The 2024 edition of Mipim, one of Europe’s largest real estate events held on the French Riviera, drew to a close on March 14. The annual conference again brought together public sector officials, investors, developers, architects and stakeholders from across the real estate industry.

Across a hectic few days, the fDi team spoke with leaders from a variety of perspectives on their outlook for the sector and emerging trends to look out for. Here’s a round-up of the most compelling thoughts we picked up.

John O’Driscoll, co-head of real estate at Axa IM Alts, on the outlook for real estate investment in 2024

“There are lots of things to make a case for real estate investment at the beginning of 2024, which are different to 2023 and 2022. We feel pretty optimistic. Our investment activity will focus on our high-conviction sectors. We know the demand for lab-enabled office space in Europe will continue for the next couple of years. And we’re very happy to invest there. We know that reshoring and onshoring will create demand for logistics and distribution space in Europe. We know the shortage of housing, changing demographics and the urbanisation of populations will create demand for housing.”

Lisette van Doorn, CEO of Urban Land Institute Europe, on heightened focus on ESG in the office sector

“Offices are still in the eye of the storm, a lot of it still has to crystallise. There’s a huge gap in the market between primary and secondary [properties]. There’s huge demand from occupiers for grade A buildings [which are] highly sustainable. Following the rising energy costs, suddenly ESG was not just a nice narrative to attract and retain talent. But it was fundamental because it affected the [profit and loss of companies]. I don’t think there's an end to offices, but there's a huge restructuring needed.”

Mark Rose, CEO of Avison Young, on distress in the current real estate market cycle

“My concern is you’re not seeing distress. There’s a methodology to [market] cycles. Our industry is capital-intensive and if [we were in a] pure free market, as in marking to market, we would probably have a distressed situation. There’s a strategy in play, that you don’t want to take write-downs and the banks don’t want to take back properties. This is a tactic. If [banks] don’t extend [their real estate loans], you’ve got write-offs, and could have a systemic banking issue.”

Carlo Ratti, architect and founder of Carlo Ratti Associati, on conversion of office towers into residential buildings

“It’s very difficult for two reasons. First, many of these buildings were built after the 1950s and 1960s and have floor plans so big that they don’t work with residential. In smaller buildings it could work and there are interesting cases like the conversion of the Chicago Tribune tower that was converted into residential even before the Covid-19 pandemic. But even in those cases, since offices have more value than residential, the scheme has to make sure that the cost of the property plus the cost of restructuring is below the cost of the final residential offer. It’s true that repricing is happening, but we are not there yet to make this work.”

Jules Barker, associate partner at McKinsey, on using artificial intelligence to decarbonise buildings

“There is a pathway to profitable building decarbonisation and there are AI-driven models to do it. Knowing just the address, building area, building type and ideally utility bills, our model can calculate the current building emissions and efficiency levels, recommend what interventions are needed, how to sequence them and the return on investment while taking into account all the different regulations, having been trained on 1 million-plus buildings. Especially when you have a portfolio of hundreds of properties, this is many times quicker than a traditional engineering-led approach and provides similar levels of accuracy.”

Robin Woodbridge, head of capital deployment and leasing, Prologis UK, on newer flexible models of logistics

“We just launched a building in the West Midlands, which is what I would describe as the real cloud for logistics. Not cloud for data, but cloud for boxes. If you want to store a pallet for a day, you can. If you want to store 5000 for six weeks, you can. It’s giving our customers real flexibility. I don’t think it will replace normal buildings, because you’ll get a better deal when you commit to a building for 10 years. But if you need a bit more space and don’t want a brand new lease, [we have] buildings looking to do that.”

Lord Dominic Johnson, UK investment minister, on recovery of the global economy

“A stabilisation and a decline in interest rates will be central to the recovery of the global economy. We are seeing a decline in inflation, particularly in the UK, now we have to then see a decline in interest rates. I’m very much of the view that the inflation danger has passed, and particularly wage inflation that’s come under control. So we need to see interest rates starting to normalise. And there’s a sense of optimism that that will happen. So it’s very important that it does. My caveat is if that doesn’t happen, then it makes it much harder [for the recovery to happen].”