Laura Holdaway and Andy King from the Mills & Reeve real estate finance team once again attended MIPIM, one of the world’s leading international real estate events. This year’s conference unfolded against an unusually turbulent geopolitical backdrop, with the ongoing US–Israel conflict with Iran shaping much of the conversation in Cannes. Although many entered 2026 with a sense of cautious optimism, lenders across Europe acknowledged that the conflict had reintroduced a layer of uncertainty, particularly concerning interest rates, inflation, and future capital flows.
Throughout the week, discussions with clients, lenders and other market participants pointed to a sector that remains fundamentally liquid but increasingly vigilant. Despite the resilience seen in parts of the debt market, lenders were clear that the need to reprice risk, tighten underwriting standards, and maintain discipline remains central to navigating the current macroeconomic climate.
A major theme across the debt panels was the ongoing uncertainty surrounding interest rate trajectories. Several speakers noted that volatility in swap rates, widely viewed as indicators of future interest rate expectations, had emerged almost immediately following the outbreak of the conflict. While swap rate increases have remained modest so far, the consensus was that a prolonged geopolitical crisis would likely result in lenders pricing additional volatility into their margins. This caution is further amplified by concerns around global energy security. Continued disruption in the Strait of Hormuz - responsible for approximately 25% of global seaborne oil and 19% of liquefied natural gas - raises the prospect of renewed inflationary pressures, adding another layer of complexity to pricing decisions.
Nevertheless, despite these geopolitical and macroeconomic headwinds, most lenders at MIPIM reported that Europe’s debt markets continue to demonstrate strong liquidity, with little indication of a looming credit crunch. Indeed, competition among lenders appears to be intensifying. Debt capital has returned to the market at a faster pace than transactional activity, which in turn is exerting downward pressure on lending margins. For borrowers, this dynamic is providing some welcome pricing tension, though lenders were clear that competitive terms will only be offered for the right deals.
Across panels and client meetings, a broad consensus emerged around the importance of continued selectivity. Lenders emphasised their focus on high‑quality assets, strong sponsorship, and robust ESG alignment, with these factors increasingly viewed as essential rather than desirable. Location resilience, future-proofing of assets, and clear business plans were also cited as key differentiators when assessing new opportunities.
Another notable trend was the renewed appetite for refinancing. In early 2023, many lenders had been hesitant to refinance loans originated by others, a dynamic that contributed to what became known as the “refinancing gap”. By contrast, the sentiment at MIPIM 2026 was markedly different. Lenders expressed a growing willingness to step into refinancing situations, including those involving transitional assets. This shift indicates increasing comfort with taking measured risk, particularly where assets are near‑stabilised and require only a year or two of lease-up or light refurbishment. For borrowers facing upcoming maturities, this renewed appetite may offer valuable flexibility and optionality.
In summary, MIPIM 2026 highlighted a real estate debt market that is stable yet evolving. Liquidity remains ample, but underwriting is increasingly selective and geopolitics are now firmly embedded within lenders’ risk assessments. While sentiment is cautiously optimistic, the direction of interest rates and the duration of the Middle East conflict will remain central to market activity over the coming months. For now, real estate lenders continue to operate with confidence, but with an eye firmly on the broader global landscape. The general feeling was that despite the new threat, the real estate market was in a better place than pre-Covid to deal with any pricing adjustments.
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