Italy’s Commercial Property Sector Shows Promise

Commercial real estate experts are optimistic about the Italian market as the country moves ahead with new government leadership amid a wider Eurozone crisis. Jones Lang LaSalle reports …

Commercial real estate experts are optimistic about the Italian market as the country moves ahead with new government leadership amid a wider Eurozone crisis. Jones Lang LaSalle reports that the country in poised to attract considerable real estate investment interest once of the crisis subsides, particularly in the retail sector. Analysts note that Italy is the home to a very wealthy consumer base and that these larger incomes will draw attention from regional and global developers and investors. For more on this continue reading the following article from Property Wire.

Despite on going financial concern across the euro zone region, Italian real estate investment has the potential to be a platform for growth in the medium term, according to Jones Lang LaSalle research.

‘Italian real estate investment has been flat since 2007, with average quarterly investment volumes of €1 billion per quarter but there is the potential for considerable upside in 2012 and beyond as investors reconsider the next opportunity as country risk subsides. We may also see more international investment move into Italy as the euro zone crisis calms down,’ said Robert Stassen, head of EMEA Capital Markets Research at Jones Lang LaSalle.

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Patrick Parkinson, Managing Director, head of Capital Markets Italy at Jones Lang LaSalle believes that whilst Italian government bond yields have hit peaks similar to that of Greece and Portugal, prime yields on Italian real estate remain strong. He pointed out that they are 100 basis points higher than yields on similar French and Swedish property.

‘Whilst investors are right to feel cautious, we expect more to dip their toe into the water and embrace these opportunities,’ he added.

Whilst consumer spending has been weak, Italy’s citizens are some of the richest in the world with average net assets of eight times disposable income. Combined government and household debt is 170%, compared to 240% for the UK.

‘We have also seen strong numbers from shopping center REITS with assets in Italy. In addition, major shopping center developers such as Westfield and Eurocommercial are investing in Italian cities such as Milan and Turin,’ explained Stassen.

‘With this backdrop, we expect more newcomers to take a closer look at the region in the next few months, possibly as a counterbalance to a liquid Paris market and falling volumes in Spain,’ he added.

This article was republished with permission from Property Wire.

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