There was a striking juxtaposition outside the annual Mipim real estate conference held this week in Cannes, France. Next to the popular Caffé Roma bar teeming with property professionals, a handful of protestors in red tents camped out against the event. Their gripes were made clear by a self-styled yellow cloth sign with large painted writing: “Mipim = speculation; expensive accommodation; homeless”.

The protestors, who had travelled from as far as Toulouse and Paris, did not mince their words. They told me Mipim epitomises all that is wrong with the real estate industry: one that is led by profits at the expense of people, at a time of homelessness and soaring housing costs. In some ways, they have a valid point.

Shortages in available and affordable homes is a severe problem across Europe at a time when many are struggling to cope with higher living costs. Almost 900,000 people are estimated to be homeless in Europe. One in ten households face excessive housing costs — meaning they make up more than 40% of their income, according to Eurostat.

Average rents have increased by 19% in the EU since 2010, while house prices have jumped 47% over that same period. In many regions, these price rises have outstripped earnings growth, according to the OECD.

The protesters directed their anger to the real estate actors they blame for driving up housing costs — to add insult to injury, several industry professionals were enjoying bubbly drinks just a few steps away. 

Mipim’s excesses — from lavish parties in five-star hotels to beachfront lunches and yacht meetings — mirror the exuberance of the real estate industry, where finely-crafted architectural projects embellish relentless profit-seeking. Real estate investors and developers take pride in the visions for change behind their projects. The industry is not just about trading stocks and bonds, but the sector’s financial drive is not dissimilar. 

This is why social housing is something that doesn’t feature prominently in their portfolios at scale. Profits are often limited and models like build-to-rent schemes can often be demanding to manage. And when it does, complaints about private equity and asset managers such as Blackstone charging unaffordable rents and pushing for evictions often come to the surface, as pointed out by a critique by the UN’s rapporteur Leilani Farha’s in 2019.

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But Mipim is also a place for people to discuss the solutions. My conversations and the event agenda alike were permeated with discussions between developers, investors and public officials on how to build more affordable housing. 

Klara Geywitz, Germany’s housing minister, opened proceedings on March 11 by calling upon attendees for more investment in social housing. “The market alone cannot solve this problem,” she said, adding that the housing crisis risks undermining the “pillar of social stability” in Germany. As a result the federal government has outlined a €45bn affordable housing program aimed at avoiding some bleak predictions.

Euroconstruct, a research group, forecasts Germany will have a shortfall of 830,000 homes by 2027. The private sector is equally candid about the implications of this. Ingo Weiss, the managing partner of Berlin-based developer Driven, told me that this sharp housing shortage would be “dynamite for society”. He suggested that residential projects can be made more affordable by using prefabricated manufacturing materials, which help reduce construction time and financing costs.

The problem is that there is not enough supply of affordable housing, meaning much more must be built. A surge in construction and financing costs is already making this much more difficult. In many cities, planning rules and cumbersome regulations around development also slow progress. The government has a key role to play in making this process easier. 

A good example of what can be done is in Berlin, where a new law aimed at speeding up development is scheduled to come into force in Autumn 2024. Even if some developers tell me they are not convinced the new law will achieve what it sets out to do, it is nonetheless a step in the right direction.

Despite this government support, the lower returns offered by affordable housing is still dissuading too many investors. Some government incentives would certainly help to enable more private capital to flow into this space.

The protestors are right to highlight one of the burning issues of our time. In the UK, average house prices are currently more than nine times higher than average earnings — the worst it's been since 1876. But to blame Mipim misses the mark as to how we will solve this crisis together. We need more collaboration between all the stakeholders to solve this, not less.

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