ITALY - Henderson Global Investors and Italian fund manager Investire Immobiliare SGR have joined up to target Italian pension funds' burgeoning appetite for property investment outside their domestic market.

A fund agreement announced this week will give Henderson a strategic position within the Italian market.

The partners expect to launch their first fund - a core-plus pan-European vehicle - this summer.

Under the terms of the fund development and distribution agreement, Investire Immobiliare will set up and manage funds aimed at Italian investors targeting international investments.

Henderson will develop funds aimed at investors targeting Italian real estate.

The deal reflects Henderson's co-investment strategy, which gives it access to specific markets through local partners.

Alberto Albertazzi, general director t Henderson SGR, said: "We have witnessed an existing appetite within Italy for investors who were looking for a route to invest internationally for a while.

"It's fair to say this appetite has grown over the past 12 to 18 months and is unlikely to narrow in the short to medium term, given the current financial climate."

One driver of this emerging appetite is the likely removal of rules introduced in 1996 that prohibit significant investment in alternatives, including real estate. 

Italian regulator COVIP is expected to announce the change by the end of the year.

In recent months, the €1bn Fondenergia pension scheme has said it will diversify 5% of a portfolio invested in equities, bonds and cash to real estate. 

Meanwhile, AXA raised €118m from Italian pension schemes for its nine-year pan-European office fund.

Less clear is international investor appetite for Italian property assets.

Although Albertazzi acknowledged that macroeconomic uncertainty meant Italian property investments were currently out of favour with international investors, he expects international investor sentiment to increase for specific assets, especially at the prime end of the market.

"Over the last six months, yields have been rising, and pricing looks increasingly attractive in European comparison," he said.

"With the market remaining under pressure, it is quite likely investment opportunities will emerge across sectors that would not be available in normal market conditions."

Positive consumer sentiment despite economic headwinds favoured retail investments.

"In particular, assets with a tourist angle will continue to fair well," Albertazzi said.

"With the constraints on financing, even many domestic buyers will be unable to invest."