Following our attendance at MIPIM in Cannes this year, the prevailing sentiment across the market can be best described as cautious but not compromised.  While global real estate is navigating a period of uncertainty, there remains a clear sense that the sector is pausing to take stock rather than retreating.

A central theme throughout was the impact of geopolitical instability in the Middle East on property. For example, given the energy intensive nature of construction development, the increased cost of materials, transportation and delivery has notably affected construction development. The obvious impact of the war will likely mean higher construction costs and rising inflation.

As dire as all of this sounds, are we overlooking the sector's longstanding resilience?

The UK property market has consistently demonstrated its ability to withstand economic shocks. This was seen following the COVID-19 pandemic UK when house prices continued to rise notwithstanding economic downturn. London in particular continues to reinforce its position as a global real estate hub and international capital remains attractive to the city's transparency, liquidity, legal framework and of course its heritage. The consensus among delegates at MIPIM was that current geopolitical pressures are unlikely to represent a permanent shift.

Encouragingly, several core factors commonly referred to as “beds, meds and sheds” continue to demonstrate strong fundamentals. For example, the care home sector is attracting an increasing institutional interest. According to carehome.co.uk with an ageing population, demand is outstripping supply. Care home models are also changing with a shift toward larger, luxury care homes. Property experts Savills predicts that the UK will need an extra 144,000 care home beds over the next 10 years to keep pace with population growth.

Hotels have also re-emerged as a compelling asset class with global travel having recovered strongly post pandemic with UK hotel occupancy rates returning to and even surpassing pre-2020 levels.

The office sector continues to evolve in response to hybrid working patterns.  While overall demand has softened there is a clear desire for quality, with occupiers prioritising well located high spec buildings. This is driving ongoing investment in refurbishment and redevelopment as businesses seek to create more effective and engaging work environments.

Another prominent theme at MIPIM was the role of artificial intelligence. Much to public surprise, industry sentiment was overwhelmingly positive about AI which is increasingly being deployed to enhance data analysis, support underwriting, and improve asset management strategies. So, in an environment where informed decision-making is critical, such tools are becoming integral to investment practice.

In conclusion, while the current environment presents undeniable challenges it does not signal weakness. Real estate remains a fundamentally long-term asset class shaped by cycles but supported by enduring demand.

More importantly MIPIM once again highlighted the importance of relationships within the industry. In periods of uncertainty, trust and collaboration becomes even more critical. The connections established through dialogue, shared insight and aligned objectives form the foundation for successful investment and development. Ultimately, people buy people so while volatility may persist in the near term the underlying strength of the property sector particularly in the UK suggests that it will continue to adapt and endure as it has done through previous cycles of economic challenge.