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Milan better than London and NY

26 October, Milano Finanza

Although the outlook is for a slight decrease of the property market in 2018 in comparison with the record performance recorded in 2017, real estate is one of the most interesting markets for investors, and Milan is the best city where to bet on. The scenarios and results have been discussed during the seventh edition of the Coima Real Estate Forum. The yearly meeting saw the participation of over 200 operators of the sector, representing about 50 national and international institutional investors, for total assets amounting to 2 trillion euro.

In the first nine months of the year, 5.3 billion euro were invested in the Italian market. Investments are supposed to reach 9 billion by the end of the year. The result is slightly lower than 2017, but still above the average of the last five years. What about the political and economic uncertainty?  “It’s an important factor, in Italy just as abroad, but we need a long-term perspective. The strategy must be based on the fundamental trends and on the gap between offer and demand, focusing on the real economy”, explained Manfredi Catella, Coima Ceo, during the forum, stressing the need of a “long-term strategy developing through the various economic and political cycles. We must focus on new generation real estate products to make an impact on the real economy”. For this purpose, Coima is betting on asset classes such as offices, residential properties, logistics, tourism and urban requalification, with the objective of investing over 3 billion euro in the next five years.

Milan, whose property market is booming, was the big protagonist of the event. Gabriele Bonfiglioli, Coima Investment Management Managing Director, explained that the returns offered by the real estate market in the city are aligned with those of the rest of Europe (equal to 3.3%, compared to 3.5% of London, 3.25% of Madrid and 3% of Paris). Milan is Italy’s most interesting market and the biggest concerning volumes. In the first nine months of 2018, the city registered investments for 2 billion for commercial properties, aligned with the figures reported in 2017 for the same period (approximately 2.1 billion euro). With nearly nine million visitors, Milan is the fifth most visited European city. The metropolis hosts the offices of 4 thousand multinationals. The GDP has grown by 6.2% in the last four years, against the national average of 3.6%, offering a per capita income equal to 36.6 thousand euro (32% higher than the national data).

Jesse Frietag-Akselrod, senior vice president for Green Street Advisors, went even further by saying that, from a comparison between returns and the state bond trend, Milan has reached London (although it’s still beyond the main German cities). Considering the revpam (the returns for available square metres), the outlook till 2021 sees Milan with Porta Nuova as more attractive than its competitors such as Munich, Berlin and Paris, leaving behind London, Madrid and New York.

Pascal Duhmal, head of the European Real Estate and Infrastructure department for Adia (Abu Dhabi Investment Authority) confirmed the intention of the sovereign fund to “massively invest in Milan”. Duhmel explained that “the city suits our European strategy, where we selected 12 metropolises to invest in. Rome is also interesting, but it doesn’t have the same potential as Milan. Hence, I don’t think we’ll invest there”.

Pierfrancesco Maran, Milan’s City Councillor for urban planning, confirmed that the new territorial zoning plan would be approved by the summer, and he reminded the call for bids for the Farini station. Finally, he stressed how the population in Milan is expected to increase in the next years, and there is no adequate offer at the moment. That means that the relation between the city and real estate will become even stronger.

Source: Milano Finanza

Translator: Cristina Ambrosi

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