MIPIM notes

There’s lots of sun in the south of France this year, but not a lot of warmth. That’s pretty much the tone of MIPIM 2011. People are relieved that the situation didn’t unravel further than it did, but there’s a pretty sour taste left in a lot of mouths over the new reality. Maybe it’s not surprising, but bankers seem to be in about the foulest mood of anybody. Fund reps, developers and consultants are all thinking how to strengthen their businesses, adapt and improve their long-term prospects.
But there appears to be a lot of frustrated bankers walking about this year. They’re annoyed about their hands being tied and uncertain what the future will bring, what with upcoming Basel III regulations still a big unknown, along with the threat of new taxes and enforced deleveraging.
CB Richard Ellis estimates there’s upwards of EUR 900b in outstanding property debt at the moment in Europe, half of which is due to mature by 2013. If there’s a big push to deleverage, then how does this circle get squared? Where’s the money going to come from?
There are various theories, but few are standing up to closer inspection. At one of the discussions at MIPIM yesterday, a member of the audience asked when the Chinese wall of money would start to flow. Not in time, was the answer.
Another hope seems to be that insurance giants will step in to fill the gap. “No way,” said one banker along the beach at a cocktail party. “They don’t have the infrastructure to do it.” More convincingly, a major European insurance company executive laughed at the idea. Banking has its Basel III concerns, he said, but insurers have Solvency II. Remember the whole Middle East sovereign fund story from a year ago. That wasn’t looking like a viable answer long before things started heating up in that part of the world. So this is very much still an ongoing story.

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