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International funds on the Milan property market
04 February, La Repubblica
After the having been struck since 2010, the construction site in Santa Giulia will resume thanks to the Australian LedLease through a joint venture with Risanamento.
Porta Vittoria is also leaving its troubled past behind. Following the bankruptcy of Danilo Coppola, the construction activities were suspended from 2007 to 2010 and from 2014 till present. The American York, through a fund managed by Prelios, has now taken over the site.
For Assimprendil Ance President Marco Dettori, these two examples alone would be enough to explain the thriving moment Milan is going through. The city alone is worth 10% of Italy’s GDP and has recently reached 400 thousand inhabitants. That’s the reason why things started moving, and the international players, unlike in the past, are here to stay.
According to Breglia from Scenari Immobiliari, Milan is a market on its own, with estimated urban renewal projects concerning a surface of 12.5 million Sq m up to 2034. Last year, the international investments in Milan were more than half of the total (4 billion over 7,5), and they’re supposed to reach 5.5 billion this year.
International investors focus on the city centre. For instance, Piazza Cordusio has seen the arrival of Starbucks in a building owned by Blackstone, while the former Unicredit owned by the Chinese Fosun will go to Dea Capital. Investments have started also spreading in the other parts of Milan. Sei Milano will be created from scratches thanks to n partnership between Borio Mangiarotti and the American fund Varde for an operation worth 250 million euro. Meanwhile, China Investment will finish a new residential complex near Porta Nuova by the summer. Near Prada Foundation, Beni Stabili will implement Symbiosis. Finally, Westfield will create Europe’s biggest shopping centre in Segrate.
To fully understand this dynamism, however, one must also consider the increased population, mainly represented by students and young professionals. It’s not by chance that Hines turned an old building near Bocconi into a student residence with 1,300 beds for an investment of 160 million. Starting from the Expo in 2015, the city has welcomed the arrival of young people, allowing international investors to see the country with a long-term perspective.
According to Andrea Ruckstuhl from LendLease, Milan is quickly becoming competitive at an international level, thanks to the long-term real estate projects. For example, the plan for the restart of Santa Giulia involves the construction of two office buildings and a sport and concert arena, also in view of the possible 2026 winter Olympics in Milan.
LendLease has also obtained the development of the former Expo area. The site will also accommodate the science and technology park Mind. The project combines private and public initiatives for a value of 2 billion in total.
As Prelios Ceo Riccardo Serrini explains, international investors tend to focus more on value-added properties, mostly concerning distressed asset to requalify, rather than core investments like entire buildings.
Source: La Repubblica
Translator: Cristina Ambrosi