New investor-friendly regulations, legal changes and a collaborative attitude from local authorities are making Italy a much more attractive place to invest in real estate. Foreign investors are voting with their feet and driving up transaction volumes, experts noted at PropertyEU's latest Southern Europe Investment Briefing which was held in London.
'Expectations are high in Italy because of the Government's reform drive,' said Mauro Montagner, CEO of Allianz Real Estate Italy. 'But what has really changed is local administrations’ policies and attitude towards planning regulations. They no longer see development as a problem to avoid, but as an opportunity to improve their city.'
The best example of this new cooperative attitude is Milan, he said: 'In the past five years the city has been transformed by small and big projects alike. It has relaunched itself and now has a completely different feel, thanks to these new partnerships between the municipality, developers and investors.'
Local authorities' new-found open and helpful attitude has gone hand in hand with a more investor-friendly revision of legislation. 'From planning to change of use, from development to regeneration, there are now good capable professionals, easy to work with, in Milan but also in Turin and other Italian cities,' said Dietmar Zischg, partner at CMS Adonnino Ascoli & Cavasola Scamoni law firm in Milan. ‘Planning and building laws have recently been simplified, and that has been hugely helpful too.'
A new law has also introduced a foreclosure provision: until now because of lengthy enforcement procedures it could take up to seven years for a lender to repossess an asset, but now procedures have been speeded up, Zischg noted.
A sign of the renewed vitality of the market has been the listing this week of Coima Res, the first IPO by an Italian real estate company for over a decade, placing 21.5m shares among institutional investors. ‘The regulatory and fiscal regime for REITs is very favourable in Italy,’ said Zischg. "It is very important that this first listing has been a success.'
Financing has become easier as Italian banks are now willing to look at real estate, and the market is becoming more varied and diversified. 'We are seeing a lot of transactions, not just a few trophy properties but new investors coming in with a new approach to the sector and a new willingness to look at sectors that were not prominent, like student housing,' said Montagner. ‘We expect retail to be the most interesting sector, that will experience further growth, not just shopping centres but also the high street. But this year we are looking at the office sector again, because it is coming back.'
The recovery is acquiring its own momentum and more quality assets are coming to the market, although not enough to satisfy investors. ‘Finding good assets is a problem, so there is a limited number of possible deals,’ said Montagner. 'But we expect the market to stay strong and it is a very good market for investors, with rents and capital values increasing. We believe the market will improve in terms of quality, performance and players in the next few years so, as long-term investors, we will keep investing.'
