INREV Annual Conference 2022 Athens: A Summary
The INREV Annual Conference 2022 took place in Athens over 19, 20 and 21 April - the first in person Annual Conference since pre-pandemic Venice in 2019. We welcomed an enthusiastic crowd of over 450 INREV members to hear the latest trends, insights and thoughtful discussion around a central theme: 'Building a balanced future: Working towards a sustainable recovery'. An audience poll revealed that that 35% of the audience were attending the high-level conference for the first time, and that 6% were attending for their 15th+ time.
An economic obstacle course: What’s on the path to a full recovery? (Jan Peter Balkenende)
Jan Peter Balkenende, former Prime Minister of the Netherlands, drew upon his extensive experience in active government to explain the importance of cooperation and collective action in affecting meaningful change.
He spoke with conviction about the need for trust at all levels, citing it is an essential ingredient for recovery and highlighting the fact that trust in corporations and governments has the capacity to drive better performance. He also talked of the need for inclusive thinking and equity – and ensuring everyone can share in the wealth of an economy.
But above all else, Jan Peter Balkenende stressed the imperative for economic policy to reflect and align with the UN’s Sustainable Development Goals (SDG) and for governments and all other key actors to demonstrate implementation. A passionate advocate for the SDGs, Balkenende told delegates that he is ‘…a big fan of SDGs because it’s about equality for everyone’.
He drew his presentation to a close highlighting two additional factors: the importance of inspiration and innovation to drive change; and the leading role that Europe could and should take in helping to recalibrate the economic world order. Europe, he said, had proved itself resilient in the past and needed to so again now: ‘There is a future for Europe. I’m optimistic about it because what’s the alternative to Europe?’
How do you view the future of Europe in the world over the next decade?
What gives Europe it’ coherent power in the new world?
Democratic stability 25%
Social Consensus 11%
Free Trade and Free movement of People 33%
Climate Responsibility 10%
Cultural and historical links and influence 22%
Life-changing: evolving values as to how we live, work and play (Kirk Vallis)
In an examination of how the human brain does its best thinking, delegates heard some inspiring and broad-ranging insights from Kirk Vallis, Global Head of Creative Capability Development, Google.
He pointed out that the key to improving the quality of our thinking is being able to unlock the connection between the conscious and subconscious parts of our brain and re-balance its four key neurological states. Delegates learned that this meant moving away from the busy ‘Beta’ state which accounts for 80% to 85% of the typical workday. Kirk spoke of the benefits of accessing ‘Alpha’ with its relaxed but single-minded focus, or ‘Theta’ where the brain is more unfocussed and open, and even ‘Delta which is the state of deep sleep. Most of these states occur when you are at home, outdoors but generally not in the office. He explained how environment is key to reaching these different states of mind – it is, he said, critical to find time to unshackle oneself from an office or a desk.
Top tips included to give your self more breaks during the day, write your thoughts down and move the timings of recurring meetings to better accomodate cognitive diversity within your team.
Kirk Vallis told the audience of the need to be deliberate, recognise cognitive diversity, work in line with circadian rhythms and regularly cleanse the cognitive function. He also highlighted the importance of better balancing our ‘reductive’ and ‘expansive’ thinking because, as he concluded, ‘…more options equals better decisions’.
The audience responded very positively to this energising how-to-guide for creative problem solving, which delivered useful and much-needed tips to help navigate the present challenging times.
Kirk also provided a recommended reading list at the request of several delegates:
- Deep Work: Rules for focused success in a distracted world - Cal Newport
- Lateral Thinking - Edward De Bono
- Rebel Ideas - Matthew Syed
- Rising Strong: How to ability to reset transforms the way we live, love, parent and lead - Brené Brown
- Great minds don't think alike - Emily Gosling
- Why we sleep - Matthew Walker
What best describes you, in terms of when you are naturally at your most focussed mentally?
Morning Lark 52%
Other Bird (Middle of the day) 24%
Night Owl 24%
Is being in the office more or less appealing to you right now, vs. before COVID?
More appealing or 58%
Less Appealing 42%
The Geopolitical paradigm shift (Gideon Rachman)
From his privileged vantage point as the Financial Times’ Chief Foreign Affairs Commentator,
Gideon Rachman shared his deep knowledge and understanding of the conflict in Ukraine and its potential impact on the global political outlook.
He spoke eloquently, pointing out that the conflict between Ukraine and Russia was unlikely to be resolved swiftly. He shared his view that, though the final outcome remained uncertain, the conflict was definitely set to change the way in which we invest currently – continuing the steady shift in approach that was set in motion with the fall of the Berlin Wall in 1989. The conflict has, apparently, raised the temperature of the debate about the potential end of globalisation, or at least a shift in the established narrative on gloablisation.
Rachman explained how he didn’t expect Russia to expand the war into NATO, but that if Finland were to join NATO, the immediate period after the Finnish application landed would mark a dangerous moment. And he highlighted the fact that Vladimir Putin is now in a fight for survival and, consequently, his endgame is in perpetual motion and a constant state of flux.
There is also the ever-present spectre of a possible Chinese invasion of Taiwan. However, Putin’s failure to secure an early victory in Ukraine suggests this threat may be receding for now.
Gideon Rachman offered the sobering and unequivocal conclusion that ‘Geopolitical risk is back.’
Is the recent promise of global integration over?
Not sure 32%
Have we been guided by a western-centric view of the world that is now unravelling?
The new operating landscape: Shifting drivers for real estate investing (Mike Bessell)
Mike Bessell, Managing Director, European Investment Strategist, Invesco Real Estate, shed light on the relative strong performance of real estate during the Covid-19 pandemic, highlighting the three key factors that supported it, namely robust policy responses to the pandemic; the strength of central banks; and enduring structural drivers of real estate demand.
Mike’s thesis then moved on to examining the need for a new way of thinking on real estate investment because new trends demand it. Here, he paid particular attention to the increasing tilt toward more operational real estate, with all that that implies – notably a laser focus on the needs of the end customers in buildings. He referred to rents and yields as being outputs of the market process and the need to challenge the current mindset and better understand the underlying drivers that deliver these outputs.
Bessell invited delegates to think differently about traditional models of real estate and depart from the established notion of sectors. He spoke of the coming bifurcation of sectors – and the returns from each of these – and the need for market participants to ‘embrace different ways of securing the returns from our investments’.
And there was an important reference to the significance of ESG as a major structural driver of change. Similarly, Mike highlighted the need for the real estate investment industry to focus hard on working with the limited resources available and ‘refurbishing rather than redeveloping’.
What percentage of your investments are in 'alternatives' today?
What percentage of your investments will be in 'alternatives' in five years time?
After the fires: how the Greeks came face-to-face with climate change (Yanis Varoufakis)
Former Greek Minister of Finance and economist, Yanis Varoufakis, returned to the INREV Annual Conference stage, receiving a very warm welcome from delegates.
Picking up on some of the themes in Ann Pettifor’s address, he spoke about the degradation of the climate and a lack of investment in both the energy sector and housing stock since 2008. He provided a report from the ground showing photos of the intense fires that Greece has experienced in the summer, the burnt out forests and the fact that they expect to see soaring temperatures of 50 degrees in the future.
Varoufakis referenced the COVID-19 pandemic that ‘turbo-charged’ the economic policies of the financial crisis, such as quantitative easing, and a debt-fuelled economic recovery that belied reality and made the ‘great deflation’ even bigger. The conflict in Ukraine has made a bad situation a whole lot worse and China’s push for digital wallet payments has fragmented the world of capital inflows and outflows.
He explained that the time is right for the EU’s Green Deal and offered an impassioned plea for a European green energy union, as well as what he described as a proper social union. Again, Varoufakis echoed Anne Pettifor’s sentiment on the importance of Europe: ‘If there’s one argument in favour of the EU, it’s the Green Deal.’
He concluded that the future will be determined by green energy, big tech and AI. And that what’s required immediately is an end to the war in Ukraine, supported by major EU investment into Ukraine to help re-build the country. He left delegates with his inspiring vision: ‘That Astonishingly There Is An Alternative’.
Does the recent Greek experience of extreme hear, wild fires and the burning of Greek forests bring climate change more directly into the framework of EU realities, that must be addressed by Europe as a whole?
Does the EU need an Energy Union?
Not costing the earth: The case of the green new deal (Ann Pettifor)
Ann Pettifor, political economist and author, treated delegates to a spirited tour de force, arguing passionately for the recalibration of the global system of finance based on a Green New Deal.
She described today’s economic system as wholly unfit for managing macro-economic and climate crises run, as it is, by Wall Street whose only mechanism for control is credit. With great historical precision, she contextualised the current situation drawing a parallel with 100 years ago when there was also massive inequality, massive deficit and the consequent rise of populism and the politics of the extreme far right and far left.
She explained how US President Richard Nixon kickstarted unsustainable economic growth in 1971 leading to a huge rise in the consumption of energy. And despite repeated warnings from the IPCC over the dangers of carbon emissions, we’ve singularly failed to do anything to stem the tide.
The time for action, she said, is now and the solution is a New Green Deal, which is a serious attempt at transformation. It will move governance of the global economy away from Wall Street; introduce re-regulation; implement monetary and fiscal policy to help finance green initiatives; and provide clear, independent definitions of ‘green’ and ‘brown’.
Pointing to the success of the EU’s Corona Bonds, she concluded with a vote of confidence in Europe’s ability to take control of shaping the future: ‘I want Europe to play a leading role because the US can’t do it.’
Is the EU Green Deal still feasible in 2022?
How should the EU Green Deal be paid for?
Taxes by nation states and/or transfer payments into EU budget by member states? 0%
Special levies on 'dirty' industries including real estate (where it is not green) 10%
Development finance and regional funds
Blended finance (Public and private) 7%
Regulation and fiscal incentives for private sector investments 10%
All of the above 73%
None of the above 0%
Three panels: Traditional sectors seek new ways, global views, and innovation to build green buildings to
WORLDVIEWS: A TRANSFORMING LANDSCAPE FOR GLOBAL INVESTING
Greg Clark (Conference moderator) chaired a lively and insightful panel debate on the changing landscape for global investing with three leading investors – Jenny Buck, CIO, Tesco Pension Investment; Paul Clark, Senior Investment Director, AustralianSuper; and Andrew Dickey, Head of Real Estate, Private Equity and Alternative Investments, MassMutual – who shared a wide range of perspectives.
There was broad consensus that the combination of the conflict in Ukraine, rising interest rates, high energy prices, and climate change had created a sense of general nervousness within the market.
The panel also shared the view that, despite the tricky economic and political environment, Europe still offered decent real estate investment opportunities.
However, policymakers at both the national and regional level face some testing challenges. Chief among these was how they might strike the right balance between interest rates and inflation. And, as was pointed out by Jenny Buck, Treasuries should be careful about over-taxing real estate.
The panel also agreed that, by and large, there had been a significant underestimation of the cost of achieving net zero – especially in terms of retro-fitting older buildings.
TRANSITIONING THE TRADITIONAL: OLD SECTORS SEEK NEW WAYS TO SUCCESS
In a last minute change to the programme Andrea Carpenter, Diversity Talks Real Estate stepped in to moderated the first panel of the day – we heard from Jay Kwan, Head of Europe, International Real Estate, QuadReal Property Group, Michael Wiseman, Head of Office Leasing, British Land and Mark Zulver, SVP, Head of Essentials Europe, Prologis. The panel spoke of the need to change the customer relationship, hire a diverse team from varying backgrounds and think about the wellbeing of buildings.
GREEN FUTURES: HARNESSING INNOVATION TO BUILD AND RETROFIT
The third panel of the conference included presentations and discussions from three entrepreneurs Nicole LeBlanc, Partner, 2150, Alan Kirsch, Head of Business Development & Investor Relations, Elithis Groupe and Ferdinand Grapperhaus Jr., CEO and Co-founder, PHYSEE. We heard about connectivity, renewable solutions that are growing in demand, carbon capture technologies and that we should be prepared the metaverse is coming and changing hearts and minds in tenant education is essential.
How will the volume of allocations to European RE by global investors change over next 5 years?
Stay the same 27%
What primary role will European RE play in Global Investors portfolios over next 5 years?
Stability and solid returns 9%
Market Diversification 33.5%
Sector diversification 0%
Sustainability leadership 4%
Wider ESG innovation 9%
All of the above 44%
None of the above 0%
ESG open-house breakout session
The central unifying theme of ESG was also discussed in greater detail during three open house break out sessions. Delegates had the opportunity to hear and discuss three important themes:
1) Solving the ESG data challenge where we presented the preliminary results of the INREV Asset level ESG data collection and had an open discussion on next steps for the industry.
2) Integrating ESG into the INREV Guidelines, where we heard from delegates on the impact of ESG on property valuations and what the next steps could be to create a consistent approach to valuation and reporting.
3) The rapidly changing EU and UK tax and regulatory landscape where there was a lively discussion on SFDR, the need to move away from labelling, the consequences of this for the industry and how the market needs to start disclosing information as part of a journey.
Don’t worry if you missed these discussions there will be more opportunity to learn and bring your ideas to the table.
Save the date for Tuesday 17 May when we will be holding a briefing on ESG data collection and in June we will be releasing a short paper on SFDR and what this means for the industry, this will be followed by an ESG Seminar in mid-June. Stay tuned to INREV News to be the first to learn more.
Save the date 2023
INREV Annual Conferene 2023 | Barcelona - 17-19 April 2023
Mark your agenda for next year’s flagship event which will take place between 17-19 April 2023 in Barcelona
In the meantime, take a look at the INREV Event Calendar for other events that you might like to attend.
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