In the mood?

It has become something of a cliché that anyone not going to MIPIM is mainly interested in two things: what was the weather like, and what was the overall mood of the conference. While the weather for a specific week might not be entirely useful in predicting investor confidence, 'mood' is certainly a decent rule of thumb for finding out where the sector stands. In an industry that is dominated by sentiment, how people feel on La Croisette is as good an indicator as any for where the market stands.

Until a week ago, most people would have expected The MIPIM Mood™ to be a positive one. The picture might not be rosy in all locations and all asset classes, but taken as a whole real estate has had something of a "turned the corner" feel of late. The economic outlook was more benign that it had been for some time, capital was eyeing opportunities and, despite ongoing challenges, growth was once again on the agenda.

But some of that confidence will have ebbed as a result of the military action seen in Iran and the wider Middle East region over the past week. Our first thoughts are with the clients, colleagues and friends we have in the region, and there are clearly all kinds of humanitarian, geopolitical and security aspects to consider. But in purely economic terms it is at the very least creating more uncertainty. A prolonged conflict has the potential to impact on inflation, interest rates and growth - three of the biggest fundamentals when it comes to real estate's prospects.

So, what will this mean for the mood on the ground in Cannes? Despite the risks facing the market, there are still plenty of reasons to be cheerful. And after the various events of the past decade, real estate is now somewhat used to dealing with the unexpected; there could be tough times ahead, but many will fancy their chances of dealing with them knowing they have seen off significant challenges in the recent past.

For what it's worth, Big Picture suspects that a broadly upbeat mood will prevail. One of real estate's strengths is its general optimism, and the industry is diverse enough that even fears in some sectors will be outweighed by positivity in others. But news from Iran will be crucial - with the situation developing rapidly, the latest updates from the region will undoubtedly influence how bullish everyone is feeling.

And as for the weather? The forecast is for some rain at the start of the week but sunshine arriving later on. Which, given the backdrop, might not be the worst indicator of what lies in store for real estate.