ITALY - LaSalle Investment Management last week opened an office in Milan under former Redevco chief acquisitions officer Francesco Coviello.

"For us, there are four European markets: France, Italy, Germany and Spain. France and Germany are the big ones in global terms but Italy has 60m people, wealth in the north, and increasing wealth transparency in the south," Andy Watson, Lasalle's regional head of acquisitions, told IPE Real Estate. With six vehicles invested in the market, he said "it was important to put down a flag".

Continuing market risks include the potential for retail over-supply in some areas and aggressive rents in others. However, Coviello pointed to limited supply in most areas and the fact that Italy, in contrast to markets such as the UK, has not seen a radical drop in yields. "Spain and the UK went up furthest in terms of pricing, and now they're falling fastest," he said.

He added: "Italy is like any other market in that you have to think globally and act locally. It's difficult to access the Italian market unless you're a real buyer - willing to buy anything at any price. But if you want it to give results and not to waste time and money, you need knowledge in the market. Relationships are especially important in Italy."

Lasalle forecasts a "thaw" in the credit crunch in 2009. "It's true Italy has economic problems but, despite them, everyone wants to come into the market," said Coviello. "There's a market to be built."

As Lasalle took advantage of international appetite for the Italian market, JPMorgan launched a pan-European property fund of funds for Italian investors following the lifting of asset allocation restrictions on direct property. The vehicle will invest in real estate, niche assets such as student housing and medical centres, and infrastructure.