Crisis set to be 'a long and painful process'

Prospects for the real estate industry remain very gloomy at Mipim 2009, according to Steve Williams, global adviser for Real Capital Analytics. 'This crisis is worse than any we've ever seen,' he said during a panel discussion at the Mipim real estate fair which got under way on Tuesday. 'So far we haven't seen a turnaround despite the vast amounts of government money being poured into rescue packages in the US.'

His view was shared by fellow-panelist Paul Morassutti, vice-president of Canadian consultancy firm Altus. 'The enormity of the crisis gripping the financial world is unprecedented,' he concurred. 'Those who believe the industry will rebound quickly and strongly in 2009 or the beginning of 2010 are delusional. It will be a long and painful process.'

Williams pointed out that the fundamentals are weakening, the occupiers' market is shrivelling and Middle Eastern money is dwindling. 'Middle Eastern investors are not there to save us.'

Turning to where the first signs of recovery will be seen, Morassutti noted that countries with a high level of institutional ownership and transparency such as Canada and Australia are well-positioned to come out of the crisis first. 'There are some good opportunities to buy office space in London, but London is still in a free fall and Western Europe has many problems. Long term I would favour cities like Hong Kong, London, New York, Toronto, Vancouver and San Francisco.'