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PREVIEW-Crisis clouds mood at world largest property fair

Published 03/09/2009, 08:35 AM
Updated 03/09/2009, 08:40 AM
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* MIPIM property conference in Cannes, France

* March 10-13

* Attendance expected down by a third

By Daryl Loo

LONDON, March 9 (Reuters) - Attendance will be down by a third at the commercial real estate industry's largest annual get-together in Cannes this week, with at least one big sector player absent and others paring back their presence.

The Marche International des Professionnels de l'Immobilier (MIPIM) will be held amid plunging property values from Europe to the Middle East, as investors and banks trim their exposure to the sector.

"The partying side of it will not be there this year. It's going to be totally focused on business," said Peter Rhodes, UK head of organiser Reed Midem. He estimates attendance will be down this year to 20,000, from more than 29,000 in 2008.

Major Dutch property company Corio will not attend this year, its spokeswoman told Reuters, while property consultants Jones Lang LaSalle, which last year had 200 staff at MIPIM, said it would send just 90 people this year.

Participants also expect a much smaller presence from bankers, as stricken lenders such as UK's Lloyds and Germany's Hypo Real Estate retreat from property risk.

"The banks will send a few people but they won't be as visible as past years," said Tony Horrell, Jones Lang LaSalle's head of European capital markets.

MURKY WATERS

MIPIM participants said picking the bottom of the lacklustre commercial property market will likely be a hot topic.

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Horrell likened it to diving into a deep and murky pond, where "the only way you can figure out where the water ends is by making out the grub near the bottom".

"Nobody ever buys the best assets at the bottom of the market," Horrell said, noting there had been increasing investor interest in UK real estate, where the correction was the earliest, and sharpest.

Industry experts say highly leveraged, multi-billion euro deals of past years -- such as Spanish giant Metrovacesa's ill-fated acquisition of HSBC's London headquarters in 2007 for $2.2 billion -- will be almost impossible to broker.

"The average deal size has fallen drastically. We haven't seen many transactions above 100 million euros across Europe," said Timo Tschammler, managing director of international investment at property advisers DTZ.

Transactions are also taking longer, averaging 6 weeks to 8 weeks, from 3 weeks to 4 weeks in past years, he said, which was because of stricter due diligence and difficulty in getting financing. (See www.reutersrealestate.com for the global service for real estate professionals from Reuters) (Editing by Andrew Macdonald)

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