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Recession and the trust in real estate

09 June, Il Giorno

In these past few years of recession, banks’ non-performing loans have increased concerning their number as well as their amount. They are especially non-collectable credits backed by properties that have been seized and put for auction. Such properties risk to be wrongly appraised and consequently sold off or to be repeatedly put for auction without finding a buyer due to requests not aligned with the market. To avoid such a risk, or at least to reduce it, ABI (Associazione Bancaria Italiana) and the leading companies of the real estate sector have subscribed a protocol titled “New guidelines per the appraisal of properties”. Assoedilizia presented the document in Milan. It aims at defining principles consistent with the current regulation and compliant with the international and European standards concerning properties’ appraisals, as well as the correctness and reliability of the assessments. The document addresses judges, appraisers, creditors, debtors and the stakeholder involved in the credit collection. It also favours the efficient foreclosure procedures since times are rather long: 1,100 days in Italy against 410 in Germany and 550 in Spain.

The initiative shows how its possible to successfully cooperate overcoming the competition between financial and real estate investments in a period of recession which is far from finished, at least for what concerns the property investments for rental. Such crisis has a long story, and it follows the logic of turning real estate investments from direct (of families) into indirect through the financial manager. Since 2007, the value of properties has dropped by 40-50%, and such fall is continuing at present, making of Italy the only exception among the developed countries and causing a considerable loss of trust towards the industry. Well, the trust won’t be back till the investors will not recover from their losses, or at least till they won’t see a significant countertrend. Besides, a taxation reform will also be needed, as taxes have only increased so far.

Source: Il Giorno

Translator:  Cristina Ambrosi