Talking MIPIM; Pension revolution
It's 2am and still warm enough to be sitting outside enjoying the last of the evening, watching the ebb and flow of people walking up to the bar, recognising people and stopping for a drink or exchanging friendly quips and walking on to where they were originally headed. A recruitment consultant at the far end of the table is answering questions from the managing partner of a London architecture practice about staff retention. It's a relaxed, candid and fascinating chat. For all the expected meetings, the stand events, the sunshine, the dinner invitations, the business cards, one of the best things about MIPIM is the conversations you wouldn't hear anywhere else. The setting and time out of the office, the volume of successful and intelligent people with complementary interests, all this creates a fertile, fascinating ground for, simply, talking and listening. Over lunch, a fund manager soft market testing a new portfolio concept he is keen to bring to market; endless varying appraisals of the BBC's recent Mind the Gap documentary about the North-South divide; an explanation of data centres I'd not heard before and where our Facebook 'likes' and You Tube views are actually served from.
The downturn robbed us of much of the time or money to have fun and simply catch up with people and spend leisurely time having non-essential, unrushed chats; we were too busy saving businesses and fighting's today's fire to stop and reflect. MIPIM felt like the antidote to that breathless routine of recent years; time to breathe, listen, learn and feel reinvigorated. More of that please in the recovery.
The pension revolution announced in recent weeks could have fascinating implications for the property market. George Osborne's decision in the Budget to allow people to draw down and spend their pension pots as they wish caught most by surprise. This was followed by a pledge to cap pension management fees and a City inquiry into so-called zombie, or closed, funds. Among those surprised were the insurance giants who hold our pensions and sell the annuities that we have until now been made to buy. Making it mandatory to buy annuities after retirement made long-term investment planning by insurers and pension fund managers a perfect property play. Traditional pension funds would often hold 10% of their multi-billion pound portfolios in UK property, enjoying capital and income returns between trades that could be years apart. Prime office buildings, supermarkets, out-of-town retail parks and large well-let warehouses are all good fodder for investments. Institutions are also behind deals such as 25-year private finance initiatives to pay for new hospitals and highways. If those same pension funds have to suddenly release large numbers of personal pension pots back to pensioners years earlier and in greater amounts than expected, how will their property holdings be affected? Could pension managers avoid holding as much property in future, as it is slower to buy and sell than shares, for instance? Will there be a spate of sales to exit long-term holdings? Sweeping policy changes announced without warning by Government rarely play out as simply as the headlines first suggest. The wealthy and powerful insurance industry might argue through the courts that pension contracts can't be unraveled so easily. But the overwhelmingly positive response to the pension changes, and the undeniably poor value of annuities, means the pension market could still end up with more freedom for consumers than has been the case until now. Such seismic changes must surely hit institutional demand for regional property.