Is the Italian Real Estate Market Surviving the Current Crisis?

13 December 2011

 

In the third quarter of 2011 the number of real estate transactions increased in Italy.

 

The latest surveys published by a public entity monitoring the Italian real estate market contain positive news regarding the trend of the volume of transactions, the price and the mortgage finance.

 

The public agency, Agenzia del Territorio, issued a survey showing that the number of transactions increased by 1.6% in the third quarter of 2011 compared with the third quarter of 2010 after four negative quarters.

 

The below table sets out the volume of transactions in Italy according to Agenzia del Territorio:

 

Sectors

III Q 10

IV Q 10

I Q 11

II Q 11

III Q 11

Residential

129296

169243

136718

160073

131125

Office

2967

5134

3258

3888

3028

Retail

6895

10755

7909

9202

7708

Industrial

2221

4065

2473

3209

2949

Outbuildings

101316

137648

107564

126511

102210

Other

40931

55575

41025

46986

41279

Total

283625

382420

298946

349870

288299

 

The following table compares the difference in % between the number of transactions of one quarter with the same quarter of the year before according to Agenzia del Territorio:

 

Sectors

III Q 10

IV Q 10

I Q 11

II Q 11

III Q 11

Residential

-2,7%

-4,1%

-3,7%

-6,6%

1,4%

Office

-3,0%

-3,5%

-4,4%

4,0%

2,00%

Retail

-10,0%

-2,0%

-8,9%

-5,5%

11,8%

Industrial

-16,9%

4,0%

-2,1%

5,7%

32,80%

Outbuildings

-0,4%

-4,4%

-2,6%

-3,4%

0,9%

Other

-3,5%

0,9%

-5,1%

-9,3%

0,9%

Total

-2,3%

-3,4%

-3,6%

-5,6%

1,6%

 

In other words, we are back with almost the same volume of transactions of a year ago. It is a good sign, but it also shows how far we are away with respect to the number of transactions registered in the first quarter of 2007 (421,275) compared with the third quarter of 2011 (288,299).

 

The prices have remained quite stable in comparison to the decreasing number of transactions. In the real estate market of Milan, for example, according to the survey carried out by OSMI-Borsa Immobiliare, a public entity part of the local Chamber of Commerce, prices increased by 1% during the last quarter of 2010 and the first quarter of 2011.  

 

A positive sign also emerges from the last monthly survey issued in November by ABI (the Italian Bank Association) according to which in September 2011 the real estate mortgages granted to families increased by 5% compared to the month before and 8.7% compared to September 2010.

 

Considering the financial turmoil around Europe and the Italian economy in particular, the real estate market has shown a good grade of maturity and stability.

 

In the near future however, there are some potential new elements to be considered: the increase of real estate taxes, the NPL transactions, the selling of properties from the central State, as well as from the real estate funds which are going to be wound up in the next two years. It is not easy to value the impact of each of these elements on the real estate market, but they could interfere with the volume and the price in the medium-short term.

 

To date, Milan and Rome are the two main real estate markets in terms of number and value of the transactions, but, if the new government initiative is successful in reducing the economic divide, there will be the basis for enhancing the real estate market in the smaller towns.

 

Antonio Campagnoli

IL PUNTO Real Estate Advisor srl

 

 

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IL PUNTO Real Estate Advisor was founded to provide integrated real estate services using highly qualified professionals - accountants, architects, lawyers, brokers and engineers - as well as experts in the hotel and retail chain development fields. IL PUNTO is the Italian independent expert of several real estate funds managed respectively by Valore Real SGR, P&G SGR, Numeria SGR, Borgosesia SGR, as well as of international firms including Fitness First, National Oilwell Vargo and Avago Tecnologies.

Recently IL PUNTO has joined CORFAC International. In recent years, North American CORFAC firms have averaged 10,000 completed transactions annually encompassing nearly 1 billion square feet of commercial space and valued at more than $16 billion in lease and sale transactions, excluding advisory services and property management fees. CORFAC International was recently ranked by Commercial Property Executive, a New York publication, as a Top 2 Brokerage Network, while National Real Estate Investor recognized CORFAC last year as a Top 12 Brokerage Firm in the U.S.