Our team recently returned from MIPIM, Europe’s leading real estate conference, and the conversations on the ground offered a telling snapshot of where the market stands today. While challenges remain, there were clear signs of cautious optimism and a sharpening focus on the sectors and strategies likely to define the next phase of investment activity.

Geopolitical uncertainty remains a central concern

Unsurprisingly, the likely impact of ongoing conflict in the Middle East featured prominently in discussions throughout the event. There is genuine concern that a prolonged conflict could stifle investment, particularly through its effect on interest rates and broader economic stability. Many delegates drew parallels with the early stages of the Ukraine conflict — if matters resolve quickly, the impact on markets may prove minimal, but a protracted situation risks dampening investment appetite significantly. Against this backdrop, lenders are exercising heightened caution, and borrowers are increasingly concerned that interest rates may rise rather than fall over the course of the year. Fluctuations in bond yields are compounding the difficulty of pricing transactions at levels that satisfy both investor expectations and seller requirements.

Capital is ready — but waiting

One of the clearest messages from the conference was that investors, funds, and insurers are sitting on significant capital reserves that are ready to be deployed. However, that deployment is being held back by a desire for greater price stability and more favourable market conditions. Private credit and fund managers are actively looking for assets to invest in, particularly within the UK, but are waiting for pricing to settle before committing. Nevertheless, there is a growing consensus among market participants that a tipping point will eventually be reached where capital deployment becomes a necessity rather than a choice.

The UK as a safe haven

In a notable shift, UK real estate is increasingly regaining its reputation as a safe-haven asset. Amid a volatile and uncertain global environment, there is a palpable sense that the UK market offers relative stability and long-term value. This sentiment was echoed across a number of conversations and reflects a broader trend of international capital looking towards established, transparent markets in which to deploy funds.

Sector focus: Living, digital infrastructure, and selective opportunities

The asset classes generating the most enthusiasm among investors were firmly centred on living sectors — including senior living, student housing, and build-to-rent — as well as digital infrastructure, with data centres and innovation districts attracting particular interest. There remains strong appetite for what the market colloquially refers to as "beds and sheds," and data centres continue to draw attention, albeit with a notably short-term investment horizon for some participants. Secondaries are also attracting increased interest as investors look for alternative routes into the market.

On the development side, enthusiasm was more muted. High construction costs, combined with regulatory headwinds — including lengthy planning processes and the ongoing implications of the Building Safety Act — present significant challenges for developers. That said, certain sectors remain active, with data centre construction standing out as a particularly busy area.

Offices: A selective comeback

While the office sector has faced well-documented challenges in recent years, there were signs at MIPIM that well-located, high-quality office assets are beginning to attract renewed interest. The emphasis, however, is firmly on prime locations, suggesting that the flight to quality in the office market is far from over.

Looking Ahead

Despite the headwinds, the overriding mood among delegates was one of quiet resolve. Many of those we spoke to remain positive about the medium-term outlook and are channelling their focus towards more innovative investments and emerging sectors. The capital is there, the appetite is there, and the sense is that when conditions align, activity could accelerate quickly. The key question now is not whether that moment will come, but when.