Investing in Turkey

Posted by:
Alan Robertson
Managing Director
Jones Lang LaSalle Turkey

2 ½ days in and the familiar MIPIM feelings were back – sore feet, indigestion and a sun burned nose! But there’s also one other feeling which has made a welcome return this year – Optimism – and it’s great.

I’ve met lots of investors and developers this week and almost without exception, their view of Turkey as a place to invest money has changed since this time last year. No fewer than six (not Turkish) organizations told me they have money earmarked for investing in Turkey. Three of them even said that they would consider taking some development risk. Sentiment like that was simply unheard of last year. While the tide might not have fully turned yet, I think we can say with some confidence that it’s about to.

Yesterday I had a meeting in our marquee between one of Europe’s largest public REITs and one of Turkey’s largest family owned conglomerates. We made very good progress in advancing an idea to form a new joint venture to develop large scale commercial projects. The foreign REIT will provide development expertise and access to international tenants, and the Turkish company will provide land, good connection and knowledge. Their roles and constitutions seem to fit together very well and I think we’ve got a good chance of coming up with a winning formula.
That afternoon I attended a conference in the Palais – The recovering Real Estate market in Turkey – and I was pleased that there were many people in the room to hear our own Kivan Erman make the Land Presentation. He made a convincing case as to why investing in Office and Retail projects in Turkey is a good idea. I hope the audience was listening!

That said it is a lot quieter than it was last year. For me, this has been one of the most effective MIPIMs. Those who were here have been keen to discuss business opportunities and there is definitely an expectation of more activity. Developers and property companies that have survived the recession are planning how best to exploit the recovery and I’m pretty sure that there will be action to follow the talk. We’ve got loads of opportunities, ideas and contacts to follow-up next week. We’re going to be busy.

Manchester – Looking As Ambitious As Ever

Posted By:
Bob Dyson
Chairman, North West
Jones Lang LaSalle England

Well, three days in to this year’s event and the Manchester, Salford and City Regions contingent have their tails up like never before.  Daily presentations from the Manchester stand, which again has its usual commanding position on the Palais balcony, have been packed.  Audiences have been treated to offerings on the compelling attractions of relocating and investing in the conurbation with the presentations culminating with Sir Howard Bernstein’s and Eddie Smith’s jaw dropping proposals for New East Manchester.

The relaxed mood that permeates the sun-drenched Croisette belies the focused and determined desire to develop ‘Brand Manchester’ and continue the renaissance of the City and its environs; which arguably is quite the envy of the other UK regions represented here in Cannes.

MIPIM has been the launch pad for a number of high profile UK regeneration initiatives over recent years. This year Manchester’s visionary proposals for the Civic Centre around St. Peter’s Square and Manchester Central and the associated partnership of land owning stakeholders have undoubtedly wowed visitors coming to the Manchester stand. I never cease to marvel at the energy of the City Council team led by the ubiquitous Sir H. ‘The Manchester Way’ is testimony to what can be achieved with sustained, relentless drive and commitment.

Jones Lang LaSalle is already working up proposals for The Co-operative – which has recently broken ground with a new 400,000sq ft HQ Building – to showcase its 3.6 milion sq ft mixed use regeneration scheme in Manchester city centre at next year’s MIPIM. This will neatly coincide with the UK becoming the country of honour at MIPIM in 2011… bring it on !

CEE Chat

Posted By:
Tomasz Trzósło
Head of Capital Markets
Jones Lang LaSalle, Central & Eastern Europe

I have been at MIPIM since Tuesday morning and a few things have really stood out to me.  The cost savings of 2009 are definitely reflected in the number of tents located along La Croissette. Few companies have decided to have their own tents, and this is a notable difference compared not only to 2007 and 2008 MIPIMs, but also to last year. Clearly this is a result of booking decisions made at least 10-12 months in advance (so in early 2009) and so what we see now is a reflection of the market’s mood a year ago. I expect however that next year we will once again see the beach filling up with corporate tents again, reflecting the improving real estate markets across Europe.

The number of visitors is similar to last year, and lower than 2007 and 2008; but my sense is that many of the delegates here now are much more senior than previously. This creates the opportunity for truly productive meetings as there are less ‘time wasters’ who only put a couple of meetings in their calendars. I think I would be happy if this trend continued in 2011 and beyond!

From my perspective, being based in Warsaw, it is interesting to observe the implications of Poland being selected as a guest of honour for this year’s MIPIM. This move has resulted in a very strong response from Polish cities, who are represented in Cannes in numbers not seen here before. In addition to presidents of various cities (eg Warsaw) Poland has decided to send the Polish vice-minister of the economy and the President of National Agency of Foreign Investment (PAIZ).

Finally, I am very happy to see some substantial changes in market sentiment – investors are increasingly keen to do deals again, and they feel the pressure from their competitors. We remember this feeling from only 3-4 years ago and it is fantastic that, although it is on a significantly lower scale, in some cases we are starting to see similar desperation in securing the asset. This will drive some yield compression, although this will be the case only for few truly core assets in a couple of markets. This is also definitely true for the CEE markets, with Poland being currently the hottest market of the CEE in eyes of most investors present at MIPIM. We clearly aim to capitalise on this in the coming months and hope it will be reflected in the revenues of the CEE Capital Markets teams!

The “New Normal” at MIPIM 2010

Posted By:
Christian Ulbrich
CEO EMEA
Jones Lang LaSalle

People who know me well are aware that MIPIM is not one of my favourites.  Too often there is too much show, too much talking without any background or substance. But the changes which started last year have continued at MIPIM 2010. People are here to do business, meetings are starting on time and the overall atmosphere is very professional.

We have been able to take advantage of the “New Normal” at MIPIM.  We have moved our tent, where we host our clients and prospects, very close to the Palais du Festival. It is a fantastic spot, much more convenient for our clients and is making life for all JLL representatives significantly easier.  We have been hosting clients for breakfast, lunch and dinners; the dinners in particular have been a great success. I attended the English and the Pan EMEA Capital Markets Dinners on Tuesday and Wednesday evenings.  Both attracted more than 100 clients and I know were very much enjoyed by our guest as well as the home teams.

For me MIPIM 2010 has been a great opportunity to get closer to clients and markets again. My (fairly) new role requires a lot of time spent on internal tasks, so it was very enjoyable to attend numerous client meetings as well as having the opportunity to just bump into lots of other people and contacts, many of whom I haven’t spoken to for a while. More importantly at least three of the meetings I have been involved in are looking very promising in terms of new big assignments.  And I am hearing the same sort of positive comments from many of our colleagues here at MIPIM.  It seems that after an encouraging start to 2010, MIPIM is pushing even more momentum into our business.   

If the “New Normal” at MIPIM looks like this every year, I will be happy to change my views and become a big fan!

The Marketing View

Posted By:
Charles Doyle
Chief Marketing Officer
Jones Lang LaSalle

I have not been at MIPIM for two years : my initial impression is that it is more muted than hitherto.  There’s not so much advertising, and the Russians not out in the strength that they used to bring to MIPIM. Although some exhibitors are still using marketing techniques that looked state of the art in the 1960s !
 
My taxi driver, a veteran of all festivals at Cannes, and a commentator, told me that he had noticed a lot more Asian attendees than before. (Taxi drivers in the south of France are usually more accurate guides than official demographics).
 
As a Firm, we launched our revitalized brand with great gusto here at MIPIM in 2008.  Now our brand is established and as befits an established global brand,  we also are more muted. However, I noticed, in the Palais and on the Croisette, that some other firms are starting to copy our brand colours and strapline – I’m not too concerned – they say imitation is the sincerest form of flattery after all!
 
We split our presence at MIPIM across a business like stand in the Palais and a more relaxed hospitality facility a few metres up the beach – some firms take a different approach and put all their assets in the exhibition area.  A mistaken approach I think.  The exhibition area is increasingly for the marketing of places by state and municipal organizations.  The action for services firms is out on the Palais terraces, the cafes and the beach marquees.
 
Two MIPIMS: it looks like MIPIM is ‘morphing’ into a festival of location marketing where the cities, municipalities and regions of the world disport the glories of their locale to passing investors and the occasional tourist. This is what occupies much of the official Palais du Congres exhibition space.  The networked and familiar world of agents, brokers, advisors, and assorted middlemen, is in the reception tents, the bars, the restaurant tables, the quiet little meeting rooms.  One is the world of physical space; the other a more subtle world of conversations, networking, drinking and eating together, shaking hands and setting up meetings back home.

UK Office Agents’ view?

Posted By:
Chris Hiatt
Chairman, National Offices
Jones Lang LaSalle England

Jones Lang LaSalle’s English business client dinner was a successful evening last night – with a great mix of over one hundred guests.  It’s always encouraging to see that we continue to pull such a mix of high calibre and interesting clients. From my dinner conversations it’s clear that the tone of this year’s MIPIM is undoubtedly one of new beginnings.  Many office developers appear to now be open to considering new opportunities – although these remain difficult to find; pricing and debt availability are still big issues to deal with. Another interesting trend is that clients are now recognising that office refurbishments may have a proper place in the UK development cycle.  

Like a number of colleagues, I do sense that attendance from the UK at this year’s event seems more subdued than 2009. Using the bar in the Martinez as a barometer, the UK contingent seemed markedly quiet (although maybe it was just the chilly evening air which put people off).

That said, the serendipity of MIPIM can still be effective (I’ve already identified a potential opportunity for our London team).  As markets slowly regain activity and sentiment continues to improve the back-to-business focus at this year’s event is an optimistic sign for those who choose to attend in 2011.

View from an American in Cannes

Posted By:
John F. Kevill
Managing Director, Capital Markets
Jones Lang LaSalle United States

Happy St. Patrick’s day from Cannes! Yesterday was our first day of full marketing of the Evening Star building located in Washington, DC on behalf of Kan Am. I have already had three breakfasts, and six meetings regarding Mid-Atlantic properties with a tremendous amount of interest in Evening Star itself. Everyone who buys core assets seems to have had their eye on it for some time. In fact, I met a Frenchman in line to register for MIPIM who had heard about it. He was a hotel investor from Paris who had heard about it in the marketplace. 

I also met with my third German institution of the day, and their focus continues to be on quality assets and underwritable income. They’re aiming for cash on cash yields of over 6%, but clearly for true trophy product they will look at risk adjusted returns, and for a long term holder in the range of a mid 8% unleveraged IRR. I am here with Steve Collins, our International Capital Group lead in the US, and we have a heavy schedule, but what we have learned in just the short space of time we have been at MIPIM is that there is a tremendous amount of money available for core investment in the US – institutional as well as high net worth investors.

Heard Over Dinner

Posted By:
Paul Guest
Director of Research EMEA
Jones Lang LaSalle

A note on the talk around the table. I attended my first big client dinner of this year’s MIPIM last night. Excepting the social discussion and catching up on who had moved where and why, and the winners and losers of the credit crunch, there was also some interesting chit-chat around the outlook for the market.
 
The concern, insofar as it relates to the outlook for UK commercial property, came from an avowed bear… Interest rates and inflation will rise; competitiveness measures are declining; economic growth is sluggish; margins are being compressed by higher energy costs and sustainability-linked capital expenditure; and rents are unlikely to grow strongly excepting a short-term blip in prime supply constrained markets. Overall the view of the prospects for commercial real estate in the UK over the medium term was a raised, questioning eyebrow.
 
As I said: an avowed bear. Others were less pessimistic but nonetheless there is considerable concern about the sustainability (if you’ll pardon the reuse of the word in a different context) of the current upturn. No one was trying to talk down the market here – it was a group of very experienced property professionals, totalling over 200 years of experience, expressing their uncertainty over where we were headed.
 
That said, as we start to climb off the bottom of the market, it’s natural that people are uncertain about where we’re going, now more that at any other time in recent memory. This doesn’t mean it’s the end of the world. It does mean we need to question everything; we need to be conservative in our expectations; and we need to seek the best advice. As Head of Research, that can only be good news for me!

First Impressions

Posted By:
Andrew Renshaw
Head of Professional & Advisory Group
Jones Lang LaSalle, England

Having completed my first day at MIPM this year I am begining to get a sense of the mood of the attendees and this year’s event. The blue skies of yesterday were welcome to many attendees from Northern, Central and Eastern Europe who have had (relatively) long and cold winters. This to my mind is a good example of the mood of MIPIM; it is as if the market is awakening from a long, hard winter and people are on the one hand cautiously optimistic, whilst not entirely sure of their new surroundings in the ‘new normal’ market.

Numbers definitely feel lower and there is much less in the way of large events. I went into the Palais yesterday afternoon, whether it was the good weather or not, there were less attendees there than I expected with the exception of the London stand which was busy. In part due to Boris Johnson speaking I would guess. Wednesday is the busiest day of MIPIM from my experience and it will be interesting to hear other people’s views on the market and opportunities.

City competition will be fierce

Posted By:
Paul Guest
Director of Research EMEA
Jones Lang LaSalle

As Europe comes out of the economic recession and property market downturn, one of the key questions will be the relative competitiveness of cities and regions – both in terms of their ability to attract investors and occupiers. There was an opportunity to assess the current sentiment – put a finger in the prevailing winds as it were – at this afternoon’s fdi Magazine ‘European Cities & Regions of the Future 2010-11 Rankings’ launch at the Majestic Barriere Hotel.
 
fdi Magazine is an FT publication which tracks foreign direct investment across the world, drawing on extensive data on greenfield (that is, excluding M&A) investment. Over the course of the year it routinely assesses the various regions of the world in terms of their relative attractiveness to foreign investors in terms of strategy, quality of life, economic potential, business friendliness, infrastructure and human resources. I’ve sat on the European panel for the past five years – though on that note, don’t blame me if your city or region did not turn up quite where you expected – I am but one lonely contributor.
 
The room was full. Most regions were well represented though with an over-emphasis on the UK and the Southeast – perhaps this isn’t suprising, London once again picked up the top city ranking, with Paris and Moscow next in line for top honours. In a world where greenfield FDI fell some 14% last year and is expected, by fdi Magazine, to only grow some 3-5% this year, competitiveness is vital. This is particularly important for real estate – the magazine does not expect any growth in greenfield real estate investment in 2010. Competition will be fierce.
 
I live in London – I took a close look at their ranking in terms of quality of life. I might as well get a little personal interest out of it! The result? Not in the top five for the major cities – I might need to look to relocate to Vienna, Copenhagen or Munich…