Italian retail investment market set to recover in 2011, says JLL

Investment in Italian retail property assets fell to a historic low in the course of 2010 but recovery is on track for next year, according to Davide Dalmiglio, head of retail investment at Jones Lang LaSalle.

'Despite returning market confidence and encouraging retail sales figures, as little as EUR 250 mln of retail product was transacted in the market so far this year, if we do not take into account the Porta di Roma transaction, which was an extraordinary event,' Dalmiglio said. 'However, we expect that the higher level of investor interest will translate into a more active market in 2011.'

The 2010 figure is roughly 30% down on the same period a year before, Dalmiglio added. Although tens of transactions have been under negotiation over the course of 2010, just a few were successfully completed while a vast majority fell through during the due diligence process.

'The shopping centre segment is becoming more and more solid, due to increasing rent levels and occupancy rates. However, there is a lack of investors able to effectively close deals,' Dalmiglio noted. Prime retail asset yields have reported a slight compression to roughly 6%, with a further 25 basis points of yield compression expected for the next months.

Core and opportunistic investors are actively looking in the market but mostly concentrates on prime product, Dalmiglio said, while there is an almost complete lack of value-added investors which could play a role in the repositioning and refurbishment of properties. 'High-quality products are limited in the Italian retail sector and in this sense we see an opportunity for companies willing to do active asset management,' he said.