56 / 132
Italy
Italy has the fifth largest investment market in
Europe by stock, with investment focussed on
the cities of Milan and Rome. As a G8 economy,
Italy is firmly established as major European
destination for global capital, as well as having
its own substantial real estate industry.
The market has been dominated by domestic
investors, representing close to two thirds of activity.
Italy also attracts capital from overseas, including
global funds, Middle Eastern, UK and US capital.
Growing overseas capital has helped support the
recovery in the Italian market.
Outside of the core focus on office and retail
assets, Italy also sees demand for industrial and
logistics premises around the major conurbations.
International business and resort hotels are also
keenly sought after.
Italy has a relatively small REIT industry, but a strong
and vibrant fund management business, particularly
for unlisted institutional funds. Preferential tax
treatment also makes unlisted funds a viable
investment route for international investors.
The Italian property market has historically shown
relatively stable performance, although latterly the
property cycle shows evidence of becoming longer
and deeper. There are active domestic and foreign
lenders, although financing at present is limited
largely to income producing assets.
In recent years availability of debt has been restricted
to core assets at relatively low loan-to-values. Over
the past year we have seen improvements to lending
conditions. The majority of debt remains sourced
from traditional banks.
Market sizing
Italy
Europe
Invested stock
(Total stock)
EUR 209bn
(EUR 735bn)
EUR 3,335bn
(EUR 8,201bn)
Liquidity ratio
(10y average)
1.8%
(2.0%)
5.6%
(4.6%)
2014 volumes
(10y average)
EUR 3.8bn
(EUR 4.6bn)
EUR 187bn
(EUR 142bn)
Market pricing –Milan (Q4 2014)
Office
Retail
Industrial
Current Yield
5.00% 5.25%
7.50%
Min/Max (10y)
4.40-5.25% 5.00-6.00% 6.90-8.00%
Yield definition
Net Initial yield
Source: DTZ Research
Investment activity by source of capital, 2014
Investment activity by asset type, 2014
Source: DTZ Research
Source: DTZ Research
Domestic
Non-European
European
Office
Mixed Use
Retail
Industrial
Other
44%
21%
35%
8%
6% 6%
23%
57%
56 Investors Guide to Europe 2015