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retail-shopping-centers Market News: Spanish Real Estate Intelligence

The 2019 real estate outlook by Cbre
15 February, Mark Up In 2019 hotels will be one of the most interesting asset classes concerning the capacity to attract investments, according to the Investor Intentions report by Cbre. In 2018, hotels in Italy drew total investments for 1.321 billion net, continuing the trend of 2017, and they’re expected to grow further this year reaching approximately 2 billion euro. With 277, 000 bookings in a year, 33,000 hotels and 1.1 million rooms, Italy is the fourth market after the United States, France and Spain. International investors, generally representing the predominant quota of real estate investments in Italy, were 65% of the total investments in 2018, having decreased from the 76% recorded in 2017. Investors are particularly attracted by luxury hotels in the main tourist destinations, especially Milan, Rome, Florence and Venice. Several international companies have recently made their debut on the Italian market. In Milan, the Singaporean First Sponsor Group acquired Grand Hotel Puccini. In 2018, Swiss Life completed its first acquisition in Italy with Radisson Blu, always in Milan, and Novotel Malpensa. For 2019, the main challenges of real estate acquisitions in Italy will still be asset availability (21% in 2019, aligned with 2017 and slightly decreasing from 2018 with 25%), cost of properties (15% in 2019, increasing from 2017 but aligned with 2018 which reported 16%), political instability (14% in 2019, decreasing in comparison with 2017 which recorded 15% but having sharply increased from 2018 with 8%). A stable year “Unless destabilising geopolitical events in 2019, we expect a steady year or even better than 2018”, commented Cbre Italy Ceo Alessandro Mazzanti. It will be, however, well below the results reported in 2017. The key sectors will be logistics and hotels. Retail will not register a significant growth, and it will require a careful selection. It will be necessary, in fact, to hunt for opportunities as prices have decreased. In 2018, the segment, in continuity with the 2017 trend, performed better than other European markets where the contraction was more dramatic since the stock was bigger. We’re currently in the middle of an evolution: bigger assets are benefitting from the rise of e-commerce, while shopping centres can be a good place where to experiment with different formats”. Retail and logistics: the most resilient segments Retail is the real estate asset class that reacted the best to the 2018 market contraction, with investments equal to 2.243 billion euro, decreasing by 6% from 2017. In 2019, we might see the completion of some critical operations concerning factory outlets, as the segment risks to be severely impacted by the law on Sunday closures. 18.43% of the people surveyed see logistic as the most interesting asset class of commercial real estate in terms of investments in the pipeline for 2019. Despite the segment has slightly reduced from 2017, in 2018 logistics doubled its transacted volumes, net of the Logicor transaction. Investments have gone from 5% as recorded ten years ago to 10% in the current economic cycle. The growth of e-commerce has positively influenced the performance of the entire sector, and it’s expected to grow further in 2019. Student housing was one of the most dynamic sectors in 2018 in Italy. According to 32% of the people surveyed by Cbre, it will be the residential segment with the biggest potential, followed by senior housing (25.2%) and luxury houses (15%). 68.8% of the interviewed believes that student housing might become the leading asset class of Italian real estate. For what concerns offices, the trends regarding serviced offices and co-working will consolidate in 2019, after the entrance in 2018 of new players. Requalification will be crucial for Milan and Rome. Milan has started with a rush, with the launch of some requalification and expansion projects already at the beginning of 2019. Meanwhile, Rome has a number of projects in the pipeline, and the demand is in excellent shape. The healthcare sector has gone from 6% to 8%. The low birth rate combined with the longer life expectancy has brought to the progressive ageing of the population. In 2017, Italy had the highest old-age dependency ratio in Europe (34.8%) according to Eurostat, resulting in one of the most attractive countries for investors in the healthcare sector. 14% of the interviewed said to be interested in the NPL sector, placing bad loans second in order of interest, followed by offices and student housing with equal merits. Source: Mark Up Translator: Cristina Ambrosi  
 
The jewels of Milan
09 February, Milano Finanza The most recent operation concerns the Excelsior gallery in Corso Vittorio Emanuele: the homonym movie theatre has been reconverted into a retail asset after having been sold for little less than one million euro. It will accommodate a Victoria’s Secret store. Another operation concerned an office building in the development phase included in the requalification project SeiMilano, in Bisceglie, for a similar amount. The two examples are similar in terms of amounts and project dimensions, confirming the interest of international investors in Milan’s real estate market. The city alone absorbs about one-third of the Italian real estate investments, especially for what concerns offices. In 2018, the city attracted office purchases for 1.7 billion euro. And the list of international investments in Milan keeps growing: from the precursors Hines (which developed Porta Nuova, together with the Catella family) and Blackstone (arrived in 2012-2013, at the height of the recession, operating in Italy through Kryalos). There are also the sovereign fund of Qatar, the Asian Fosun, the Anglo-Saxon York, and familiar names such as Goldman Sachs, which is ready to return to Italy. Among the Italian players, Dea Capital Sgr, Coima Res, Covivio (formerly Beni Stabili), Generali, Unipol are the most active, either operating on their own or on behalf of institutions, especially retirement funds. What attracts them? The dynamism of the city reflects on the real estate market, perceived as liquid, safe and profitable. The promises have been kept: the returns had gotten closer to those of the leading international markets. “Returns for offices in Milan are set at 3.75% gross near Duomo, and around 4.75% in Porta Nuova”, explains Simone Roberti, Colliers Internationals head of the research department. “Returns for some iconic buildings in Porta Nuova might decrease to 4-4.25%. The references of the tenants and the outstanding duration of the lease contract are also factors to be taken into consideration, but for this type of building there’s a wide choice of potential tenants”. Large development projects such as CityLife and Porta Nuova have contributed to the economic growth of the city. Porta Nuova, having overcome the challenges represented by the recession, ended up driving the whole sector. CityLife follows, to the point that the construction of a fourth tower has been rumoured. The city is thriving with new projects, especially concerning requalification: from the former Poste building in Piazza Cordusio which has become the first Starbucks in Italy, to the old Inps offices that have gone to Coima Res in Via Melchiorre Gioia (with the reconversion project Gioia 22). The estimated value once the works will be completed in 2020 is 600 million, considering that the average leases are 500 euro/Sq m/year and returns are close to 4% for a 50 thousand Sq m surface. It will undoubtedly become one of the most valuable assets in the city, but it won’t be the only one, and certainly not the most expensive. Surprisingly, the former Rinascente building in Piazza Duomo dominates the chart, although it’s neither new nor innovative. The asset was acquired in 2011 by Enpam through the Ippocrate fund of Dea Capital SGR for 472 million euro. The asset is worth 850 million. If it were available on the market, Galleria Vittorio Emanuele would be worth even more. According to the experts, the shops alone would be worth at least 25 thousand euro/Sq m, roughly 50% more than the 17,500 euro/Sq m estimated for Rinascente. Thanks to a more careful management, the returns from the rental of the assets owned by the City of Milan have gone from 8 to 32 million over the last ten years. And this is not all. Among the most expensive buildings, there is the Unicredit tower in Porta Nuova, a symbol for the whole district and an icon in Milan’s skyline. Today, it’s estimated at 600 million euro. It’s followed by Gioia 22 and the CityLife towers: the one occupied by Allianz (Isozaki tower) is worth 460-480 million, while the one accommodating Generali (Hadid tower) is estimated at 390-410 million. In the old town, there is Palazzo Broggi in Piazza Cordusio, formerly known as the Unicredit offices, which is worth 345 million. Its intended use hasn’t been determined yet, but if it becomes a commercial asset, its value will increase even more. At the bottom of the top ten, there are the Diamante building in Porta Nuova, occupied by Bnp Paribas (350 million), the PWC tower in CityLife (270-280 million), the Edison headquarters in Foro Bonaparte (270 million), the former Banca di Roma offices in Piazza Cordusio currently occupied by an international legal firm, and finally the Corriere Della Sera offices in Via Solferino for which Blackstone paid 120 million in 2011 and whose value has doubled at present. Finally, it’s also worth to mention big hotels. The three most expensive hotels are Gallia, Four Season and Mandarin, all estimated between 200 and 250 million each. Source: Milano Finanza Translator: Cristina Ambrosi
 
Non-residential investments have decreased, although not so much as expected
04 February, Il Sole 24 Ore The final rush in the real estate operations in the last quarter of 2018 swept away the worries for a possible sharp decrease in volumes compared to the 2017 record performance with 11 billion. According to Cbre, non-residential real estate investments in Italy were equal to 8.856 billion euro (resulting in a 22% reduction from 2017). Bnp Paribas Real Estate reports a good performance of the office sector in the fourth quarter of 2018 with volumes set a 3.5 billion, one of the best Q4 of the last five years and third best Q4 of all times. However, the figures don’t match. Colliers estimates volumes for 8,1 billion, while Cushman & Wakefield for 8.3 billion and Redilco for 8.5. The issue of market transparency had re-emerged, and data sharing would be definitely useful for the sector. Cbre reports that the retail was the segment that reacted the best to the market contraction. With volumes for 2.243 billion, it was one of the most performing asset classes of the past year (-6% from 2017).  The segment had been most impacted by the reduction of consumptions and by the rise of e-commerce which demands a certain caution from investors. Despite the fears for an end like the American malls, closing one after another, and the threat represented by the internet, the truth is that the segment is going through a radical change. The way of shopping is changing. There will be more virtual shops, while physical shops will only showcase products. Transactions in Italy had concentrated in shopping centres. These, however, have to re-think their future. Some of them have already been repriced, according to the experts. Volumes have fallen by 17% for offices, setting at 3.418 billion, and by 10% for logistics. Concerning the office sector, Milan is still the primary market with investments for 2.077 billion. Rome maintains a good take-up level in a market that continues shrinking. Cbre is ready to bet on hotels, seen as the most promising asset class for 2019. “We’d registered volumes for 1.3 billion in 2018 (the number includes not only luxury hotels, as in the JLL estimate, but also hotel reconversions and NPLs)”, says Francesco Calìa, head of the Cbre hotel division – “At the beginning of the year, assets for sale were already 800 million”. According to Joachim Sandberg, C&W manager for Southern Europe, offices have been the segment that was impacted the most, registering a 35% decrease. “In 2019, we’ll be more selective on cities. Retail is perceived as risky, although this view is not justified for Italy. The issue will always be the shortage of product. We’ll have to wait for 2020-2021 for new products”. In any case, 2018 confirmed the interest of international investors for Italy, seen as a core country in the European asset allocation, despite the uncertainties of politics which had characterised a good part of the past year and caused the spread to rise, deterring or delaying some operations. According to Bnp Paribas, 2018 closed with investment volumes over 8.6 billion. Several factors had determined the reduction. Some are the shortage of product, the returns consistent with the trend of mature markets, and the absence of large portfolio operations. Bnp disagrees with Cbre about Rome. “Offices had grown by 30%. The Capital had benefitted from the high prices of offices in Milan in combination with more cautious international investors”, comments Cristiana Zanzottera from the Bnp research centre. In 2019, the attention will focus on hotels, according to Colliers. The sector saw transactions such as the one for LaGare in Milan and Venice for 105 million and for the Castello in Casole. The largest operation, however, concerns Belmond. 50% of the hotels of the brand are in Italy, all trophy assets like Cipriani in Venice, Villa San Michele in Fiesole or Caruso in Ravello. But there are also other transactions in the pipeline. Capri Palace of the brand Mytha Hotel Anthology and the Aldrovandi hotel in Rome, always of the same group, are allegedly for sale. Davide dal Miglio from JLL recommends caution with hotels, as the asset class is very fragmented in Italy. He says: “I believe that, when we talk about hospitality, we should also include student housing and senior living”. In 2018, JLL reported volumes for 83 billion. Transactions are for smaller amounts than in the past, 50 million on average instead of 70. For what concerns prime net returns, offices in Milan in Q4 were stable at .3.30%. Returns for logistics are set at 5.25%. Sandberg concludes: “the problem with logistics is finding assets”. Source: Il Sole 24 Ore Translator: Cristina Ambrosi