MIPIM
MIPIM is such a large international event that even its level of registrations weeks ahead of the actual event might be viewed as some indicator of the health of the property market. So it was interesting to discover this week that some 2,300 international investors have registered for the 21st MIPIM (Cannes from March 16-19), a 12% increase on the same period in 2009. The organisers are probably quite rightly seeing this as a sign of improved confidence in the real estate market and economic recovery.
Ernst & Young – it’s unsustainable
UK commercial property prices rose 3% in December, their highest monthly rise in 23 years, but the chances of a sustained recovery in 2010 and beyond are unlikely, according to the Ernst & Young ITEM Club. The upturn has been primarily driven by market sentiment, where investors had decided the bottom of the market had been reached. Furthermore, the flood of extra cash and liquidity as a result of the Bank of England’s Quantitative Easing (QE) has helped to fund transactions, says the Ernst & Young ITEM Club. With QE likely to come to an end soon, coupled with the risk to banks of more property companies defaulting on their loans, the recent rise in activity is likely to fall away. The report also says the recovery could easily become destabilised because there is little sign of a pickup in market fundamentals – there were further upward movements in vacancy rates and downward shifts in rents throughout last year and this trend looks set to continue. Dean Hodcroft, EMEIA head of real estate at Ernst & Young, explains, ‘Welcome though the bounce of activity has been, its sustainability is far from certain. The upturn has largely been based on investors deciding the bottom of the market had been reached and the massive decline in prices over the past couple of years resulting in attractive buying opportunities.’
BDO agree
Business advisers BDO warned “Don’t bank on a property recovery in 2010″. Although the number of commercial transactions increased during 2009, there are still problems ahead, according to BDO’s latest Commercial Real Estate Review. Solly Benaim, head of real estate at BDO, said: “Although we are seeing higher investment returns and a more stable tenant market, we still have a long way to go before we are at the number of transactions that we saw pre-recession. The combination of an election year, which is bringing considerable uncertainty across industry sectors, coupled with continuing fears about unemployment and consumer spending, and concerns over rising taxes later in the year all have the potential to undermine the commercial property market.”
Drivers Jonas Deloitte – compliance
It was reoported during the week that Drivers Jonas has stepped down as letting agent at Camomile Court in the City of London after landlord Mitsui & Co said a conflict had arisen because of the property services firm’s pending merger with Deloitte. The assumption is that they wanted to avoid a conflict of interest as Deloitte is the auditor to Mitsui & Co and some of its subsidiary companies. The Japanese company has replaced Drivers Jonas with Savills who will join King Sturge as joint letting agent at the scheme.
CBRE – making profits again
CB Richard Ellis made a net profit of $64.3m on revenue of $1.3bn in the fourth quarter of last year, putting it in the black for the full year. The New York Stock Exchange-listed property services firm’s fourth quarter results, were its best of the year and the first to show year-on-year growth in seven quarters. The profit compared with a loss in the fourth quarter of 2008 of $1.1bn and more than offset the previous three quarters’ poorer performances. For the full year CBRE made a net profit of $33.3m on revenue of $4.17bn. The firm’s big rival, Jones Lang LaSalle yesterday reported a small loss for the year.
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