Private investment in Italian real estate is due a renaissance, Andrew Moylan, head of real estate products at Preqin, the funds data specialist tells PropertyEU.
'What makes the market interesting is that unlike the rest of Europe, Italy never recovered in a big way. While fundraising rose and even exceeded targets in its European neighbours, investors paused on Italy. But there are signs that is changing,' Moylan told PropertyEU, after Preqin released a factsheet on Italy's private real estate industry.
'A few days ago, Italian real estate group Coima announced the first close of an opportunistic fund focused on Italy, picking up a sovereign wealth fund as a big cornerstone investor. I think that's a sign that the big institutional funds may be significantly reassessing Italy,' he added.
According to Preqin's data, while there were 24 deals worth a combined $2.3 bn in 2015, there have been 32 deals worth $2 bn so far in 2016. 'We would expect the aggregate deal value to exceed 2015 by the end of the year,' confirmed Moylan. That would set Italy apart from most of Europe, where inferior deal flows throughout 2016 have on the whole failed to approach 2015 figures.
'We're also seeing an interesting trend with hotel and industrial assets increasingly changing hands,' he added.
'Traditionally, the Italian market has been dominated by domestic players – funds and institutional investors – but we are increasingly seeing international investors entering the market, as evinced by the recent Coima announcement about interest from a significant sovereign wealth fund,' Moylan said. 'The same is evident if we look at the biggest deals registered so far this year.'
Top dealmakers
Indeed, with AXA IM – Real Assets, M&G Real Estate, Jaidah Motors, Coima and Invesco Real Estate and Thor Equities behind the five biggest deals so far in 2016, spending almost €1 bn between them, international money seems to making the biggest impact.
Preqin's note also reveals the intentions of some of the largest Italian players. According to the briefing, Cassa Depositi e Prestiti Spa Bank will be investing €3.8 bn over the next four years through direct investment, listed and private real estate funds focused on Italy, while pension fund ENPAM plans to invest directly and through listed and private real estate funds on an opportunistic basis over the next year.
Preqin reports that the Banca di Roma employee pension fund is planning to invest in direct property holdings and private real estate funds in the year ahead, with a preference for highly experienced managers. The pension fund typically commits €5-20 mln per fund investment.
'We are seeing that there's plenty of appetite from pension funds and other institutional investors for real estate above other asset classes, which is likely to grow in the coming months. Domestic investors have always dominated the market but property's popularity is increasing for a wide range of funds,' Moylan said.
'Italy's economic and political woes are always going to be in the background, and indeed are probably the reason why we haven't seen so much capital raising in the past. But now institutional investors are looking at opportunities, and you have to remember that private equity investors tend to have a bigger appetite for risk. Even in a climate of a shortage of prime assets, they’re not going to be afraid to take on development risk to create the core product of the future,' Moylan concluded.
