04 November, Milano Finanza
Between purchases and reorganizations in this last year and a half (therefore net of Porta Nuova), Hines Italia has invested almost one billion in Italian real estate, ore better, in Milan real estate. Eight building altogether, offices and shops, all centrally-located and of high quality, from the former Banco di Roma headquarters in Piazza Edison, to that in Via Cordusio, from Via Broletto to Via Orefici. But, considering equity and leverage, the amount is destined to double over 18 months, and without selling the assets of the portfolio. On the contrary, the company is broadening its horizons, both in terms of sector and geography, trying new territories such as the residential sector. With which strategy is explained by Mario Abadessa, Hines Italia Ceo for two years.
Why doubling the exposure on Italy in such a short time?
Right now, everybody considers Italy a very interesting marketplace and underestimated for what concerns the value of its economy. Some alternative markets, such as Latin America, Russia, China or India represent too many uncertainties. Moreover, even after reaching 2 billion, it won’t be a very high amount, little more than 2%, considering that the assets managed by Hines Group in the world amount to 93.2 billion dollars, approximately 90 billion euro, divided among 20 countries and 192 cities.
In Italy, however, you’ve been mainly focused in offices in the streets around Via Cordusio paying high prices, while other international investors preferred more speculative investments. Who is right?
Among the underwriters of the Hines Group, there are many pension funds. For this reason, in Italy and in the world, we operate with a long-term perspective looking for properties capable to maintain their value and provide returns in the long term in order to grant pensions in 20-30 years. Italy presents many uncertainties due to the political instability and the public debt. Only high-quality properties can resist these uncertainties, avoiding excessive depreciation and vacant spaces.
Now you want to go beyond offices…
Right now, the most interesting sectors are offices, but only in Milan, and high-street, namely commercial spaces in shopping streets. From this point of view, we look with interest at other cities such as Florence, Rome, Verona. There are also interesting niches still untouched and, more importantly, not impacted by the political and economic instability. That is residential.
Since at least 20 years, however, institutional investors in Italy have been exiting the residential market and they’re still keeping away. Even though, everybody is talking about its potential…
Obviously, we’re talking about the residential market with a more innovative view compared to how banks and insurance companies used to do.
What do you mean?
Society has changed a lot and today we can identify at least four interesting segments. One of them is student housing, representing a valid instrument in terms of long-term investment.
But universities are in the middle of cities, with limited space. Where are you going to build them?
Whole Italy can be considered a big campus because there are many beautiful cities, with prestigious universities, of great interest for international students: Milan, Florence, Rome, Venice, Urbino, Perugia, Pisa, Padua…And there is space available to build them, as well as beautiful buildings, historical too, that can be reconverted. After all, in Milan, 90% of the Bocconi students come from other cities and its new student residence, just finished, offers 2 thousand beds for a student population of 15 thousand students. The same is true for Politecnico. Without mentioning Florence, where there are 43 international universities, attended especially by American and Chinese students. All over the world who studies arts, design, architecture, but not only, is interested in studying in Italy.
There is, however, plenty of apartments to rent, also centrally-located. What can you offer more and at which price?
The buildings will be of the highest quality, with laundry room, kitchen, library, cinema, 24h reception, gym, swimming pool. An ad hoc company of the group will manage them. We’ll not forget the social aspect, offering half of the residences at a fixed price. Let’s not forget then that the student population includes also doctorate students and young professors.
When are you planning to build them?
We’re thinking of building 20-25 buildings of this type and, besides student houses, which will be our main investment, we’re looking also at other types of residential properties. Starting from senior living, featuring all kinds of services except medical ones. Or micro-living, new buildings dedicated to short-term rentals, competing with hotels. The latest niche is multifamily residences, dedicated to families that want to rent, whose number is growing.
When will be the first investments in residential?
If 2017 has been the year of offices, 2018 will be the year of residential, with some operations already closed in the first semester. Then we’ll think about logistics in 2019.
Source: Milano Finanza
Translator: Cristina Ambrosi