As the property market goes global, firms are stepping up their European marketing initiatives. Catrin Griffiths meets the pathfinders at MIPIM in Cannes.
The buzz in the Martinez bar – the best place to network in Cannes – is all about how the global property festival, MIPIM, is changing. “It's getting so big nowadays,” complains one UK lawyer, noting that delegates now number some 12,000 compared with 10,000 just a year ago. “Three years ago it was just the Brits,” adds another City property partner. “Now there's tons of Germans around, and lots more Americans too.”
The theme of global real estate practice loomed large in Cannes this year – the marketing material of the various banks, funds and surveyors all emphasised international capability above everything else. They met with a willing audience. The pools of institutional capital washing around Europe need projects to invest in, hence MIPIM's pivotal role as a marketing arena.
UK projects such as Canary Wharf once again took prominent stands at the exhibition, but continental institutions and municipalities have had an increasingly strong presence of late.
As Clifford Chance Punder partner Wolfgang Usinger says: “More and more German cities, such as Frankfurt, have discovered MIPIM.” The lawyers are there on the back of it.
“What you have is an a la carte menu of investors, occupiers, developers – people looking for the right place to put their cash,” says Linklaters & Alliance partner Patrick Plant. “And they need lawyers who can take them across the borders.”
Several firms were out in force showing their newly-burnished international associations. CMS Cameron McKenna, which appeared to have hired a ferry, such was its size, hosted several receptions for clients at which its fellow-CMS members from around Europe were very visible.
Lovells had more of a down-home atmosphere (Bob Kidby's scratch band even drew attention away from the Rotch yacht for once), but property partners from the German side, Boesebecks, were on both the boat and the Lovells stand. (In a nice symbolic touch, Lovells managed to site itself between the London stand and all the German banks).
Linklaters hosted a reception at the Carlton Beach where all its Alliance partners were out in full force. Clifford Chance, as usual relatively retiring at MIPIM compared with other firms, nevertheless placed a number of double-page adverts (very black and white, very socialist realist) in various MIPIM publications.
Parties are easy enough to organise. Putting together a credible pan-European real estate practice is not, and it has certainly exercised the minds of a number of City property lawyers. “Increasingly our clients are looking at European market as one market,” says Clifford Chance partner Robert MacGregor, echoing a number of senior UK property lawyers.
The odd thing is that only a handful of firms have gone any way towards initiating a European property service line: Clifford Chance, Linklaters, Lovells and, to a lesser extent, CMS Cameron McKenna and Freshfields. It is no coincidence that all five have just concluded mergers with well-known German firms, thereby giving them presence in potentially the most interesting real estate market on the Continent. “We have a once-in-a-lifetime opportunity – we're pathfinders,” enthuses Charles Romney, a partner at CMS Cameron McKenna.
The most fruitful area for expansion is without doubt that space where property, tax and structured finance converge – something which plays into the hands of the larger law firms.
“We can't carry on without moving closer to our corporate and banking partners,” says Lovells property head Bob Kidby. “In fact, the threat to law as a City-based service doesn't come from Nabarros or Berwin Leighton, funnily enough, but from my own corporate people.”
The sexiest growth area of all is the corporate outsourcing market, whereby large occupiers divest themselves of property assets to institutional investors, who manage the property themselves. “The corporate outsourcing market is pan-European now and will require legal firms capable of acting [accordingly],” says John Mason of Trillium, which is advising Abbey National and London Underground on outsourcing issues.
“It's the application of private finance initiative (PFI) techniques and structures applied to the private sector,” says Linklaters' Plant, who adds smartly: “It's a further example of how the demarcation lines between practice areas within the larger law firms have become blurred.”
It naturally suits the purposes of the larger City firms to characterise their property practices as something more akin to structured finance; just look at the lofty use of the phrase “real estate”, rather than the more humdrum “commercial property”. Their refrain – which may be self-serving but is certainly persuasive – is that only the larger City firms can deliver on pan-European transactions.
The question is whether property firms with a more domestic focus will be left out. Berwin Leighton, which does not have a fixed European network but is pondering exporting its property and projects skills, will be an interesting one to watch. “We take it very seriously,” says property head David Taylor. “We've started exporting PFI-based skills, not just to Europe but as far as Argentina.” Berwin Leighton and Nabarros – the top domestic-focused firms – at least have the advantage of UK resources. But without a heavyweight European network or, crucially, a German presence, even they may have a PR battle on their hands.
Clifford Chance Punder
CC's tie-up with Punder Volhard Weber & Axster gives it the top Anglo-German real estate practice by some way. Punders advises a number of real estate investment funds of major German and international banks. Work includes huge construction projects in Berlin, including Potsdamer Platz for DaimlerChrysler Immobilien. Punders is particularly well regarded for innovative tax structuring.
Probable focus: international (particularly US) investment players; open-ended funds; the hotel sector.
CMS Cameron McKenna/CMS Hasche Sigle Eschenlohr Peltzer
Both firms have strengths in both projects and advising institutional investors. CMS advised the architects on the new Reichstag building in Berlin.
Probable focus: projects and public procurement a strong feature; Anglo-German link-up shores up CMS' established Eastern European property practice even further; in common with other larger firms, will target US investors.
Freshfields Deringer (and perhaps Bruckhaus Westrick Stegemann)
Freshfields' tie-up with Deringer Tessin has not yet yielded results on the property side, for the simple reason that for Deringer, property is a service business. The Bruckhaus merger, should it come off, may change this. Bruckhaus advised: Commerzbank on the spin-off of its 130 branches and the lease-back of the property to Commerzbank AG; Hannover Leasing on the structuring of a real estate leasing fund used as a vehicle for the financing and construction of MainTower; and Nomura International on the proposed acquisition of 18 railway housing companies from the Federal Government.
Probable focus: corporate outsourcing has huge potential, as has structured finance.
Linklaters & Alliance/Oppenhoff & Radler
The only firm able to challenge Clifford Chance Punder on European real estate, it is particularly strong in Frankfurt. It has advised German, UK and Danish clients on various hotel projects, plus a number in the leisure field. Some experience of infrastructure projects supported by public-private partnerships.
Probable focus: a wide range of investors and occupiers; headquarters developments.
A nice fit on the property side, particularly since Boesebeck Droste has a strong institutional client base and is recognised as one of the market leaders in the real estate-corporate-tax area.
Probable focus: corporate outsourcing is a serious area for Lovells; in general terms, likely to target both end users (particularly in the leisure sector) and funds.