In God we trust. All others must bring data.
The latest MIPIM in Cannes was, by almost universal consent, one of the most easygoing in recent years, at least for German participants. The uninterrupted sunshine, the positive mood in the halls, the varied and frequently lively programme of seminars and panel discussions – all served to support an atmosphere that facilitated fruitful dialogue, despite the geopolitical uncertainties lurking in the wings, offstage.
The noticeably heavier security presence was a constant reminder, nonetheless, of the heightened tensions outside the Palais des Festivals, and of the atrocities that France – and Nice just up the road – have suffered so recently. Visitors to the fair accepted the extra inconvenience of the physical body and bag checks gracefully, acknowledging the new realities we now live with.
Perhaps in years to come, German participants at the MIPIM – and they were more than ever this year, at more than 4,000 – will look back fondly at the 2017 event as the year when the real estate market still seemed rosy, although by no means reckless. Good assets are scarce, yields are compressing, prices are still rising – but then, so too are commercial and residential rents, thanks to Germany's still-prospering economy.
Perhaps too, though, there are yet a couple more years of this to go. Trump, LePen, the now-real Brexit, even twitching interest rates – who knows, perhaps all these will come to be seen as the triggers for a new round of the world's investors embracing real estate as their asset of choice. The Germans may have it good – but there was no mistaking the swagger of the burgeoning British presence, many convinced that with the help of a cheaper pound, prices are correcting and, for Little Britain at least, the good times are only getting ready to roll. We hope they're right.
With things going so swimmingly, conversation turned swiftly to the fallout – if any – of the Brexit vote. All the usual candidates were trumpeted as being the leading contenders to benefit from the flight of the banks to a safe eyrie within the Eurozone – Dublin, Paris, Amsterdam, Frankfurt. We even heard an Italian contingent pushing Milan's claims to offer the ideal alternative to London. Hmmm. Let us see.
At least Lloyds Insurance is one of the first to come down off the fence and has committed this week to Brussels with a handful of staff for its European passporting business. We don't know if this trickle will turn into a torrent – the food, after all, is excellent in Brussels and it's only a short train ride back to London on Fridays for lonely expats. We think Berlin's chances are being mispriced by the market, particularly in the fintech and proptech fields, but having moved REFIRE's own head office to the German capital last year, we don't want to appear biased.
Still, Berlin trails only London now as a desirable real estate destination in Europe according to CBRE's latest Investor Intentions survey. It's easy to see why, and the demographic prognoses forecast growth for many years to come.
After some years of playing a subordinated role, technology, digitalisation and innovation now dominate much of the real estate agenda – with ideas and processes whose time is definitely coming. It's an evolutionary development, rather than revolutionary – but it's changing our workplaces into tech hubs, and the industry itself into a data-driven ecosphere. Investors, landlords, clients – all now demand speedy access to reliable data, and only innovative new tools can provide the transparency that customers need.
Data room technology had been advancing in leaps and bounds, but the digitalisation of everything is now fundamentally re-shaping large tracts of professional real estate management. Data is now at the centre of every building and infrastructure project.
Never again will there be buildings where the history of every nut and bolt, every pipe and rivet, every doorframe and radiator has not been digitally recorded, along with their provenance, life expectancy and maintenance requirements – with all the data available for current and future owners.
This is opening up new business opportunities for the most nimble digital operators, and setting new benchmarks for minimum standards required in project developments. BIM files which can be extracted, exchanged and networked to support decision-making are now a prerequisite for favourable funding decisions in many quarters – with the trend clearly set to accelerate.
As financial providers seek ways to better understand the projects they are underwriting, and to quantify the risks they are exposed to at any given stage, new and better standards are needed for more mutual control and improved transparency. Standards formalised by RICS in the UK are positively influencing other markets who have grown up with different traditions, including the absence of the profession known in the UK as Chartered Surveyor. A similar platform is now being introduced in Germany
In Munich on 11th May the first BCMA Building Construction Monitoring Congress in Germany is taking place, bringing together a top-class range of interdisciplinary speakers to discuss project development financing, monitoring and digital risk management tools. REFIRE is honoured to be a media partner for what promises to be a most stimulating event. Come and join us.