investment, asset management, structuring and research.” It was also announced this week that Swiss Life Asset Managers had acquired two high-street assets in Spain, both located in San Sebastian, as well as three retail assets in Germany, in Bonn, Dortmund and Mannheim.
Swiss Life Asset Managers France’s Frederic Bol: high potential for growth
SOCIETE GENERALE SHOWCASES FULL RANGE AT MIPIM FOR THE first time Societe Generale Group is presenting its complete brand at MIPIM, reflecting the bank’s whole approach to real estate at the show.Traditionally the company has come to MIPIM with its real estate development arm Sogeprom but this year includes its corporate and investment banking, private banking, retail banking and other divisions involved in real estate in France. “We think we are a real player in the playground so want to show the bank as a whole is here with different capabilities for the real estate sector,” said Eric Groven, head of SG Real Estate French Networks and chairman of Sogeprom. He said it also helped the bank provide a more holistic approach to what it is doing. “My role is to align the different business lines throughout the bank to co-operate through one single voice and be a group that is able to concentrate its focus on one project,” he said. Societe Generale is also one of the leaders of the Grand Paris project with up to €2.5bn committed to the metropolis of tomorrow. “We strongly believe that Grand Paris is one of the first real places where the building of future cities will take place,” Groven said.
Bahrain is doing the business ON THE back of its track record in financial services and technology sectors, Bahrain is at MIPIM to woo European investors. “Bahrain may be geographically compact, but its growing economy offers investment opportunities within a supportive business infrastructure designed to help companies flourish,” said Ali Murtaza, director of real estate investments at Bahrain’s Economic Development Board.
“The economy of Bahrain is the most diversified in the region, with particular strength in the financial services and technology sectors and related industries,” he said. “We’re looking to be the Singapore or Hong Kong of the Middle East. As part of that we want to talk to European investors to examine ways of making strategic investments.” One of the bedrocks of the attraction of Bahrain is its business policies and laws which
give even small businesses the opportunity to thrive, Murtaza said. “There are many reasons to do business in Bahrain including its central Gulf location, low cost of operations, talented workforce and stable economy. With a track record of pioneering under its belt, Bahrain continues to move forward with policies and reforms that empower businesses and industries to establish themselves and grow.”
MIPIM News 3 • 19 • 14 March 2019
Bahrain EDB’s Ali Murtaza
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IOC integrates sustainability into ‘iconic’ new head office THE NEW headquarters of the International Olympic Committee (IOC) will be previewed at MIPIM today, ahead of its official summer opening. Marie Sallois, director of corporate development, brand and sustainability for the International Olympic Committee (IOC), will showcase the IOC’s new headquarters in Lausanne, Switzerland, in this morning’s session in the Grand Auditorium, entitled PechaKucha: Engaging The Future. The new Olympic House will open on June 23 — the 125th birthday of the IOC. It has been designed by Danish architect firm 3XN to bring together the 500 IOC staff who have been working across four different locations in Lausanne. “We are at MIPIM to explain how the IOC is walking the talk
in terms of sustainability, which we would also like to embed in the Olympic Games,” Sallois said. “We are aiming at various certifications, which force us to look at sustainability in a holistic manner and we have succeeded in integrating sustainability into an iconic building.” The design brief focused on a number of factors — sustainability, flexibility and respectful integration into the public park in which the site sits. “The final point was symbolism,” Sallois said. “We didn’t want to be ostentatious, but had to be iconic.” Kim Herforth Nielsen, creative director and founder of 3XN Architects, said this had been achieved by creating a sense of movement and sport within the building. “We were designing out from what was going to be happening within the building,” he said.
International Olympic Committee’s Marie Sallois: “walking the talk in terms of sustainability”
Towarowa 22 is next BIG thing DEVELOPER Echo Investment is at MIPIM to launch its latest ambitious project — Towarowa 22 in Warsaw, Poland. The mixed-use scheme, which
BIG’s Towarowa 22 in Warsaw, Poland
is located in the heart of the Wola area of the Polish capital, has been designed by architecture firm BIG. It will consist of around 230,000 sq m of space,
including offices, retail, residential and leisure. Construction work is expected to start in 2021. “When designing Towarowa 22, we drew on the rich cultural history of Warsaw to create a contemporary neighbourhood with lasting value for the future,” said Bjarke Ingels, BIG founder and creative partner. He added that the area’s mix of publicly orientated programmes and open parks would “form a future city that takes the best of aspects of a lively and activated urban density and a spacious landscape”. BIG’s best-known projects include Lego House in Billund, Denmark; VIA 57 West and 2 World Trade Center in New York City; Europa City in Paris; Google’s HQs in California and London; and 8 House and the Superkilen park in Copenhagen.
MIPIM News 3 • 21 • 14 March 2019
RUBY HOTELS’ FANS KEEN ON ‘LEAN LUXURY’ RUBY Hotels, the hospitality group specialising in ‘lean luxury’, is winning over a new generation of fans, according to founder and CEO Michael Patrick Struck. “The sort of people who like our hotels aren’t bothered about marble lobbies, gold taps in the bathroom or huge bedrooms,” Struck said. “They’re looking for hotels with character, soul and a sense of place, as well as somewhere to find like-minded people.” After launching around five years ago in Europe, the group now has six hotels in operation — three in Vienna, and one each in Hamburg, Munich and Dusseldorf — with another 13 under construction, including two in Asia. “This is the third group that I’ve grown,” Struck said. “Ruby has emerged out of a potent combination of experiences from my other initiatives. The projects that we are now seeing come to fruition are the result of a long collaboration with our partners.” Struck’s approach focuses on every detail, from the ground up. “We build our own hotels and plan them differently,” he said. “We have developed a modular development system that allows us to work with more than 100 different room geometries.”
Ruby Hotels’ Michael Struck
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Flexibility factor dominates global office space trends
IWG chief executive Mark Dixon
A TIPPING point in the need for flexible office space has been passed as businesses — driven by the need to reduce real estate costs and attract and retain employee talent — turn to a mix
of solutions, according to Mark Dixon, chief executive of IWG. The head of the global workspace provider said that while lots of different things had combined to drive change, three key factors are influencing the future direction of the market. “First you have new accounting rules from this January that mean that office space has to go down as debt on the balance sheet,” he said. “That is a big influencer for CEOs. Secondly, people are demanding flexible options to the way they work and this is consistently coming up as one of the most important factors in recruiting talented people. And thirdly, if business life gets better then employees are happier and more productive.”
Dixon described the trend as “universal”, although it has gained particular traction in continental Europe, especially those markets with high employment and a strong regard for worker welfare. IWG’s largest single market, the US, has also been growing rapidly. “I think the Americans are very fast adopters if they like the look of something,” he said. “If it works for the business and it works for the employees, then they are much more likely to implement it quickly.” As a result of soaring demand for distributed, serviced workspaces, Dixon said that IWG had increasingly segmented its offer to provide users with a range of budget and style choices, depending on the business.
Tourism behind boom in Montenegro MONTENEGRO is offering investment opportunities for real estate development in luxury and high-end tourism locations, family-oriented and mass tourism sites as the country expects to offer five major tenders for development partners this year, said Damir Davidovic, secretary of state for sustainable development and tourism. Two luxury coastal schemes are already under development, Porto Montenegro and Portonovi, and Davidovic said that he is keen for interested investors to speak to the current development partners to hear about their experiences in Montenegro. “What’s important is that these are not concepts but live projects,” he said. “Montenegro is full of surprises, with beautiful beaches and heritage, and tourism represents 24% of GDP. Tourism revenue exceeded €1bn
for the first time last year.” The country expects between 2.4 and 2.5 million tourists in 2019, up from 2.2 million in 2018, and the government has focused on creating a stable and open process for investment, mindful of developing the right
balance of hotels and real estate and creating the right conditions for international partners. “Primarily we are looking at working with overseas business on a long lease basis of 30-90 years in order to develop all levels of tourism in the country,” he said.
Damir Davidovic, secretary of state for sustainable development and tourism
MIPIM News 3 • 23 • 14 March 2019
ALDAR TAKES THE GREEN PATH FOR DUBAI PROJECT
Aldar Properties’ Maan Al Awlaqi
ABU DHABI-based Aldar Properties is rising to the challenge of sustainable building, according to its executive director of commercial properties, Maan Al Awlaqi. “Our new community, Alghadeer — located on the border between Abu Dhabi and Dubai — is going to be a game-changer in terms of green real estate,” he said. “This unique project comprises a total of 14,400 residences, including villas, townhouses and maisonettes, all enjoying access to a multiuse agricultural-led space featuring allotments for producing food. As well as finding tools on site to garden and grow, residents will be able to sell their produce in a market space.” Apart from providing resources for green-fingered residents, the destination will feature lakes, running and cycle tracks, gym, camping and BBQ sites plus a network of walkable gardens and parks lit entirely by solar powered lights. “The new Alghadeer masterplan also includes schools, a hotel, public garden areas, community swimming pools, multi-use sports areas, and community centres — so it provides the full package,” he said.
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MIPIM UK Summit moves to new venue in Old Billingsgate London’s Old Billingsgate Market will be the venue for October’s MIPIM UK Summit
THIS October, the UK’s leading event for the built environment, MIPIM UK Summit, moves to Old Billingsgate in the heart of the City of London. Ronan Vaspart, managing director of MIPIM, said: “After five successful years, MIPIM UK Summit is evolving to reflect the contemporary world of real estate. With a new venue and a new name, the MIPIM UK Summit
will look closely at the changing dynamics of property and the importance of cities and regions across the UK. The high-level conference will feature international voices and address the critical issues impacting on the future of UK real estate.” MIPIM UK Summit focuses on the global, economic, societal and technological trends driving the real estate industry. It
will offer strategic insights, solution-oriented tools and insights from leaders from across the real estate industry. The event will explore the expanding needs and interests of the built environment, along with the changing priorities of cities, places and people. This year will also see new event partnerships formed, including alliances with the British Property Federation, the
UK Proptech Association and the London Evening Standard Homes & Property publication. “New technology and changing behaviours are transforming the nature of real estate as an investment, and as a product or service we use as consumers,” Vaspart said. “High energy prices, climate change and government regulation are already pushing sustainability up the real estate agenda. There is a need for investors and owners to improve asset performance and manage a broader range of risks.” He added: “With a new structure, content, speakers and venue, the MIPIM UK Summit gives a unique opportunity to envision the future of UK real estate, enabling economic growth, sustainable performance and community cohesion. To create an environment that brings to life the contemporary real estate scene in the UK, MIPIM UK Summit is committed to a 50:50 gender split in the conference programme, combining a strong national agenda with international voices, supporting the industry to forge relationships, share knowledge and create a purposeful dialogue.” MIPIM UK Summit takes place at Old Billingsgate, London on October 14-15, 2019.
PLP ‘rethinks the role of architect’ LONDON-based architecture practice PLP has launched PLP Labs, a new advisory and research group that will develop concepts and technologies to make the built environment more integrated with emerging technologies, as well as more user-conscious and better equipped to fight climate change. Hala El Akl, director of PLP, said: “PLP Labs emerges from a need to rethink the role of the architect as a mediator between the unprecedented speed of technological and digital change and the comparative slow pace of urban development.” PLP Labs will look at unexplored
areas of the built environment to propose new scenarios that add social, environmental and financial value, El Akl said. The new advisory will collaborate with neuroscientists, social and data scientists, and tech companies to explore research-based solutions to help businesses, property developers, governments and cities stay ahead of emerging innovations. Its activities will range from developing frameworks for transforming public assets into multi-use developments; live 3D holographic modelling, allowing multiple users to design collaboratively in real time;
research into subterranean and sub-aquatic networks of tunnels for autonomous electric vehicles; and studies into the circular economy and materials re-use. The institutions with which PLP has partnered on research projects include the City of Stockholm, Cambridge University and the World Economic Forum. El Akl added: “The built environment is lagging and struggles to keep up with change — at a huge cost to our social and natural environments. PLP Labs’ aim is to make cities more inclusive by increasing the number of voices shaping the urban environment.”
MIPIM News 3 • 25 • 14 March 2019
PLP’s Hala El Akl: “increasing the voices shaping the urban environment”
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Strong economy helps Hungary set new inward investment high AS THE premier central European investment destination Hungary has broken all records for inward investment in recent years. 2018 was the best year yet. “We broke records in the total number of projects and in the total volume of projects,” Robert Esik said. Esik is the president of HIPA, the Hungarian Investment Promotion Agency. “Inward investment was up 23% in 2018 over the previous year. We had 98 projects inwardly funded which created 17,000 new jobs,” he said. Some of the record-breaking was due to a number of breakthrough projects — including BMW’s decision to build a new factory in Hungary. “That means Hungary is the only European country outside Germany that has a car manufacturing factory from each of
Germany’s big three carmakers — BMW, Mercedes and Volkswagen,” he said. Hungary’s foreign investment success is firstly down to its sta-
Robert Esik, president of HIPA
ble and strong economy. “GDP growth is running at 4.9%,” Esik said, “which is twice the European average”. And secondly it is due to Hungary having a very competitive tax system. “We have the lowest corporation tax rate in Europe at 9%. And we continue to believe that products not labour should be taxed.” Hungary’s economy is also very open. There are few constraints on foreign investment. HIPA is at MIPIM, Esik said, because “it enables us to promote infrastructure projects and real estate where we want to emphasise the focus. For example we’re very keen to diminish the north-south investment divide that exists in Hungary and target more investment and infrastructure to the regions in the south. Budapest, the capital is a great place to invest. We now want to promote the regions too.”
Sophia Antipolis celebrates 50th WITH a strong claim to be Europe’s first ‘technopolis’, the Sophia Antipolis development zone in the hinterland behind Antibes, on the south coast of France, celebrates its 50th anniversary this year. Jean Leonetti, mayor of Antibes and Sophia Antipolis, told MIPIM News: “The dream 50 years ago was to create a unique environment where university, research institutions and hightech companies could be located close by each other. The idea was they would cross-fertilise each other and benefit the local and national economies. The idea was right. It worked.” One of the basic requirements in those early days, which has been conformed to ever since, mayor Leonetti said, was that the technopolis “would also benefit from state-of-the-art and cut-
ting-edge architecture. We wanted it to be a showcase as well as a zone of economic benefit.” Fifty years on the dream became a reality. “But the working dream is not yet finished,” mayor Leonetti said. “It goes on. We’re creating
1,000 new jobs every year. And we’re making available 20,000 sq m of new space every year.” The Sophia Antipolis site covers 2,400 ha. It is home to 2,500 companies and 38,000 people work there.
Jean Leonetti: “we’re creating 1,000 new jobs every year”
MIPIM News 3 • 27 • 14 March 2019
MPC UNVEILS NEW HEALTHCARE PLAN IN NETHERLANDS GERMAN asset manager MPC Capital has launched a new healthcare strategy through its Dutch subsidiary Cairn Real Estate. Cairn has just reached the financial close of a capital-raising round for the new venture, having secured a total of €30m in equity. The company will now leverage this capital to grow its portfolio, with the aim of reaching a total of some €70m. The initial investment and development portfolio consists of three medical centres across the Netherlands. The company is also developing a primary-care medical centre in Alphen aan den Rijn, and the construction of a new private nursing home in Bodegraven. Pieter Akkerman, managing director of Cairn Real Estate, said: “This new strategy presents us with the opportunity to invest in a market that is experiencing increased opportunities that are still attractively priced.”
EUCON LEADS THE INDUSTRY INTO DIGITISED WORLD DIGITAL transformation expert Eucon is helping drive the evolution of the real estate industry, after leading both the automotive and insurance sectors into a brave new world, according to Sven Kruger, CEO of the Munster-headquartered global company. “We started 20 years ago with motor and insurance firms, and now we’re helping real estate businesses digitise and automate their processes,” Kruger said. “In Germany, two of our leading clients are Union Investment and Strabag, so we’re working with the best. “We already have 400 employees in our worldwide businesses, from Atlanta Georgia to Shanghai, and we’re focused on further growth at MIPIM, to help more firms embrace the future.”
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White Arkitekter driven by social and environmental sustainability
White Arkitekter’s Alexandra Hagen: “taking a holistic approach”
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GOOD design should be at the forefront of the move towards inclusive and sustainable urban environments, according to Alexandra Hagen, CEO of Swedish-based White Arkitekter, one of Europe’s leading architectural firms. Talking to MIPIM News, Hagen said making cities sustainability and inclusive are the design watchwords of White Arkitekter, which is Scandinavia’s leading architectural practice and the third largest in Europe, with projects across Europe, the US and Africa. “We work with clients, communities and consultants to create inclusive, resilient architecture that inspires sustainable ways of life,” she said. “Our vision is to design a better built environ-
ment with people in focus, and to innovate sustainable ways of living. Embedded in our work is a commitment to sustainability in all its forms, underpinned by practice-based research.” White Arkitekter consists of a collective of 900 employees organised in networks across 13 offices in Sweden, Denmark, Norway and the UK. It is an interdisciplinary practice, covering urban design, landscape architecture and interior design. But Hagen said that, as an employee-owned company, “we live by our values of sustainability and innovation. They permeate our entire organisation and every assignment we pursue. Challenging ourselves to improve the ways in which we practice are the two key factors that help us to create
engaging, lasting architecture.” Hagen, who spoke at Tuesday’s Manchester At MIPIM-hosted session The Next Generation Of Cities: Creating The Places People Want to Live, Work, Play And Learn, added: “The world faces enormous challenges of social inequality, climate change and diminishing resources, and architecture and urban design play a vital role in tackling this. Our responsibility is to help create inclusive, equitable communities as our cities face the pressures of greater densification and diversity. Sustainability is a driver for creativity and the backbone for meaningful architecture. For us, it means taking a holistic approach and a longterm perspective — a combination of environmental, economic and social sustainability principles. Our focus, first and foremost, is to create value for people. This means improving the quality of life, health and wellbeing for all.”
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MIPIM News 3 • 29 • 14 March 2019
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Expanding market in Turkey fuels Istanbul property show DEMAND for property is booming in Turkey, which is why the annual real estate show called RE360 — just two years old — is already a fixture on the local industry calendar but with the potential to grow internationally. “Our goal is to expand on a national level to ultimately create an international platform, to promote Turkey’s investment potential at a global scale,” said RE360 organiser Avi Alkas. RE360, The Great Gathering of Real Estate, has set off on its journey determined to rebuild the future with a new perspective, Alkas said. The first RE360 was in 2017, and the show took place for the second time last year “serving as a solution plat-
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form for the real estate industry’s sub-sectors with a 360-degree point of view”, Alkas said. “We strive for our conference programme to respond to the expectations and considerations of industry stakeholders in the best possible way,” he said. RE360 is organised with support of the Turkish ministry of environment and urbanisation “which proved highly influential and instrumental in gathering more than 700 senior leaders at the last event”. Alkas’ goal for RE360 2019 is to “ensure a high level of domestic as well as international participation. The world’s leading property market MIPIM will be our RE360 strategic partner for the second time this year, enhancing
our strength to promote Turkey’s potential in the international arena and to thoroughly discuss our real estate topics in a 360-degree way”. RE360 is an event organised by Alkas in strategic partnership with MIPIM and Alkas is also the official Turkish representative of MIPIM and MAPIC. “In the last five years, we have had an ever-expanding delegation representing Turkey at MIPIM,” he said. “Thanks to our working relationship with MIPIM and the high potential Turkey offers, MIPIM also promotes RE360 to the international arena. This is an embodiment of the trust and confidence of MIPIM in Turkey’s potential. RE360 2019 will be held at end of the year
Avi Alkas, MIPIM’s Turkey representative and organiser of RE360
in Istanbul. It will strengthen Turkey’s co-operation with its neighbouring countries and support Turkey’s promotion overseas.”
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CONCEPT SHOPPING MALL WITH THE UNIQUE STREET FOODMARKET KANTINI BERLIN, GERMANY
MIPIM News 3 • 31 • 14 March 2019
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‘Our economy is steaming,’ Quebec tells global market FIRST-time MIPIM exhibitor Quebec is showcasing some of the major projects cur-
rently under way in Canada’s strongest-growing province. “We’re the only province in
Canada that has shown 2% annual growth for the past 20 years,” said Carl Viel,
Team Quebec: showcasing the Canadian city and province’s “great opportunities”
president and CEO of Quebec International, the body responsible for the city and province’s economic development. Alongside Quebec International, the Quebec team has representatives in Cannes from nine developments, companies and organisations: ABCP Architecture, Capwood Advisors, Centre des Congres de Quebec, Graph Synergie, Immostar, Le Phare, Norton Rose Fulbright, Societe Immobiliere du Massif de Charlevoix and Societe de developpement Eximm. According to Viel, Quebec offers numerous investment opportunities. “Our economy is steaming,” he said. “We have a very low unemployment rate, currently standing at 3.8%. Jobs are growing in Quebec and we’re attracting people from all over the world. There are great opportunities.”
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Dubai prepares for World Expo and plans legacy development AS DUBAI gets ready to stage the World Expo 2020 — a global economic showcase — equally important is what happens to the site after the sixmonth event concludes, which is why there is a strong delegation from the emirate at MIPIM. The expo will run from October 2020 to April 2021, when the 2.7 sq km site in south Dubai near the international airport will become the location for a new, mixed-use urban development run by the District 2020 organisation. “We’re going to ensure that post-expo is as exciting for the District 2020 area as Expo 2020 itself. A city will host the expo; but a city will also remain after it,” said Nadimeh Mehra, Dis250_AIX_N2_PIM
trict 2020’s legacy development and impact vice-president. Mehra said the site will remain
“a space built for connectivity, innovation and sustainability”, as embodied by Expo 2020, but
District 2020’s Nadimeh Mehra: “the most connected place on the planet”
the full 2.7 sq km area will be turned into residential, commercial and hospitality zones. “It will be the most connected place on the planet between October 2020 and April 2021, and we’re handing all that on afterwards to create a smart city,” Mehra said. All spare land left over after the post-expo zoning will be sold to third-party developers. District 2020 will begin the handover to future occupiers in the last quarter of 2021. More than 2.5 million sq m of floor area will be available. There will be 200,000 sq m of commercial and residential space available for rent, including 55 grade-A commercial units and 800 residential units. 100 serviced plots for residential, commercial and hospitality developments will be for sale. There will be an autonomous vehicle public transit route linking all points on the site in a 4.4 km loop.
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MIPIM News 3 • 35 • 14 March 2019
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Bremen’s diversified economy offers something for everyone
Bremen’s Martin Guenthner (left) and Andreas Heyer: “a lot of opportunities”
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BREMEN’s centre may be a UNESCO World Heritage Site, but that has not stopped the city from finding space to accommodate growth in its highly diversified economy. According to Martin Guenthner, senator for the economy, labour and ports of the Free Hanseatic City of Bremen, the city is primed for investment. “MIPIM is important for the real estate scene all over and especially for a city like Bremen, where we have had a lot of good developments over the last few years,” he said. “We are one of the main logistics hubs and have one of the biggest ports in Europe. We also have a lot of industry, including the biggest Mercedes-Benz [plant]. So, on the logistics and industrials side, it is quite interesting to invest in
Bremen.” However, Bremen’s economy is about far more than the automotive and logistics sectors. “The German space industry is more or less concentrated in Bremen,” Guenthner said. “We also have a lot of food industry — the beans for every second cup of coffee you drink in Germany are roasted in Bremen. It’s very diversified. So, for people who are interested in good businesses, there are a lot of opportunities in Bremen.” Andreas Heyer, CEO of economic development for Bremen, said the city has been careful about planning for growth in each of its core markets to ensure that space is available for further development. “There are sites for manufacturers near the automotive sector, for instance,” he said. “We have a development pipeline of more than 500,000 sq m and we are developing the plan for the next four to five years so that, in the future, we will continue to have space for investors.”
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MIPIM News 3 • 37 • 14 March 2019
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High yields bring investment as Greek recovery continues CONFIDENCE is returning to Greece and international investors are active in the market again, with the country offering high yields as it recovers from the economic crisis, said Aris Karytinos, CEO of NBG Pangaea, Greece’s largest REIT. NBG Pangaea has around €2bn invested across real estate asset classes in Greece, particularly in the office and retail sectors. It also has significant investments in Italy, Cyprus and Sofia, Bulgaria as it positions itself as a regional player in south east Europe. “Greece is a relatively small market, so in order to create scale it is important for us to deploy capital in our neighbouring markets as well. We are also aggressively pursuing hospitality assets, student housing — where there is a real lack of modern accommodation — and logistics, which is going to be a very important sector for Greece given its location in Europe,” said Karytinos, who added that after a very
difficult decade he believes “the worst is behind us and we feel far more confident about the future”. Karytinos said that the industry “had a lot of things to do” as it moved to create a more positive investment climate and that the recent issuing of a 10-year government bond signalled far greater confidence in the Greek economy. In order to encourage
further overseas investment he said he would like to see more done to counter bureaucracy as the country continues on an upward trajectory. “Our goal is to continue to diversify and we remain very optimistic that the Greek market will continue to improve and with this attract further inward investment,” he said.
NBG Pangaea’s Aris Karytinos: “we feel far more confident about the future”
Intreal solution to Brexit woes FUND managers in the UK are waking up to the fact that they will have to adopt new business models if they are to continue to trade in the EU, according to Michael Schneider, managing director of Intreal. Marking the company’s second visit to MIPIM, Schneider said
that Intreal’s business model, which involves initiating and managing funds on behalf of third parties, could provide a solution. “We do not launch our own funds — we work with other managers,” he said. “This is a nice model because the managers do not need a license themselves.
Intreal’s Michael Schneider: “we are looking for more partners”
“Some of the UK managers have a problem, because when Brexit comes they will lose their licence for Europe and so ours is an interesting model for UK managers because we are located in Luxembourg and Hamburg in Germany. We are looking for partners and more and more managers are looking for partners on the administration side.” Schneider added that he had detected a change in mood among UK managers at this year’s MIPIM. “Last year the managers were very relaxed, but now they are getting more and more nervous and they know that Brexit will have consequences. They will lose their licence and not every company is big enough or strong enough to start a new business in Dublin or Luxembourg.”
MIPIM News 3 • 39 • 14 March 2019
SCHRODERS SEES CAPEX AS KEY TO LONG-TERM INCOME GLOBAL real estate firm Schroders is continuing to reinvest capital expenditure into its portfolio with a focus on income generation. The firm is concentrating on key ‘global cities’ such as Berlin, Paris and London, especially those cities that contain high-end professional services firms, tech companies and ‘knowledge-based businesses’. Speaking to MIPIM News, Jessica Berney, deputy fund manager of Schroder UK Real Estate Fund, said: “We’re really focused on creating income. We’re heavily focused on investing in the portfolio and creating that income. We have a future pipeline of capex and the teams are heavily pushing tenants to re-gear. The whole focus is ensuring that we have sustainable affordable longterm income.” Schroders has around £15.5bn (€18bn) of assets in numerous markets throughout Europe, with roughly 60% of these based in the UK. The company has been active in Berlin, attracted by the abundance of tech companies and the digital clusters that have sprung up in the city. In the UK the company has just completed the signing of personal finance advice and price-comparison tech platform Moneysupermarket Group, to its asset at No.1 Spinningfields in Manchester. The company has taken 2,100 sq m of space over two floors at the building in the centre of Manchester.
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Bologna set to become the world’s ‘fifth city for super-computing’ WITH its medieval fortifications and one of the oldest universities in the world, Bologna might not look like a candidate for Italy’s foremost smart city. Yet the emergence of digital firms in the urban area have inspired the launch of a new tech-friendly hub, the Bologna Big Data & AI Technopole, which is set to make Bologna the Italian super-computing capital by 2020 — and one of the top-five data cities in the world. “We realised that Bologna was already hosting 70% of Italy’s super-computing capacity, through a natural cluster of university research units and a nuclear physics institute,” FDI director of the Emilia-Romagna region, Ruben Sacerdoti, said. “So we decided to bring these projects together on a single campus, transforming a former tobacco factory site not far from Bologna’s railway centre. “The resulting scheme will con-
centrate investment funding by the European Commission and regional government funds, to potentially make Bologna the fifth city in the world for super-computing.” The Emilia-Romagna region is present at MIPIM to discuss opportunities for international investors to get involved.
“We’ve allocated 40,000 sq m of space to international investment projects at the site, and we’d love to welcome interested parties,” Sacerdoti said. “This is going to be a place where energy and climate change, life sciences and big data can work side-by-side to solve the problems of the future.”
Emilia-Romagna’s Ruben Sacerdoti: project to solve the problems of the future
Altus builds on French acquisition
Altus Group’s Carl Farrell
ALTUS Group, the Toronto-based software and data company behind property-management software Argus, is moving into Germany after its entry into the French market in 2018, following the acquisition of software company Taliance. President Carl Farrell said he expected the Munich office to be fully operating during the second quarter of this year and called it the “next natural step for the business”. The €20m addition of Paris-based Taliance was the company’s first step into continental Europe and provided a foundation for growth in the fund management segment of the market globally, Farrell said. Meanwhile, Allianz Real Estate recently selected Altus Group as
its partner to provide an investment and asset-management platform for its global €60bn asset portfolio and, Farrell said, the size of the German market made it the obvious next staging post for an office. “While we have an ‘Argus-everywhere’ strategy for our global top-100 real estate clients, it has become clear that having local offices to serve mid-market companies is very important,” he said. “In addition, each country has its own regulations and we are optimising the software for each market, working on translations of the material and adjusting the functionality.” He added: “There is a clear opportunity for data to be far more complementary to what the real estate investors are doing,” he said.
MIPIM News 3 • 41 • 14 March 2019
SHEFFIELD LAUNCHES GLOBAL INNOVATION CORRIDOR THE UK’s Sheffield City Region is to launch a Global Innovation Corridor at MIPIM 2019 that will link assets such as the Advanced Manufacturing Innovation District, the University of Sheffield’s Advanced Manufacturing Research Centre, Sheffield Hallam University’s Advanced Wellbeing Research Centre, the Sheffield Olympic Legacy Park, the National College for High Speed Rail, Barnsley’s Digital Media Centre and Doncaster Sheffield Airport. The aim is to create a magnet for people, industry and innovators from across the world. Sir Nigel Knowles is special advisor on international trade and investment to Dan Jarvis, the mayor of Sheffield City Region — who came up with the idea originally. “As we build our vision for a Global Innovation Corridor connecting people, places and ideas, MIPIM provides an excellent opportunity to engage with international partners and forge new investment partnerships,” Sir Nigel said.
Sir Nigel Knowles
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Low risks and high returns lure investors to Hannover THE GERMAN city of Hannover is attracting growing numbers of foreign investors, drawn by low-risk, high-return assets and developments, the city’s mayor has said. Speaking at MIPIM, Hannover mayor Stefan Schostok said that, over the past decade, the profile of investors in the city has shifted from being almost exclusively internal to a diverse mix that includes buyers from across Germany and overseas. “We had €800m in transactions in 2018, and a big proportion of this came from buyers outside of Hannover,” said Schostok. “10 years ago, investment in Hannover was mainly internal, now it comes from German and international investors.” Schostok added: “We’re here to meet foreign investors because it’s important to us to know the people who are investing and to
know that they are interested in Hannover as a city, not just as an investment. We are not an A city in Germany. We are a B city, but Hannover is a beautiful city.” Among a number of development projects currently under way in Hannover is the construction of a new global headquarters for tyre manufacturer Continental. The 45,000 sq m development on the edge of the city, due for completion in 2021, solidifies the global company’s connection with Hannover, which dates back to 1871. Also under way in a burgeoning neighbourhood of Hannover is a significant residential development project, which will add a further 3,500 homes to the city. The current population of Hannover stands at around 550,000 people. Schostok said there were also considerable opportunities for
investment and development within the city’s office and light-industrial sectors.
Hannover mayor Stefan Schostok: “€800m in transactions in 2018”
History meets hi-tech at Materazzo PIONEERING Brazilian regeneration project Cidade Materazzo aims to preserve the past while creating one of the most technologically advanced communities in the world, according to developer and project visionary Alexandre Allard.
“There has never been a project like this in Brazil that preserves the heritage of old buildings on such a scale to create a new district,” said the database billionaire. “In Brazil, developers have preferred to knock down low-density structures to build
Cidade Materazzo developer Alexandre Allard: “never been a project like this”
new towers, as its more financially rewarding. But Sao Paolo is now paying the price.” With a population of 21 million people and acute congestion, the city is crying out for green spaces, Allard said. He added: “Materazzo village represents a careful restoration of the old hospital site, where 500,000 local people were born. Citizens have an emotional connection with this place and it will become a tree-lined area of cultural exploration, flanked by a farmers’ market and a unique retail concept.” Underpinning all this, Allard has created an app to augment the traditional shopping experience, backed by fearsome logistics resources and underground robotics. “The experience will be rendered seamless by data-driven solutions,” he added.
MIPIM News 3 • 43 • 14 March 2019
GLOBAL CAPITAL FLOWING IN AND OUT OF JAPAN THE ANNUAL Japan Breakfast yesterday heard that the country’s real estate industry is becoming more global, with capital flows into the sector increasing at the same time as Japanese investors are looking to diversify by investing abroad, especially in the US. Yasuyuki Sanami, managing director at Diamond Realty Management, told delegates: “The low interest-rate environment in Japan means stocks and bonds don’t offer decent returns, so real estate is increasingly attractive.” He added that strong competition in the domestic market was driving investors to look abroad in search of returns. But at the same time, global capital is flowing into Japan. Louise Kavanagh, managing director of Nuveen Real Estate, said she was targeting residential in the major Japanese conurbations. And AXA IM - Real Assets has just bought a large portfolio of core logistics assets, according to Laurent Jacquemin, head of Asia-Pacific. Suchad Chiaranussati, chairman and managing director of SC Capital Partners, said the Japanese hospitality sector was attractive because demand for hotel beds was being driven by the 2020 Tokyo Olympics and the growth in tourist numbers.
Diamond Realty Management’s Yasuyuki Sanami speaks on the Japan Breakfast panel
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YOUNG LEADERS
Young people need role models to draw them into real estate ROLE models, coaches and a clear purpose are three key factors needed to increase the appeal of the real estate industry for the younger generation according to Young Leaders: Promoting Talent & Skills, the second session in the Young Leaders Summit at MIPIM today. Zofia Voda, Czech Republic board member for the RICS, said young women in particular need to be able to see the path ahead of them. “They need to see themselves in five or 10 years and to see that when they come back from maternity leave they have a role model to look up to,” she said. Bernardo Asuaje, managing director of Grupo Attia said the younger generation needs to understand its role. “We need to have a purpose to be in a company and understand what we are doing to
make a difference,” he said. Connor Ryterski, managing director of Prizeotel Hotel Group, said the industry also had to learn to listen better to young talent. “A lot
of people talk about generation Y but not so many talk to generation Y. We are not that different it’s just that the meaning of the job has changed,” he said.
The Young Leaders: Promoting Talent & Skills panel: Grupo Attia’s Bernardo Asuaje (left); PfP Capital’s Alexandra Notay; RICS’ Zofia Voda; WMCA’s Deborah Cadman; Prizeotel Hotel Group’s Connor Ryterski; and EY’s Marc Lhermitte
Industry must open up to new talent OPENING up the conversation around real estate is key to attracting a more diverse range of people into the industry, according to Jonathan Sebbane, CEO of Sogaris, a French company focused on urban logistics. “Real estate is a closed term. The way to improve things is to open it up to wider ideas,” Sebbane said. “For example, urban logistics is not just about real estate but the way people are using buildings and so on.” Getting people interested in sustainability and environmental impact of real estate is also a way to attract new talent, he said. “We have to be more implicated in the challenge of climate change, because it’s very important for the younger generation. If real estate can demonstrate it can bring real solutions to some of the big challenges we
face, then it can interest more and more people,” he said.
Sebbane has been CEO of Sogaris for the last three years.
Sogaris’ Jonathan Sebbane: climate change is “very important” for young people
MIPIM News 3 • 45 • 14 March 2019
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VTS looks to ‘open-minded’ northern Europe to grow proptech platform US-BASED leasing and asset management platform VTS is looking for further expansion into Northern Europe this year, through gateway cities Amsterdam and Stockholm, while it anticipates organic growth in France and Germany, UK managing director Charlie Wade said. The company currently services 19 European countries from its London office, opened in 2016, and now has 930 million sq m and 35,000 users across its platform worldwide, covering the office, retail and industrial sectors. Wade hopes to double the European space on the platform this year, as the company introduces its latest update, dubbed VTS 3, while it launches MarketView and MarketPlace in the US ahead of introduction to Europe in 2020 or 2021. “I have been blown away with the open-minded approach from the Dutch and Nordics about adopting proptech,” Wade said. “These markets are very enthusiastic about the op-
portunities that technology provides and we expect them to be a major focus this year.” Wade also noted expansion in the industrial and logistics sector, which he expects to be a feature of 2019. He said: “Since the last quarter of last year we have seen a big take-up of interest from the logistics operators, and not just the key developers but many of the smaller ones
too. Whether they are riding the wave or perhaps very keen to ensure that they are not disrupted by new players, they have really embraced the opportunities around technology.” Wade added that helping optimise the use of data is a key focus for VTS. “Our job is to help our clients ‘slice and dice’ the information,” he said. “We call it ‘lighting up the data’.”
VTS’ Charlie Wade: “lighting up the data”
Co-working ‘now part of the landscape’ CO-WORKING is the future and it’s here now. That’s the message from Enrico Sanna CEO of co-working space
Fora’s Enrico Sanna
specialist Fora. “Even when I was at MIPIM last year people were not sure about co-working, sharing and optimising office space. But it’s now part of the landscape.” Sanna said the co-working concept has matured. “We’re no longer treated as a fad, or a kind of naughty kid. We’re seen as a realistic and beneficial way of optimising office space.” He added: “Landlords ask themselves whether they can do it themselves, or should they consult a professional? Increasingly they’re going to the professional, and that’s us.” Sanna is at MIPIM to talk to clients and hold meetings. Even
though most of Fora’s office projects are in London, “MIPIM is a better place to track people down and gather everyone you need to speak to together. It’s also the place where you’re going to meet potential new clients.” Projections indicate that co-working is taking between 20% and 30% of mature markets like London. These percentages are almost certain to grow in the future. “Landlords, developers and occupiers realise that co-working saves them money. It also gives them flexibility. The office world is seeing it as a natural progression to their needs.”
MIPIM News 3 • 47 • 14 March 2019
CONSTRUCTION STILL ‘STUCK IN AGE OF POST-AND-BEAM’ EARLE Arney, managing director of global architectural practice Arney Fender Katsalidis (AFK), is focused on growing the firm’s business in Canada and in mainland Europe, to counterbalance its established operations in Australia and the UK. In Canada the 60-storey Brookfield Place in Calgary has completed and AFK is carrying out workplace transformation projects for Deloitte in Montreal, Calgary and Vancouver. And in Europe the firm has been appointed on six hotels, mainly in Germany. Residential is a third pillar of the firm’s mix of business, according to Arney, and it has won a major project in North London to deliver 824 apartments, part for rent and part for sale with 40% designated as affordable. “The project has been designed with modular construction in mind,” Arney said. “The car industry has moved on from chassis to monocoque design, but construction is still stuck in the age of post-and-beam.” He said capacity issues were driving the move towards modular but there were still barriers to its take-up. “We need incentives for construction companies to adopt modular,” he said. “And that needs to be top-down and policy-driven.”
Arney Fender Katsalidis’ Earle Arney
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Prepare for tax rule changes, German consultancy warns REAL estate investors need to get up to speed with changes to German law coming soon, which will affect the way property sales are taxed, according to a partner at one of the country’s leading business and tax advisory firms. Peter Eggers, partner at Berlin-based global consultancy firm Baker Tilly, said that reforms to German law affecting land transfer tax, currently going through the German parliament, will place new costs on buyers of commercial property and other assets. The changes to the law would reduce the threshold at which land transfer tax is paid, from
95% of the shares of a property company to 90%. Under the current rules if a buyer acquires fewer than 95% of the shares of a property company or asset they pay no tax on that deal, a rule which has allowed investors to avoid large tax payments. Eggers said that the reforms could hamper share deals in Germany, which would become less attractive to buyers. He said that companies both inside Germany and from outside should be very clear what the new rules are and how they will affect any future transactions, including current deals which could be affected retrospectively after the new law has come into place.
Baker Tilly’s Peter Eggers
“Even if you have already signed a contract you can be hit by this. People need to know that there are ways to avoid this. They need to get advice from experts,” he said.
REPRESENTATIVES of the five UK local authorities selected for the Future Places programme gathered at the RIBA/RTPI Breakfast yesterday with RIBA president Ben Derbyshire (centre). The five local authorities announced as winning participants are: Bradford; Exeter; Yarmouth; Gateshead; and North Northamptonshire. The Future Places programme was launched last year by the Royal Institute of British Architects (RIBA), the Chartered Institute of Housing (CIH), the Local Government Association (LGA) and the Royal Town Planning Institute (RTPI).
Joining forces to reduce carbon WORKING together with developers and landowners to ensure that development considers future power and energy needs is the key focus of Electricity North West, the UK network operator and provider of power to Greater Manchester, Lancashire and Cumbria. It also needs to be done to ensure sufficient power is available to drive the region’s economy and decarbonisation agenda.
“Primarily we are here at MIPIM to support Manchester and the north west of England,” said Steve Cox, engineering and technical director at Electricity North West. “A lot of the work we have been doing with the city council is about how we can support the sustainability of the city while reducing carbon. “The real challenge is how we make sustainability affordable for cities and residents. We have
to focus our investment on areas where the city is redeveloping or modernising the structure now. If we focus expenditure on what’s changing now we can take steps to a decarbonisation process,” he said. Cox said a two-way conversation with developers was required. “Once we know where we are we can get into a more collaborative partnership with the developer.”
MIPIM News 3 • 49 • 14 March 2019
JAPANESE BUYERS LOOK TO EXPAND LONDON ASSETS LONDON is likely to see an influx of Japanese investment into Central London offices in 2019, as yen buyers find office investments a third cheaper compared to three years ago, according to the latest research from Knight Frank. Analysis of the Central London offices market reveals the significant currency discounts for global investors over time. Compared to the previous market peak in 2015, Japan sees the biggest discount on the West End offices market, with Japanese investors paying 31.2% less in Q4 2018. Last year saw Japanese investors spend £222m (€259m) on Central London assets with major deals including the £154m (€180m) acquisition of First Avenue House on High Holborn, by a Japanese private client of Sumitomo Mitsui Trust Bank (SMTB) and Knight Frank, the sixth largest private purchase in London last year. Edward Fairweather, Central London capital markets at Knight Frank, who specialises in Japanese cross-border investment, said he expected higher investment activity in 2019. “Japanese investors are now expanding their Central London appetite into a wider range of sectors in 2019, including hotel, logistics and residential as they look to diversify out of Japan. Investors can expect discounts of up to a third on 2015 values for West End offices, which combined with Japan’s ongoing programme to diversify its public purse, means London is very well placed for significant investment in 2019.”
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Landlords switch on to WiredScore as rating scheme boosts demand DIGITAL connectivity is the oxygen of business, and elevated standards of internet speed and reliability represent the “next-level challenge for the real estate industry”, according to William Newton, president and EMEA managing director
WiredScore’s William Newton
of digital certification specialists WiredScore. WiredScore, the global rating scheme for digital connectivity in commercial real estate buildings, has been “the driving force behind repositioning the wider industry debate around connectivity”, Newton said. “Recent data show a rental uplift on average of 4.7% for WiredScore certified buildings,” Newton added. “It’s a reminder that proptech companies shouldn’t be focusing on their products’ ‘exciting features’ but on the value those features can drive to their clients.” Landlords are becoming increasingly “switched on” to the ratings scheme, Newton said, taking advice from brokers and engineers to focus on the connectivity issue. That in turn has meant greater success in attracting coveted
Technology, Media & Telecommunications (TMT) tenants. “As a whole, TMT occupiers make up 14.1% in non-WiredScore certified buildings, whereas in certified ones that rises to more than double at 30.2%,” Newton said. This revolution now means that around 6.5 million sq m of commercial buildings in the UK now carry WiredScore certification. There are also consequences at a city level, with the most forward-thinking municipalities addressing the question at the urban planning stage. “The City of London draft city plan mandates digital certification for new buildings,” Newton said, “as connectivity is fundamental for buildings in the square mile. We expect to see that reproduced elsewhere. The city of Boston also addresses questions about digital connectivity in its planning laws.”
London tops new digital chart in Europe LONDON narrowly beat Paris to top place in a new survey that ranks European cities for social media and online news mentions. Madrid, Rome and Barcelona rounded up the top five. The report, Europe’s Most Talked About Cities, provides a completely new insight into which are the most visible European cities on social media and online news. It was produced by built environment PR and communications firm ING to help city policy and placemakers understand how online presence impacts a city’s brand. While London came top overall, Paris was ahead of London for social-media mentions. Berlin scored well for digital news coverage, while London, Paris, Moscow and Istanbul led for Instagram snaps, being captured roughly twice as many times as any other city.
Leanne Tritton, managing director at ING, said: “Visibility matters to cities, influencing investment, where talent concentrates and whether we decide to visit or not. The challenge is to
ensure the quality of conversations happening across all forms of media — including digital — helps each city to not just climb the rankings, but also activates its unique story.”
Leane Tritton (top, second left) and the ING team
MIPIM News 3 • 51 • 14 March 2019
GL HEARN ADOPTS MODERNISATION STRATEGY
GL Hearn‘s Deborah McLaughlin
LONDON-based property consultancy GL Hearn has relaunched at MIPIM, widening its focus to including project and cost management functions, as well as appointing a new senior leadership board to the business. “We are creating a new future-focused dynamic team focused on residential, retail and corporate occupiers,” said Deborah McLaughlin, managing director of GL Hearn. She said the company saw those three sectors as driving growth and had appointed new sector leaders for each. “The business is 95 years old but we have a five-year strategy and are very focused on what we will look like in five years. We are modernising the business so we are better able to advise our clients,” she said. Part of that was about attracting more young people to come forward within the business and an innovation forum set up within GL Hearn helps to encourage this, she said. Staff are encouraged to present their ideas in innovation hub events at the company’s offices across the UK. “That won’t be line managers; it’s about young people bringing their ideas forward because they think differently,” she said.
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Booming Malta in Cannes to show new opportunities for investment FOREIGN investment into Malta’s real estate market has “increased drastically” over the past six years, according to the country’s finance minister. Speaking to MIPIM News, Minister of Economy Dr Christian Cardona, said that Malta had “managed to achieve huge economic growth” over recent years and was attracting an unprecedented level of foreign investors across all sectors, including the property market. “We have a very stable political and social platform, and Malta has reached a stage where there is virtually no unemployment,” Cardona said. “This is attracting investment and bringing people in to work in Malta. Economic growth at around 6.5% 172_RMisAWARDS_N1_PIM
of GDP compared with 1% between 2010 and 2013, and this is going to continue next year. “There is less development activity happening here because there is a small stock of real estate but this is creating lots of opportunities for investors.” This is the first time that Malta has been present with a stand at MIPIM. Representatives from the Ministry of Economy and the Malta Tourism Authority are here to showcase economic opportunities and meet with potential investors and partners. Cardona said that there were numerous opportunities for cross-border movement into Malta, highlighting the thriving economic services sector, as well as the country’s growing creative, knowledge-based industry.
JAPAN REDEVELOPMENT SET TO CONTINUE AFTER 2020 OLYMPICS THE JAPANESE development market is booming ahead of the 2020 Tokyo Olympics, but the opportunities for investors extend far further into the future, according to Kanji Matsushita, associate managing officer at Takenaka, who is at MIPIM to support Japan’s national stand. “My role is to bring in investment from foreign players to the Japanese market,” he said. “We are doing a lot of redevelopment in city centres — the Japanese market is currently doing a lot of regeneration projects. Redevelopments are really active. Of course, we have the 2020 Olympics, but I think we
Malta’s Minister of Economy Dr Christian Cardona
will see continuing activity after that as well.”
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Panel stresses importance of a positive social impact THE REAL estate industry can and must do more to engage with society and ensure that it has a positive impact on communities, according to Gerry Hughes, chief executive of Avison Young. Hughes was speaking at a breakfast event aimed at UK investors and was introduced by the panel’s chair, Landsec chief executive Rob Noel, as a tireless champion of urban regeneration. Having stressed the importance of leadership, both in the private and public sector, Hughes went on to emphasise that the built environment industry had a long way to go in terms of ensuring that it truly represents society at large. “We need to diversify the skill set that we have as an industry and bring people into the sector to
allow us to adapt to the changes that are happening every day,” he said. “We need more creative people and more people who are able to think strategically to work alongside investors to bring forward the very best developments.” Hughes also urged the room to think more carefully about the social impact the industry can deliver. “We’ve got to stop paying lip service to these issues and really focus on how we can make a greater positive impact on society,” he said. “There is a symbiotic relationship between what we do and the impact that has on people’s lives. We really need to drive a focus on ensuring that our businesses actually make people’s lives better.”
THIS IS WHERE THE FUTURE IS BEING BUILT
UK office market enters ‘new kind of space race’ PRE-LETTING is set to remain a vital component of the UK office market for both occupiers and landlords, but with supply levels falling tenants are being forced to look further in advance for quality space that fits their needs, according to Cushman & Wakefield. The company’s latest research shows a significant decline in the delivery of new offices, yet occupier demand has remained
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robust, even following the EU referendum result. Chris Dunn, senior insight analyst at Cushman & Wakefield, said: “With delivery of new office space falling, we are seeing a new kind of space race play out. To stay ahead of the game, pre-let occupiers will increasingly be forced to look even further ahead of time to secure high quality space; this could be four to five years for large transactions.”
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Privatised Hamburg bank back on the global scene HAMBURG Commercial Bank is attending MIPIM for the first time since it was privatised and has used the event to set out its international strategy. The bank, previously known as HSH Nordbank, was state-owned until last November, when it was bought out by a consortium of private-equity firms. It is now 100% owned by Cerberus Capital Management, JC Flowers & Co, GoldenTree Asset Management, Centaurus Capital LP and BAWAG. “It’s a new name and a new design but, in real estate finance, it is the same team with the same spirit,” said Michael Windoffer, director and head of crossborder business at Hamburg Commercial Bank. “We are the first German state bank to have been privatised, so it’s a unique situation.”
After being bailed out by the state in 2008, HSH Nordbank stopped its international real estate lending activities. However, Windoffer reported that, in the last few months, Hamburg Commercial Bank has once again started doing deals outside Germany. “We have new possibilities due to our new owners,” he said. “We are now able to go abroad again. We looked at what our clients were doing and which markets we’ve worked in before, and decided that we would do deals in France, Benelux, Austria and the UK. We closed the first deal in December and we’ve closed another two Dutch deals since then, plus one UK deal.” Windoffer added: “Our international strategy is no longer just a concept or a theory — it’s happening. We see great potential in the Netherlands.”
Working to keep cities unique URBAN planners and developers need to avoid taking a “cookie cutter” approach to urban regeneration projects if they are going to keep their towns and cities unique, the associate director of a major international architects firm has said. Speaking to MIPIM News, Oliver Bayliss of London-based BuckleyGrayYeoman, said that there is a danger of creating “generic spaces” in cities where regeneration is done without care and diligence for existing buildings. Bayliss said: “The danger is that design can become quite generic, without any sense of continuity with the past. Cities have their own personality. What you want in a regeneration project is something that’s genuine; that becomes very potent”. BuckleyGrayYeoman is based in Shoreditch in East London but has been engaged in numerous overseas projects in recent years,
including in Spain, Sweden, Italy and Germany. In London itself it is involved in a significant and complex redevelopment project, The Goodsyard on Bishopsgate, near Liverpool Street station, on behalf of landlord Hammerson. Bayliss said that there is strong international demand for UK architecture expertise, as well as the powerful branding and conceptual design associated with arty areas in East London in and around Hackney and Shoreditch.
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LES CYCLISTES de l’immobilier arrived in Cannes in time for the opening day of MIPIM. The peloton of 47 cyclists left Fontainebleau on March 8 and rode down the Rhone Valley via Lyon and Valence before heading east to Cannes. The cyclists have already raised more than €40,000 for their nominated charities, Solidarites International and Se Tendre la Main, and hope to raise €60,000 eventually.
THIS year’s SWIPIM charity swim saw 25 intrepid swimmers brave choppy conditions to make a 40-minute circuit of the Bay of Cannes yesterday morning. The event’s co-organiser, Elliot Wood associate director Mark Goodbrand, said the swimmers had already raised €6,000 for homelessness charity Streets of London. “If property people can’t help the homeless, who can?,” he said.
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All eyes on Wales as Cardiff Bay 2.0 regeneration plans unveiled CARDIFF and the surrounding region are set to benefit from a number of economic initiatives, infrastructure projects and real estate developments in the coming months and years, the leader of the city council has said in Cannes. Speaking yesterday at the MIPIM launch of an ambitious regeneration project for the Cardiff Bay, Huw Thomas, leader of Cardiff Council, said the Welsh capital offered significant opportunities for investors with future development planned across a number of sectors. The Cardiff Bay development will see a major overhaul of a significant stretch of land, including the creation of a new indoor arena with capacity for 15,000 spectators. Thomas said that, at 169_RM SOME_N1_PIM
this early stage, the council and regional planners are in “listening mode” over the project, ahead of more detailed proposals, consultations and moves to kickstart the bidding process for a development partner. The project is being dubbed Cardiff Bay 2.0, as it follows on from a wide-ranging regeneration project over 30 km of waterfront land back in 1999. The project fits in with the wider Cardiff Capital Region plan, a far-reaching, long-term drive to stimulate economic growth and industrial activity in South Wales. Andrew Morgan, chair of Cardiff Capital Region, said: “We are looking at making big investments in the region’s infrastructure, in initiatives like the South West Metro. We want to drive progress in Cardiff and outside
the city.” Within Cardiff itself, Thomas said there had been a number of significant property developments in recent years and there was potential for further expansion within key sectors, with grade-A office space and housing being in high demand.
He also noted that the retail market in Cardiff had also been bolstered in the past decade by the arrival of the St David’s shopping centre. Thomas added: “We are bucking the trend in terms of high streets. We have a good strong blend of major department stores and the independent businesses. There is a need for housing, including social housing. The private-rented sector is at an early stage in Cardiff, but it’s picking up.”
Showcasing big plans for Cardiff and the South Wales region: Cardiff City Council’s Huw Thomas (left) and Cardiff Capital Region’s Andrew Morgan
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FEATURE: HOSPITALITY
The Hospitality & Tourism area at MIPIM 2019
Staying in I the game Airbnb has given travellers a way of bypassing the traditional hotel. Chris Bown asks how hospitality brands are fighting back — and what it mean for the properties they occupy
N FEBRUARY, European hospitality giant AccorHotels announced something of a rebrand — it was dropping the word Hotels from its name. The move might be dismissed as insignificant by some but, as an indicator of the way the major players in the hospitality sector have shifted their thinking, it was a significant moment. Facing an onslaught that includes disruptors such as Airbnb, changing consumer expectations and booking habits, and immediate trial by social media should anything be less than satisfactory, hotel companies have had to react. The response has taken time. In some European markets, despite consistent growth in tourism, commentators have pointed out how hotels have barely improved their returns over the last decade. Now, we are seeing the fightback. Evidence of the changing demands of consumers comes first hand from the results of fo-
MIPIM News 3 • 69 • 14 March 2019
cus-group research, carried out by business-intelligence experts BVA BDRC. “What we found is that, while cost is a high driver, the highest is the demand for the comfort of a home,” says James Bland, BVA BDRC’s head of hotels research. Also strong in the minds of consumers was the wish to avoid feeling lonely, connect with the locality, enjoy shared experiences and feel hosted in some way. For hotel brands, “uniformity is kind of toxic”, Bland warns — hence the reason some brands are redesigning their ground floors with stronger local input. He says that hotels need to play to their strengths, including higher perceived security, facilities and their breakfast offering. “There are levers that hotels can pull — they need to focus on the positive,” Bland adds. As regards hosting, for example, he says the concierge function can be reinvented: “Hotels are actually full of local people — they work there. It’s all about
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FEATURE: HOSPITALITY where you deploy the talent.” At Accor, it is more than the name that is changing as the group sets out its position in the hospitality space on a number of fronts. In recent years, the company has invested in buying into companies that provide food and events support, home rentals and technology. It has also backed edgier hotel concepts, such as Mama Shelter, Jo&Joe and 25hours. More recently, it has made a major investment in reinventing its guest loyalty scheme, declaring that customers are no longer simply interested in gathering points towards a free hotel night. Elsewhere, industry stalwart Hilton has launched Motto, a new brand firmly pointed at the younger, millennial traveller. It promises flexible rooms, interconnected to allow families and groups to have shared space, combining the feel of a trendy hostel with its hotel roots. And unusually for a global company that still has much of its portfolio in the US, Hilton will launch Motto in Europe, with the first site under construction in central London. Hilton says it will look for city-centre sites, relying on a compact room design to deliver value. “From the top-down perspective, there is evidence that Airbnb is
growing, not just cannibalising, the hotel market,” says Andrew Harrington, co-founder of investment advisor AHV Associates. “I see aparthotels and boutique hotels being consistent with the change in the market. Hotel groups need to be offering product that moves along the spectrum.” The Airbnb effect can also be detected in the way that serviced apartments are making headway in the mainstream accommodation market. The idea of hiring a room with a mini kitchen and perhaps a lounge area was not on the radar of many European consumers a decade ago, when it was a product largely reserved for corporate guests, often on long-term stays. Today, apartment brands including Staycity, and InterContinental’s Staybridge Suites are doing well in European markets. Not only does their accommodation appeal to independent travellers, but there is no need to run expensive restaurants or bars, which keeps operating costs low for owners. While still suitable for the long-stay guest, online booking systems and wider distribution channels also mean owners can sell single room nights easily, which ensures higher occupancy levels. Staycity, originally from Ireland, has built a portfolio across the
UK, Germany and France, and recently launched a premium brand, Wilde. Staybridge Suites is an established apartment brand from the US, which InterContinental reinvented for Europe. After a slow start in the days when hotel owners were wary of building properties with large rooms that would be hard to flip to another brand, Staybridge is now rolling out across Europe. Marc Finney, head of hotels and resorts consulting at Colliers, says Airbnb “has brought the business into the 21st century”. Market analysis by Colliers shows the market penetration of Airbnb is driven by leisure travellers and varies strongly. For example, in the UK, Airbnb accounts for 25% of the accommodation market in Edinburgh, yet just 3% of the market in Manchester. And that growth has, to an extent, been driven by the shortage of reasonably priced hotel rooms. Finney insists the home-sharing market that Airbnb has promoted has grown the overall accommodation market, notably attracting younger travellers, groups and those seeking budget accommodation. But issues around regulation remain, he says: “There’s an unfairness towards hotels — it
Accor out in force in Cannes
MIPIM News 3 • 71 • 14 March 2019
takes a while before governments get involved. Healthy competition is not a problem but, if Airbnb crack the business market, that could be a problem.” Hotels remain a sound investment, though Finney says that developers and investors need to be granular when checking suitable locations — “in a big city, even street by street”. Another phenomenon that has arisen in response to changing consumer demands is the dual-branded property. The concept is an established one, with operators enjoying cost savings as a result of running two hotels side by side. But in Europe, it is increasingly being interpreted as a combination of a hotel and a serviced-apartment brand in a ‘double decker’ format. The move gives guests a choice, depending on their preference and type of trip, as to whether they have a pure hotel experience or stay on a more self-contained basis. Dutch-based operator Cycas Hospitality has been at the forefront of running dual-branded properties, starting with a Holiday Inn/Staybridge Suites duo close to London’s Olympic Park, and more recently launching a joint Moxy/Residence Inn property in Amsterdam.
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FEATURE: HEALTHCARE
Changing health demographics bring real estate opportunities
The real estate industry is waking up to the potential of healthcare property
An ageing population and emerging medical technology are driving a revolution in the way medical services are delivered. Large city-centre hospitals are being replaced by a decentralised model of local clinics and care homes, and this change is opening up opportunities for the property industry to deliver these new facilities. Peter Clucas reports
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S AN investment sector, healthcare is bundled in with others including self-storage, data centres and automotive, under the title “alternatives”. JLL’s research on alternatives reveals that respondents see the most value in less-established sectors, where yields haven’t compressed as much in recent years or there is greater assurance of income, as in the case of prima-
ry healthcare. And their analysis points to softening in yield expectations for elderly care and retirement living, in contrast to primary healthcare. Why is this happening? The provision of primary healthcare is being devolved. In the UK, for example, pressure on the large National Health Service (NHS) hospitals is being passed back down the line to doctors’ surgeries, which are opening longer and
are becoming better equipped. This is enabling hospitals to become more specialised while the first line of defence is the smaller units: local health centres and doctors’ surgeries. This means that there is greater need for residential accommodation away from hospitals. According to CBRE director, David Mathieson, speaking about the South of England: “Activity in the healthcare market continues to
MIPIM News 3 • 73 • 14 March 2019
shift towards new builds and sites for up to 80 beds. Innovation and quality are centric to investment decisions with a focus on service, facilities and regulatory compliance. The private pay sector is key to the sustainability of new builds as higher operational costs coupled with rising build costs are impacting profit levels. Care villages are now firmly on the radar with a number being completed and significant pre-sales agreed
FEATURE: HEALTHCARE prior to practical completion.” Giovanni Perin is managing partner at Threestones Capital, with a portfolio of 75 nursing homes with more than 7,000 beds across three core European markets — Germany, Italy and Spain. “In general, compared to traditional property investment sectors, the prime yields on modern care homes typically range between 5.5% and 6%” Perin says. “This is a good 190 basis points above those of first-class commercial or retail properties in core markets. Over the last decade we have consistently delivered annual returns in excess of 10% across our three healthcare funds.” Filippo Monteleone, president of CAREIT, a specialist in senior housing and care homes explains the background: “Medical technology is changing rapidly. Hospitals are becoming technical platforms with more accent on treatment and less on residential care. This puts more pressure on care homes and assisted living,” he says. And he sees this trend continuing. “Diseases are being treated — you can live with cancer. People will be at home more.” And if they cannot live at home, they will need to find places in care homes or assisted living developments.
Filippo Monteleone:
“Diseases are being treated — you can live with cancer. People will be at home more” Benjamin Davis, CEO of Octopus Healthcare, agrees: “By 2050, the global population of retirees aged 60 and over will reach 2.1 billion and will include 425 million people aged over 80, which means there is an increasingly strong demand for real estate that’s tailored to the needs of an ageing population. Healthcare infrastructure offers investors attractive, sustainable returns underpinned by age-adjusted real
assets as changing demographics fuel demand to service a growing elderly population.” Davis cites care homes, which involve long-term leases, of typically 35 years. The leases are linked to inflation with the broader assurance that returns are unconnected to the financial market. “Investors are confident in the returns profile for healthcare investments, with 42% of investors we surveyed for our recent Healthcare Infrastructure Institutional Report expecting net returns over the next five years in the range of 10%-15%,” he says. “There’s a desperate need for high-quality healthcare investment across Europe,” Perin says. “According to the OECD, an extra 15,000 people per day will be reaching retirement in Europe over the next 30 years. By 2025, more than 20% of Europeans will be 65 or over; and the number of over-85s is projected to rise from 14 million to 20 million by 2020.” “Over the next 10 years the market will continue to mature, driven by growing numbers of institutional investors seeking long-term, anti-cyclical, and uncorrelated stable income streams to match their liabilities,” Perin says. “At the same time, asset managers will deepen their understanding of residents’ needs and operators’ capabilities and harness the transformative power of technology. All of which will improve the lives of the people that the healthcare and nursing homes sector exists to serve.” Octopus’ Davis confirms this view. “In the care-home arena, we expect the importance of longterm relationships with respected operators and ensuring quality of provision to the end user to grow. In terms of retirement living, later life is taking on a different shape and meaning to previous generations. Quality of life is better, and the modern-day retiree is active and social so healthcare infrastructure needs to adapt. This includes facilities with outside space: gyms, swimming pools, hair salons, bars and cafes. The supply of fit-for-purpose housing for each of these groups is in
Octopus Healthcare’s Benjamin Davis: “investors are confident in the returns”
short supply and therefore more will need to be built to meet demand.” The market is expanding throughout Europe. Perin describes it as a “demographic megatrend that impacts the entire continent” so picking specific countries is not that straightforward. “However, we have focused our attention on investment opportunities in Germany, Italy and Spain where we have identified future growth, consolidation opportunities, and strong supply-demand imbalance.” Octopus sees that the growing global elderly population is already putting a strain on medical services and, as it continues, demand for quality-care real estate and more suitable living accommodation will further outweigh
Benjamin Davis:
supply. As a result, they expect a strong flow of interest from institutional investors into healthcare infrastructure, with the potential for $200bn to be invested in the sector over the next five years. “We work in real estate, but we understand operations,” Monteleone says. It’s essential to know how it works — investment and operations. And we need to know how it is evolving. “Healthcare is something that used to be linked to hospitals. Now society, elderly care and hospitals are converging and wellness is a big issue. For the future, I believe that cities must become more inclusive. Generations will need to stay together — working, living and caring for each other.”
“By 2050, the global population of retirees aged 60 and over will reach 2.1 billion”
MIPIM News 3 • 74 • 14 March 2019
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