Findings from property agent CBRE reveal that the cross-border property investments in Italy picked up twice as much last year upon their 2012 investment transaction values. The increased interest shown by foreign investors is expected to continue in 2014. Meanwhile, local investment activity has assumed a depressed pace in the recent past. Analysts predict that local investors may re-surface into the property market in the coming two years. Also, analysts are concerned by the resurgence of the Italian real-estate market through capital instead of fundamentals.
Overseas investor appetite in Italian real estate market improves
A CBRE report claims that the cross-border investment values hit €3.6 billion during 2013. The report also reveals that North American investors accounted for about €1.3 billion of the transaction amounts while European investors accounted for transactions of a similar order as well. Investors from Asian and Middle-eastern countries contributed some €900 million of the net transactions with Qatari investors alone contributing €787 million.
Foreign investments in the Italian real estate market seem to be continuing on an upward swing through 2014. During the first quarter of 2014, nearly 48 percent of the €700 million transactions made in the the commercial property market in Italy, came from overseas investors.
Tight lending rules inhibit local investor activity
While overseas capital has been performing well in the Italian real estate market, the tight lending regulations are withholding the activity of local investors. Prelios’ Corporate and Institutional Business Development Head, Luca Turco says that local investors had the complete support of Italian banks earlier. Italian banks are now more focused on clearing out old debts, while foreign banks have begun to show a pronounced interest in the Italian market.
Foreign banks are careful with their credit ratings and lend their support to foreign investors in Italy, he explains. However, local investments are expected to return and cause the property prices to shoot up. Turco says that local investors who are currently out of the property market radar will step back in the coming two years. He predicts that local banks will be ready to tender new loans in two years time. The current period is the right time for overseas investors to make aggressive opportunistic investments, he adds.
Analysts voice concern over capital backed revival of Italian real-estate
Property investors warn that the new wave of investments in the Italian property market are backed by the capital rather than changes made in fundamentals. Ron Rawald, European real estate chief of Cerebrus, a private equity group in the US, says that the fundamentals are not as appreciable and the capital can only be solely accounted for the revival seen in the Italian property market. He reports that there has not been any reduction in the vacancy numbers, or an increase in the tenant numbers in Italian real estate. He adds that the inflow of new investments from capital rather than fundamentals puts the market in a worrisome position.
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