International investors' appetite for Italian real estate has been growing strongly in the first months of 2010, but few of the deals being considered are ultimately completed, according to CBRE's head of capital markets Paolo Bellacosa. 'Several investors are looking to buy but the success rate of deals is still very low,' Bellacosa told PropertyEU in an interview. 'Investors are still very risk-averse.'
International investors' appetite for Italian real estate has been growing strongly in the first months of 2010, but few of the deals being considered are ultimately completed, according to CBRE's head of capital markets Paolo Bellacosa. 'Several investors are looking to buy but the success rate of deals is still very low,' Bellacosa told PropertyEU in an interview. 'Investors are still very risk-averse.'
Retail specialists such as Corio, Pradera and Eurocommercial are dominating the core/core plus investment market, but also German open-ended funds and pan-European fund managers like Cordea Savills, Schroders and Henderson Global Investors. Earlier this year, Schroders announced plans to invest a further EUR 450 mln in Italian real estate after making the first acquisition for its Schroder Italian Property Fund II. Similarly, Corio invested over EUR 100 mln in the acquisition of Le Vele shopping centre in Cagliari and is teaming up with Allianz to buy Porta di Roma in Rome.
Private equity groups such as Carlyle, Doughty Hanson and Orion are also looking at the market for investment opportunities, with Carlyle in particular being active in the redevelopment of Le Terrazze di Vado, a 21,000 m2 commercial centre in the Liguria region of Italy. The operation represents the first investment in Italy by Carlyle Europe Real Estate Partners III.
A total of EUR 690 mln of commercial property was transacted in the Italian market in the first quarter of 2010, in line with the same period in 2009 but less than half the amount transacted in the fourth quarter of last year (EUR 1.7 bn). The figure, however, does not include the sale of Porta di Roma which has yet to be closed. Prime office yields have bottomed out by around 75 basis points since the peak of the crisis, and currently stand at around 5.75%. Pime retail yields are in the range of 6.20% in the country, Bellacosa said.
According to Bellacosa, the market is suffering from a lack of prime office product, while the retail sector still offers opportunities. 'In the past years, investors have done a lot of trading, but they have not worked on the management of the assets. As a result, today there is not that much good-quality product available on the market.' Looking ahead, the redevelopment of existing stock to Grade A standards could offer good opportunities, Bellacosa added.
