This year’s MIPIM RE-Invest summit in Cannes, France brought together around 70 representatives of institutional investors to discuss major challenges facing real estate, including valuations, decarbonisation and the need for new talent.
It was the first time that the annual closed-door summit, including sovereign-wealth and pension funds, had congregated in the south of France for three years.
In a live poll, 55% of representatives indicated that renewable energy was the most material ESG topic for their organisations, while around 80% responded ’no’ when asked: “Are we having the impact we would ideally like today with our real estate allocation?”
A roundtable discussion moderated by Ciaran Carvalho, head of real estate at CMS, concluded that there would neither be a permanent shift to working from home nor a complete return to pre-pandemic working practices – but rather a mix, tilted towards people returning to the office.
Carvalho said the experience of commuting would be an important factor to people’s willingness to return to the office and this could be addressed by introducing measures such as more flexible office working hours.
Andy Pyle, head of UK real estate at KPMG, moderated a panel discussion which led to a consensus that the “valuation gap” between the most and least sustainable buildings would increase over time.
According to Pyle, the widening gap could be partly attributed to government regulation, as well as demand and financing which are all causing challenges for investors.
A panel moderated by Neil Slater, the global head of real assets at Abrdn, concluded that there was a need for private-public partnerships to help solve certain challenges facing the built environment.
Slater’s panel, which discussed the topic ‘Investing in the future or building on a burning planet’, highlighted the need for talent and clear industry guidelines to help with transition training.
A panel moderated by Timothé Rauly, CIO, head of real assets fund management at AXA IM Alts, concluded with a positive view on regulations that are helping to accelerate decarbonisation.
But Rauly said the panel was concerned that data relating to real estate decarbonisation was difficult to access.
The need for data was also referenced during a net-zero discussion moderated by Herman Jan Faber, co-head of client and fund management at Redevco. Faber said data collection needed to support a uniform approach to key performance indicators, so everyone can work from the same baseline.
John O’Driscoll, global CIO and head of investment, real assets at AXA IM Alts, moderated a panel discussion on the burgeoning life-science real estate market
The panel raised concerns about the rise in “life-science washing” – investment opportunities mispresented as life-science real estate investments which are simply traditional office assets “rebranded”.
Mahdi Mokrane, head of investment strategy and research at Patrizia, oversaw a discussion on smart, sustainable and affordable cities.
According to Mokrane, a key priority was decarbonisation; however, the panellists’ views differed on whether to focus on new or existing assets.
Andy Pyle: Cities face ‘inflection point’
The real estate sector is encountering enormous challenges but still provides opportunities, the head of UK real estate at KPMG told the MIPIM RE-Invest summit in Cannes, France on Tuesday.
In his future of cities presentation, Andy Pyle said there would be a “significant inflection point” for cities in the post-COVID-19 environment, and that, now more than ever, there was a call for “greater emphasis on health, sustainability and community well-being”.
The real estate sector is experiencing a decline of “one-size-fits-all” approaches and the traditional “centralised-city” model. “The sector is experiencing a shift from mass-production to mass-customisation,” Pyle said.
Now more than ever the real estate sector is adopting “smart, digital experience-centric solutions” and will require new partnerships and collaboration, both between and across public and private sectors.
Future cities – and real estate in general – is fully connected by using digital technologies and channels to “hear the voice of every community member”. This puts every citizen, business and stakeholder at the centre of everything a city does, Pyle said.
The future direction of cities is forcing investors to put ESG considerations at “front and centre of decision making”, according to Pyle.
Investors are making customer experience a priority by providing personalised service, a “unique experience that connects seamlessly with the virtual world” alongside other customer-focused services.
They are also placing greater emphasis on ‘placemaking’ and mixed-used spaces to create community and social interaction, he said.
According to Pyle, the real estate sector is also experiencing increased collaboration across the board in the form of public-private partnerships, landlord-customer relationships and the introduction of external industry expertise and experience.
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