Month: July 2018

Residential: sales and mortgages for houses are growing, but prices are going down

27 July, Il Sole 24 Ore

Transactions for residential properties have increased by nine percentage points, while mortgages have risen by seven points. But the average selling prices have decreased. It’s the sign that the property market, although recovering, is still not at its best. The data are taken from the fourth report based on the notarised deeds registered throughout the country.

The figures allow making a comparative analysis of the real estate market trends in 2016 and 2017. According to the data, the transactions registered for tax purposes during this period had grown by nearly seven points, going from 808 thousand to 863 thousand.

The group includes various types of property: warehouses, lands and, even though in small numbers, mines and quarries.

If we narrow down the analysis to residential properties, the figures are still positive. In fact, transactions have grown by 9.33% from 2016. The data considers main residences as well as second houses.

Over a half of the houses were bought benefitting from the tax relief for the first house, especially concerning the age range from 18 to 35 years. Transactions for main dwellings bought from a company have been the only ones that decreased (-3.55%). In conclusion, homes continue to be sold mostly by privates rather than by companies.

It’s indeed from companies that comes a worrying signal, which is the reduction of sales for business properties (like offices and warehouses), decreased by 1.44% in 2017. The number of warehouses sold by companies has also considerably reduced: 15 points from 2016.

While the number of transactions has significantly increased, the average prices for residential properties show a somewhat mixed performance. If 2016 registered an average value over 148 thousand euro, this value was approximately 126 thousand euro in 2017.

The reduction mainly concentrated in the second part of 2017. The data might confirm a trend where the number of transactions is growing, but prices are not rising too. It might also prove the tendency to buy small size properties.

Finally, the survey also analyses mortgages. 2017 registered an increase in the loans for warehouses (+6.68%), reaching 360 thousand.

The amounts loaned are mostly up to 150 thousand euro (71.6% of the total). It’s worth to note the significant increase (+35%) in loans for luxury properties with amounts comprised between 450 thousand and 500 thousand. They represent, however, a limited number of properties: only 1,410 in 2017.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

AXA IM – Real Assets acquires high-street retail asset in Bologna (IT)

26 July, Europe Real Estate

AXA Investment Managers – Real Assets, acting on behalf of CNP Assurances, has completed the acquisition of a prime high-street retail asset in the heart of the historical city centre of Bologna, Italy. The recently refurbished property is comprised of two adjoining classical buildings with a total surface area of 2,300m², spread over three floors. Each of the respective properties is fully let on a long lease contract to leading international retail brands. The purchase price was not disclosed.

The asset benefits from excellent visibility being centrally located in the heart of Bologna’s historical centre on Via Rizzoli, one of the city’s prime shopping streets, and opposite the Piazza Maggiore. Bologna has a well-established retail industry which dominates both the city and its metropolitan area, benefiting not only from an affluent local population of over a million residents but also from a daily inflow of tourists and workers, ensuring consistently high footfall.

Source: Europe Real Estate

AXA Investment Managers – Real Assets grows value-added platform with acquisition of the 8Gallery shopping centre in Turin, Italy for €105 million

27 July, Axa Im

AXA Investment Managers – Real Assets (“AXA IM – Real Assets”), a global leader in real asset investments and the leading(1) real estate portfolio and asset manager in Europe, announces that it has completed the acquisition, on behalf of its clients, of a significant majority interest in the 8Gallery shopping centre in Turin, Italy for a total purchase price of €105 million. The acquisition is part of AXA IM – Real Assets’ ongoing value-added investment strategy and is in joint venture with Pradera, a specialist retail asset and fund manager.

Located in the iconic Lingotto Complex, 8Gallery, a top-ranked Turin retail destination, totals 23,300 sqm of GLA over two floors, with 4,000 parking spaces. It is let to a diverse range of national and international brands. Alongside 8Gallery, the Lingotto Complex houses a 2,300-seater cinema, two hotels, a conference centre and a Polytechnic University of Turin campus. The historic mixed-use destination extends to more than 150,000 sqm.

The proposed asset management strategy will seek to capitalise on the centre’s dominant catchment with a number of value-enhancing initiatives. Permissions have been granted for the refurbishment of the northern entrance, with the aim of reinforcing the 8Gallery brand and improving customer flows, as well as a c. 7,700 sqm extension, to deliver additional medium and large sized units, further diversifying the tenant mix and significantly improving the income profile.

The shopping centre benefits from excellent public transport links, with the City Centre less than 15 minutes by metro, as well as its close proximity to Turin’s ring road which provides access to a catchment area of 1.6 million people within a 30-minute drive.

This transaction is part of AXA IM – Real Assets more than €4 billion value-add strategy which seeks to invest primarily in office, retail, logistics and hotel assets in Europe’s key real estate markets, that offer significant value-enhancing asset management opportunities, principally through re-letting, refurbishment and repositioning strategies.

Ian Chappell, Head of Value-Add and Development Funds at AXA IM – Real Assets, commented: “8Gallery fits with our stated value-add strategy of acquiring assets which offer significant capital growth potential and where we can leverage our pan-European local footprint to the benefit of our clients. We are pleased by this acquisition of a landmark urban shopping centre which has excellent real estate fundamentals and strong upside potential through re-positioning and an extension. We will continue to deploy capital in value-added strategies given our increasing investor interest and our focus on sourcing new opportunities in this space.”

Stefano Viciguerra, Joint Head, Pradera Management Italy added: “We are pleased to be working alongside AXA IM – Real Assets on the asset management and development of 8Gallery. Pradera’s Italian and international retail and leisure teams see huge potential to further enhance the attraction of such an iconic complex for the local customer base and for the increasing number of tourists visiting the city each year.”

Source: Axa Im

Everybody is buying UTPs. 100 billion for sale, but the price is a mystery

26 July, Il Sole 24 Ore

Italian banks are working on UTPs for 100 billion. Unlikely to pay is the new frontier. There are many operations currently going on: Intesa Sanpaolo, Mps, Cariparma-Credit Agricole and Carige. The buyers are international specialised companies such as Deutsche Bank and Jp Morgan, but also other groups are creating their own division, like Dobank. Giovanni Viani, Oliver Wyman partner, explains: “The stock of impaired loans in Italy amounts at present to 280 billion gross, representing 14% of the total. Of these, 100 billion are UTP”.

Portfolios composed of several small loans or by single names (significant holdings towards only one debtor) are being auctioned. Antonio Lombardo, Dla Piper partner, says: “Investors buy UTP to manage reorganisation processes, in some cases converting or rescheduling the credits. Generally, the investors enter an agreement with the debtor, or they opt for an agreement among creditors, although this is a longer and more complex solution”.

Cariparma has recently finalised the sell of UTP for about 450 million, partly secured by real estate. The American fund Bain Capital Credit acquired the portfolio. There are also other UTP operations currently going on: Mps is working on several scheduled transactions, while Carige is pursuing its disposal plan for 1.5-billion UTP. The Carige loans originate for one-third from shipping, for one-third from real estate and from the industrial sector for the remainder.

Last month the bank reached an agreement with the ship-building company of Ignazio Messina to reorganise his debt amounting to about 450 million euro.

The debt was curbed by Gianluigi Aponte from the Genoa group Msc with the creation of a newco which will receive the assets and the liabilities of the Messina’s group as well as the capitals from Aponte. The Carige UTPs include businesses like Marina Genova Aeroporto and Leonardo Technology. Finally, Intesa Sanpaolo has put for auction UTP for 250 million.

The approach to UTPs differs from that of NPLs. Lombardo explains: “With UTP, you have to carefully assess the collateral since it’s still an active credit. The approach is selective and not statistical as with NPLs. It’s possible to buy a number of credits of a single holding, or a majority share as a creditor, or a minority share with fewer credits. In the case a majority share is bought, it’s important that the creditors’ approval must be at least 75%”.

Some players are entering the market with ad-hoc teams. Dobank, for instance, appointed Andrea Giovanelli for the management of its Utp & Banking division.

Viani says: “Unlike NPLs, whose market is now mature and there’s a standard method for their management, UTPs are active credits on which the specialised players have just started working”.

Who buys UTPs are usually companies specialised in credits (Bain, Pimco, Credito Fondiario, Algebris, AnaCap, Davidson Kempner), as well as real estate investors (Gwm, Varde, York, Cerberus and Tpg).

There is then the issue connected with the assessment of UTP. In Italy, UTPs are less hedged than bad loans, due to their different nature: 30-40% hedge against the 60% of NPL. A lot depends on the guarantee. Alexandre Astier, Cbre Capital Markets managing director, says: “At least for the biggest holdings, UTPs are backed by development projects (residential as well as commercial) where the debtor is often a developer or a sponsor in financial difficulties and struggling with sticking to the repayment plan agreed with the bank. In fact, UTPs are for large part characterised by debt reorganisation plans with covenants or refunds at stake. Another scenario is that of industrial groups, not necessarily real estate, which had to renegotiate their loans with the banks and had to put as a guarantee operating assets or other properties of the ownership or the holdings”.

Finally, when assessing UTPs, one must consider that the debtor might return being performing. Viani continues: “Therefore, it’s a problem also for the buyers since they’re difficult to assess. Besides, we must distinguish between UTP backed by real estate and those represented by credits towards companies. Real estate credits are easier to assess, while those related to companies are about three-quarters of the total. In this case, it’s essential to understand whether the company is still operating or not”.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

Villa Igiea and Hotel Le Palme: the jewels of Palermo sold to Algebris

25 July, Live Sicilia

Two of the best hotels in Palermo, Villa Igiea and Hotel Le Palme, have been acquired by the company Algebris, guided by Davide Serra. The two hotels belonged to the company Acqua Marcia of the entrepreneur Francesco Bellavista Caltagirone, and they were put for auction together with other five-star hotels located in Sicily.

The properties were adjudicated last Monday after that several auctions got inquorate in the past. But not this time: Algebris obtained Villa Igiea for 23.2 million euro and Hotel Le Palme for 12 million. The prices are lower than the last auctions when they were respectively 28 and 12.6 million euro. Moreover, the Excelsior hotel in Palermo was also sold with the last auction. The hotel went to some entrepreneurs, whose name hasn’t been disclosed, operating on the island for a long time.

Banco di Sicilia owned these luxury hotels until the end of the Nineties; then the bank decided to sell. The hotels are San Domenico in Taormina, Excelsior, Villa Igiea, Hotel Le Palme in Palermo, and Excelsior in Catania. The operation was finalised in 1998 through Sgas and Itacs, two companies owned by Banco di Sicilia which used the manage the hotels on the bank’s behalf, employing 250 people and worth approximately 36 billion. Acqua Marcia bought the hotels, but the recent financial difficulties forced the company to find an agreement among creditors. As a result, the hotels went for auction to pay the debts with a starting price of 241 million. Before last Monday, only the San Domenico in Taormina managed to sell, going to the group Statuto. The hotel might be transferred to a British investment fund together with other luxury hotels such as Danieli in Venice, the Four Seasons and the Mandarin Oriental in Milan.

We must add to these, as already said, the Excelsior, Villa Igiea and Hotel Le Palme. The last two went to Algebris, although the deal will be officially closed at the end of October. Since then, the auction might be re-opened in case someone else raises a bid. In the meanwhile, the investment fund managed by Davide Serra will keep the hotels.

Source: Live Sicilia

Translator: Cristina Ambrosi

Coima Sgr starts developments in Porta Nuova investing 700 million in total

25 July, Il Sole 24 Ore

Coima Sgr, the asset management company managing real estate investment funds on behalf of Italian and international institutional investors, has finalised the purchase of two public areas in Porta Nuova, Milan, and the corresponding construction permits from the Municipality of Milan for a total surface of 32,208 Sq m and an investment amounting to 78.9 million euro.

As the memo reads, the company plans to complete the development of two new-generation buildings by 2022, with a total investment of over 270 million euro. If we also include the requalification projects in Via Bonnet (in the former Unilever headquarters) and in di Via Melchiorre Gioia 22 (formerly Inps offices), Coima has launched urban regeneration projects in Porta Nuova for a total value of 700 million.

The acquisition of rights was carried out through a vehicle company 60% owned by the fund Coima Opportunity Fund II and 40% by a primary international institutional fund in the role of co-investor. The fund CofII, which has recently completed to raise funds for over 650 million euro including co-investments, is the biggest discretionary fund dedicated to investments in Italy, with an investment capacity of over 1.5 billion euro including the financial leverage.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

Manfredi Catella: “The appeal of Milan is clear. Now we have to be the first to experiment”

25 July, La Repubblica

He made the first move for the biggest and most strategic station in Milan. After Porta Nuova, Via Gioia and an operation near Fondazione Feltrinelli, Manfredi Catella acquired from the fund Olimpia Investment the first piece of the Farini train station for 69.5 million: 60 thousand Sq m in Via Valtellina that will be occupied by the Land Registry Office until 2022 and will ignite the transformation process of the former train station. From here, the manager looks at 2030, for Farini, he believes, “could become the pilot project for the creation of the city of the future”.

Will Farini become the next Porta Nuova? What will you do with the area that you just bought?

Yesterday we started a workshop on urban regeneration calling experts from Italy and from abroad, from Amsterdam to California, from London to Washington, to think about the neighbourhood of the future regarding public spaces, energy, transportation, etc. Right now, Milan is the city in Europe with the most developable areas, centrally located too. The city offers more opportunities for innovation compared to other cities which may have started sooner, but now don’t have the same chances to experiment.

Will you expand to other spaces in Farini or the other stations?

Urban development is our primary job. It can be stations, disused or industrial areas, we look at the city on the overall and not only that.

Could the stations attract foreign investors?

It depends on the type of investor. Those who can wait to see the returns in the long term will find an opportunity in the city, or in Italy.

How strong is the interest in Milan right now?

There is definitely interest in Milan. Certainly, the country suffers from the macroeconomic and political uncertainty. For this reason, it’s essential that Italy and each city express reliability, favouring solid long-term projects.

Do you fear, as some analysts do, the stop of the investments due to the uncertainties connected to the new Government?

I hope that the government will demonstrate reliability and competence so that analysts will stop worrying and investors will continue investing in Italy. I believe that if cities work as Milan is doing, they’ll be able to attract capitals. Also, let me add one thing.

Go ahead.

The foreign capitals are here, this has been already ascertained, but it’s easier now for them to leave, considering the less favourable economic cycle. Perhaps, this is the moment for Italian investors to return betting on the country to innovate and to create new jobs. It’s what is happening in other countries in Europe such as France and Germany, for instance.

However, the arrival of Apple and the opening of a Starbucks shop in September are seen as the confirmation of the interest of international players in Milan. Is that true?

There is interest in Milan, for sure, as it’s the city that managed to stand out the most. The arrival of Apple and Starbucks, however, is the confirmation of another thing, in my opinion. It’s that Milan has now become a tourist destination. For this reason, it has entered the global network of the international brands.

After Expo, it seems like also something else has changed.

I’ve always been very positive by nature. But I would like to shift the attention. At this point, the appeal of Milan abroad is certain. The focus for me now is on how the city may become a blank page where to experiment more than in other cities. Perhaps, all we have to do is to be brave and say: we’re in a higher league now, let’s play this match till the end. Moreover, exporting in Italy the model of collaboration between private and public sector has worked well here.

Starting from Farini, will the neighbourhoods of the future Milan feature skyscrapers?

I’ve never been a lover of skyscrapers as such. They’re one of the many ways to shape a city. But if I have to be honest, nowadays substance is more important than form. I think that the new cultural symbol is the High Line in New York, which residents along with tourists can experience and share.

Source: La Repubblica

Translator: Cristina Ambrosi

Boom of houses sold (+11%). But prices continue to decrease

25 July, Libero

The real estate transactions have recovered in the first part of the year. But prices are still following the trend started in 2010, and they continue to fall. Scenari Immobiliari has reported the performance of the six months of the year, confirming the trend pictured by Eurostat in the past few weeks. Whereas it’s true that the transactions in Italy have recovered (+11.5%), prices are still dropping: -0.2% on the overall. The reduction is more accentuated in the service segment (-0.5% for offices) and a slight recovery of shops (+0.2%). The problem is that the number of transactions in the residential market is still low, almost halved in comparison with the peak years, with 290 thousand deals.

Italy is last in Europe

To be honest, Eurostat in its European chart had already identified the substantial balance shown by the research centre. According to Eurostat, the Italian property market has not recovered. The standstill is even more evident if we compare the numbers with those of other European countries. Nearly all of them are growing. In the Eurozone in the first quarter, “property prices grew by 4.5% on a yearly basis, and by 0.6% compared with the last quarter of 2017”. Italy reported the most significant reduction (along with Sweden): prices have fallen by 0.4%. Latvia (+13.7%), Slovenia (+13.4%), Ireland (+12.3%) and Portugal (+12.2%) are the countries that grew the most, while in the last quarter Latvia (+7.5%), Hungary, Slovenia (+4.4%), and Portugal (+3.7%) reported the most significant growth.

Bad loans

In conclusion, the Italian market is still struggling. One of the reasons is the significant NPL stock still within the banks. According to the latest survey carried out by Unimpresa last spring, almost 43% of the bad loans come from real estate. 54 billion “originate from real estate and the construction sector. Construction represents 27% of the total bad loans, with approximately 35 billion euro, while real estate is 15%, corresponding to 18 billion”.

There are also the defaulting mortgages of those, likely due to the job crisis that accompanied the past few years, lost their jobs or had their wages considerably reduced. The banks that issued these loans prefer to not downgrade them to bad loans (to avoid negative consequences for their financial statements), but they’re still not collecting the credits. Banks are not selling the stock of seized houses causing the standstill of the property market, whereas in other countries (Spain and Portugal) the market collapsed in the span of few years.

Source: Libero

Translator: Cristina Ambrosi

Apple Piazza Liberty opens Thursday in Milan

24 July, Apple

Milan — Apple today premiered Apple Piazza Liberty, a new retail location that will revitalize a piazza in the center of Milan. The project, which includes both a grand public plaza and a store below, brings Apple’s latest retail design to Italy for the first time.
Just off the Corso Vittorio Emanuele, one of the most popular pedestrian streets in Milan, visitors will first see a dramatic glass fountain that serves as the entrance to the store and a backdrop to the large outdoor amphitheater. The piazza, clad in Beola Grigia, a stone used throughout Milan, is open to the public 24 hours a day and will host special events year-round amongst 14 Gleditsia Sunburst trees planted in the area.
“There’s no better expression of our vision for Apple stores serving as modern-day gathering places than Apple Piazza Liberty,” said Angela Ahrendts, Apple’s senior vice president of Retail. “In a city with such rich history of art, entertainment and creativity, it’s an honor to establish a space where anyone can be inspired to learn, create and connect with their neighbors.”
Apple Piazza Liberty provides a grand venue for Today at Apple, free hourly sessions on photography, filmmaking, music creation, coding, design and more, that aim to unlock creativity in all attendees. This September, Apple Piazza Liberty will host a special month-long Milan Series, where 21 local artists will share their visions for the creative future of Milan.
“To work within one of Italy’s historic piazzas is both a great responsibility and wonderful challenge,” said Jony Ive, Apple’s chief design officer. “We combined two fundamental elements of the Italian piazza — water and stone — adding a glass portal that creates a multi-sensory experience as visitors enter the store through a cascading fountain that seems to envelop them.”
After descending a stone and metal staircase cantilevered from the Beola Grigia wall to the store below, visitors will be met by a team of 230 highly-trained employees, many of whom come to Milan from Apple stores around the world.
Apple Piazza Liberty opens Thursday, July 26, at 5pm, and Today at Apple registration is available now at apple.com/today.
Source: Apple

The interest of foreign investors for Italian real estate has decreased

24 July, La Stampa

Foreign investors have still a positive sentiment towards Italy, with purchases for over 2 billion euro in the first part of the year. However, the trend has seen a reduction of the expenditures by 48.2% compared to the same period of the previous year. The numbers come from the report by Scenari Immobiliari presented today in Milan. This reduction doesn’t mean that foreign capitals are leaving the country, it’s instead a physiological decrease after an excellent year such as 2017. According to Scenari Immobiliari, another reason is the scarcity of quality product on the market.

International investors have mainly bought offices in Italy (two-thirds of the total investments) and commercial properties. An emerging trend sees Rome as a new marketplace, where to find prime properties to turn into hotels. Investors, however, are quite cautious in the research, especially the extra-European ones, due to the increased political risk.

According to Scenari Immobiliari, it’s because of this uncertainty that prices for offices have decreased in the first half of 2018, reporting a -0.5% from the end of 2017. The outlook is for a negative performance until the end of the year. Rents are also dropping, with the only exception of business districts. The data were presented today during the presentation 26th edition of the forum organised by Scenari Immobiliari that will take place in S. Margherita Ligure on 14th and 15th September.

In the meanwhile, the numbers confirm the excellent shape of Italian real estate, although investors and families have been more cautious in the first semester compared to the same period of the previous year. The uncertainties related to the future fiscal and occupational policies are holding back the market, which is also restrained by the lack of quality product for residential (dropped by 10%) and non-residential properties, especially in the big cities.

Commercial properties are in better conditions, mainly shops and high street, which drive the rise of prices. In the first part of 2018, prices for the retail segment reported a positive result for the first time since 2007, having grown by 0.2% from the second quarter of 2017. This growth is meant to consolidate, and it’s expected to reach 0.5% by the end of the year. Moreover, Istat assessed that consumptions by families have increased in the last few months.

“The trends of real estate market and finance are becoming more and more alike – commented Mario Breglia, Scenari Immobiliari president. – In fact, we’re going through a period of uncertainty concerning fiscal policies and real estate issue which is preventing investors and families from purchasing. It would be ideal to give a clear message about what politician are intending to do with this sector, being the fifth economic pillar of the country”.

Source: La Stampa

Translator: Cristina Ambrosi