FM newsroom – mipim, real estate market. Amid challenges unseen for decades the global real estate market players are only cautiously optimistic about the possible recovery. Market challenges and potential solutions all came to the fore at MIPIM real estate conference in Cannes last week.
The real estate market is facing significant challenges globally, including falling commercial real estate (CRE) prices and empty offices due to the pandemic. Professionals, investors and developers gathered at the MIPIM real estate conference in Cannes were trying to find optimism in the current situation while watching for signs of a cautious recovery in investor activity – Portoflio writes referencing Reuters.
Only cautiously optimistic
Though professionals at the conference saw positive signs of investor activity, they still advocate caution. The increase in borrowing costs and the high vacancy rate negatively affected several markets. A significant part of office space is considered obsolete in both Europe and the United States.
The volume of European commercial real estate transactions fell drastically in 2023, which meant record-low sales in the office market. Still, some investors are hopeful that the situation will improve if interest rate cuts by central banks ease corporate debt burdens.
At MIPIM investors and property agents have been toasting deals since 1990, but there were few to speak of last year. Consequently this year increased attention was paid to what new opportunities are unfolding. According to some market players, only unsellable projects remain.
Further decline expected?
The real estate crisis reached global proportions, which was particularly noticeable in Germany and Sweden. Larger banks have escaped the situation relatively unscathed so far, but further losses are expected for alternative lenders.
Whether the slump in office prices widens out into a broader crisis will depend partly on whether banks and developers can avoid losses until borrowing costs fall, or demand returns – Reuters claims.
Opinions are divided as to the possibility of further price reductions. In some markets, we may already be close to the bottom, while in others – for example in Germany – a further decline is expected. In addition to the slow revival of investor confidence, there is growing interest in the European real estate market from some regions, such as the Middle East and Asia-Pacific.
