Report on ExpoReal 2011: Experts can still find value

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Photo of Greg SheppardPhoto of Michael Chidiac, M.D. of RealCorp LuxembourgINDUSTRY INTERVIEW: This October, RealCorp’s Head of Investment & Advisory Services, Greg Sheppard, and M.D., Michael Chidiac, attended ExpoReal 2011 in Munich, and returned full of energy for new and ongoing projects. I asked them why they find this event so particularly useful and what specific insights they gained this year (in general, they echoed or expanded on each other’s conclusions, so I have conflated their answers here).

  1. What is the purpose of ExpoReal?
    It’s an opportunity for companies, regions and countries to display their latest real estate projects, and a networking forum for property professionals. All the people one might need to see, from different countries or from different sectors of the commercial real estate business, are together under one roof. So it is ideal for meetings with clients or complementary service providers.
  2. What is your purpose in going to ExpoReal?
    We attend Expo to make new connections, introduce our clients to each other, and deepen existing relationships. Expo is a great forum for gaining a broad insight into the state of the market by exchanging ideas with peers and taking the pulse of the industry in general.
  3. Did ExpoReal 2011 differ from last year’s Expo in any way?
    The ExpoReal closing report outlines that Belux is a growing platform at Expo. This year there were twice the number of visitors from the Netherlands. The report also specifically mentions Luxembourg real estate, underscoring our country’s growing popularity as a Real Estate investment and development location. In the words of Jeannot Krecke, Minister of the Economy and Foreign Trade of Luxembourg, “It would be a mistake not to be here”.
  4. How does it compare with MIPIM and the GRI Summit?
    Well, Expo is really such a significant size that it’s difficult to compare it with anything but MIPIM. ExpoReal hosted 37,000 people this year, and although MIPIM 2011 had only about 18,000 visitors, it has had up to 30,000 in other years. In contrast, only 300 or so attend the GRI. Both MIPIM and Expo are trade shows with a much more overt promotional ethos, whereas at the GRI the focus is on facilitated discussion by industry leaders. However, this does not mean that the senior decision-makers are not at ExpoReal, just that they are usually in business meetings, such as those that we arrange.
  5. The report says that “The mood in the halls was very good” and that “71 per cent of the visitors were of the opinion that the current economic situation in the sector was positive. As regards developments going forward, 47 per cent expect no change, 28 per cent think there will be an improvement and 25 per cent see a worsening of the situation.” Did your own conversations bear out these statistics?
    Our sense was that the “mood” was mixed. Interest in trading was definitely tempered by deep concerns over the Euro sovereign debt crisis and the increasing scarcity of finance. People we spoke to were busy with deals and ongoing projects, but many of these were proceeding slowly. Both developers and investors mentioned issues with debt financing, and the uncertainty over how the Euro will emerge from the sovereign debt crisis naturally makes banks reluctant to commit funds to anything other than core property deals.
  6. Were your own expectations or hopes of this year’s show fulfilled?
    All of our meetings were very positive and we came back with new avenues of business, and new relationships to explore. The positive impact of ‘meeting shops’ like Expo is to galvanise opinion, ideas and relationships into plans of action … and we’re never short of a good idea or two!
  7. Why do you think that you had these positive responses, given the current economic climate?
    Firstly, we are experts in the local Luxembourg market, which is still trading comparatively strongly, so we had some good opportunities to offer clients. Secondly, we can think imaginatively about how to structure deals, despite banks’ reluctance to finance. Thirdly, we have specific experience in identifying and delivering real estate value through local market knowledge and active asset management. Despite financial turmoil, real estate still needs to be managed and clients are always keen to speak to people who can find and deliver solutions for their real estate needs. As one contact said at Expo, “People forget that Real Estate is real—it’s not a financial instrument or bond”. Despite difficulties of financing, people need to do business, and it must be a shared hope that the Euro countries will sort out their debt issues before the markets do it for them.

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