EUROPE - The hot topic at this year's MIPIM event in Cannes is going to be how banks manage and offload the real estate assets on their books, panellists concluded during IPE Real Estate's inaugural webinar.
John Forbes, partner at PricewaterhouseCoopers, told an online audience that his firm was starting to see "more rigorous action with borrowers" on the part of lenders, and this would be a leading topic of conversation at the annual property convention next week.
In addition to gauging general levels of investor appetite, panellists Hermann Aukamp, CIO and director of real estate at Nordrheinische Aerzteversorgung, and Alessandro Bronda, head of global investment strategy at Aberdeen Property Investors, agreed this would be a leading talking point.
Panellists argued if more banks were to offload assets, it might help prevent market bubbles from emerging in the core Western markets - particularly in the UK - where investor demand is outstripping the supply of assets on the market.
Forbes said a "lot of money chasing the same assets" had brought about the start of a bubble in a number of core markets, particularly the UK.
"To a certain extent, that is already happening now in Paris as well, but I don't think we will see the same movements in pricing as we will see in the UK," Bronda said.
"It is definitely happening in Germany in certain cities," Aukamp added.
Forbes said the "penny was starting to drop" with investors who were beginning to realise that they are unlikely to be able to achieve the returns they are seeking by just targeting prime real estate in London, Paris and Munich.
This realisation could coincide with the start of banks beginning to offload some of their non-core properties at attractive prices or through complex transactions.
"One of the things the banks will be keen to do is extricate themselves from non-core markets, so that UK lenders will want to wind down their positions overseas," Forbes said.
Bronda said such an offloading of assets could have a negative impact on the pricing of non-core real estate markets, but equally could widen the investment opportunities open to investors at the moment.
Aukamp agreed and said he will be most interested to learn at MIPIM whether investors were regaining an appetite for investing outside their home borders again.
IPE Real Estate's preview of MIPIM was aired live on 9 March and a recording will be posted on IPE Real Estate.com next week.