MIPIM: Sovereign wealth and pension funds debate future of asset class

About 60 representatives of institutional investors came together at the MIPIM RE-Invest summit in Cannes, France on Tuesday to discuss the future of commercial real estate.

Topics touched on at the 30th edition of MIPIM centred around deals, pricing, e-commerce, climate change, new ways of living and how real estate should adapt as well as environmental, social and governance (ESG).

Hosted by Peter Woodward, co-founder and director of Quest Associates, a live poll by 52 of the representatives of institutional investors revealed that 54% had some awareness and were familiar with the UN Sustainable Development Goals agreed in 2015; 31% were not at all familiar and 15% were very familiar.

Pertti Vanhanen, the global co-head of real estate at Aberdeen Standard Investments, who moderated a roundtable discussion, summarised and said investors recognised ESG as a “benefit rather than a cost” and were at “different stages” of implemention.

Following discussions on residential investments, Edmund Craston, the head of fund management at Patrizia, said all investors were interested in residential as an asset class, but the lack of available assets was pushing investors to adopt varied approaches and strategies.

The poll at the event revealed that 66% of investors see residential-for-rent as an asset class that has the highest priority in terms of increasing investment exposure in 2019 and 2020.

Retirement and data centres each polled 11% with student accommodation and hospitality assets polling in 8% and 5%, respectively.

Craston said social housing was also being considered in a “meaningful way”.

Ciaran Carvalho, head of real estate at CMS, moderated a discussion on logistics, retail and e-commerce, and said last-mile logistics was seen as important but challenging to achieve in city centres due in part to a shortage of assets.

Carvalho said the panel agreed that drones were not going to be a major part of logistics’ delivery mode as a result of issues associated with security but added that they would still have a part to play and could be valuable in certain circumstances like delivering medical supplies to remote areas.

Responding to the poll question on whether the logistics property sector is overheating, 56% of investors said yes.

Andy Pyle, the head of UK real estate at KPMG, said the assumption that real estate is immune to disruption is wrong.

His panel’s discussion was on what new skills and experience real estate investors will need to employ, and there was a recognition for the need for more entrepreneurial and creative people.

A poll showed that data and analytics was the most important (44%) skill for real estate companies and investors in order to position themselves for future success; 30% believed lifelong learning and adaptability was the most important; branding and customer experience was voted for by 19%, while change management gained 7%.

No one voted for artificial intelligence as the “most important” skill for real estate companies and investors in order to position themselves for future success.

Andra Ghent, an associate professor at University of Wisconsin-Madison, moderated a panel to discuss the future of office property.

Ghent said in future the office sector will be focused on access to high-value tenants and where they want to be, adding that co-working offices and space was likely to become a complementary product.

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