Mipim – Luxembourg on show

Mipim is the most important real estate exhibition in the world. It attracts exhibitors and visitors from across the globe. As usual, Luxembourg occupied a prime position just inside the front door. Jones Lang LaSalle Managing Director Luxembourg and Head of Capital Markets Belux, Olivier Bastin, took the opportunity to explain how the Luxembourg market is performing, and what Mipim represents for the Grand Duchy.


Firstly, give us an overview of how the Luxembourg market is faring in this ‘emerging from recession’ period.
 

Olivier Bastin: The market can be split into two. In the letting market, there is clearly some improvement. As we come out of the crisis, there are two major types of corporates in this market segment. There are those which are happy to have survived the crisis, even though there is still restructuring work to do before they can really think about growth or ambitious plans. The second type of corporate players involves those which intend to take advantage of the exit from the crisis, recognising that this is a period which offers opportunities to take market share, and these companies have two year or five year plans. They don’t intend to miss this current wave. I would say that the banking sector fits into the first category, and the business services sector into the second. Most services companies like ours, for example, are currently looking to take staff on.
In letting terms these circumstances translate into a market which is hovering around the 100,000 m² a year mark. Vacancy has pushed above 7%, but this is likely to remain stable in 2011 and come down in 2012, helped by a pipeline which is practically reduced to nothing in 2012 and 2013. There already isn’t much in 2011! Taking a brief look at the second category, the investment market, we were in 2010 in a situation which hadn’t changed for a while. There was money around to buy core properties, but very few properties available to be bought. Investors are now looking at ‘core plus’ or even added value. This means that sellers, along with advisors such as ourselves, will have more work to do in 2011 in these new fields.
 

Let us turn to Mipim. What was the atmosphere like, and what was the position of Luxembourg?

Olivier Bastin: If I had to sum it up in one phrase, it would be that there was less show and more concrete action. There are always two sides to Mipim. One is that of ‘seeing and being seen’, which is of course very important as a PR exercise in a ‘people’ business. The second aspect is that of working in concrete terms on real estate dossiers. What was different about this year’s Mipim was that we had much more concrete discussion about the dossiers, this aspect seems to have taken centre stage this time.

What is Jones Lang LaSalle’s strategy towards its core clients where Mipim is concerned?

Olivier Bastin: Well I should start by saying that what makes a good Mipim is above all the pre-Mipim and the post-Mipim work. Beforehand, the public relations aspect has to be prepared, and you have to get all your dossiers ready. This doesn’t just mean putting the dossiers in your briefcase, it sometimes means having meetings with owners, finding out how the property can be marketed at Mipim (or even if it can be), what we can say, what we can’t say… We need to set objectives for Mipim with regard to specific dossiers. So there is a lot of work before the show. As for the post-Mipim period, this involves sorting through all of the information we have collected, seeing what is really concrete, what can be transformed into actual business, other information which may be important too, but which doesn’t need to be handled immediately. In terms of Jones Lang LaSalle’s important clients, we use Mipim to work on specific projects and on the close relationships we have with these clients. Alongside concrete projects, Mipim gives us the opportunity to talk of real estate strategy, real estate vision, with our key clients.

Does ‘concrete business’ go as far as obtaining a signature on the stand…?.

Olivier Bastin: Well this can happen, but it is normally symbolic, and may represent an opportunity for some good public relations. It may have been decided in advance to have a signing ceremony on the stand. In itself, though, the fact of signing during the Mipim is not especially important. By contrast, we are often able to develop new ideas with clients during the show, and then develop these when we return. So it may be three months later – or a year later – that these ideas turn into real business, but Mipim was an essential opportunity for developing them. There are also dossiers with which we can make progress at Mipim. I am able to set up meetings with both parties during the show and work on a dossier with them. Sometimes the buyer and seller haven’t met before, and meet for the first time at Mipim! So even if there isn’t a signature, there is very concrete progress made on the various projects. In terms of how we are organised, we have our stand in the exhibition halls, but perhaps even more important is our substantial infrastructure outside on the Croisette. This enables us to have lunches and dinners of course, but also meetings with our clients in the meeting rooms available.

Finally, how is Luxembourg perceived by the international real estate community at Mipim?

Olivier Bastin: Well firstly, the Luxembourg stand is very important, and it was very well frequented by visitors. The stand personnel also meant that questions about Luxembourg could always be answered professionally. There were a series of cocktail events, of presentations, and in general a very good presence and a very good visibility for Luxembourg, and this is important. Important because during the crisis investors tended to concentrate on two things: firstly their domestic market, which is always the case during crisis periods, and secondly, as we began to emerge from crisis, core markets such as Paris, London, Frankfurt… But now, investors are once again looking at other markets, and Luxembourg is one of the markets they look at first when they turn their attention away from these core markets. So it was important that Luxembourg had a good presence at Mipim. There is also quite clearly money available for Luxembourg, and from different sources. There are the open-ended German funds (those, at least, which still have liquidity, because they don’t all), there are the closed-end funds, and then there is the private sector, both from within Luxembourg and from abroad, and insurance funds. One category which is not new, but which seemed to take renewed interest in Luxembourg this year, is the opportunistic Anglo-Saxon funds sector. So, to conclude, there is money available for Luxembourg, Mipim proved this, but we still need to find product to satisfy it!
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