28 December, Il Sole 24 Ore
Construction sites are empty, and buildings are left incomplete. The recession has left visible traces in many Italian cities and provinces. This is especially true for the residential market, where the positive phase before 2008 fuelled the construction activities for then abruptly stop.
Today, the transactions in the sector have resumed, according to the most recent data from Revenue Agency Observatory, registering a 6.7% increase in the third quarter of 2018. The recovery is slow and won’t be able to reabsorb all the stock, especially out of the big cities where the market is stuck, and prices are still dropping. Even Milan has not been spared by this trend, although Mario Breglia from Scenari Immobiliari stresses how “the problem concerns the areas outside the big cities, the hinterlands and the small towns. The operations started during the boom had been swept by the collapse of construction companies and banks. Today, the stock consists of 200-300 thousand houses which are still under construction and will never be completed. These houses mostly concentrate in the Po valley and on the Adriatic coast. Thanks to the boom of constructions and the easily accessible mortgages, companies built even where there was no demand. Now, there is still no market, and those houses are getting old”.
According to Breglia, in the big cities, properties can be recovered, it’s only a matter of price. This is not true for small towns. The forecasted migration out of big cities has never happened. Breglia says: “This is an important matter for the market”.
Some real estate funds tried to sell these houses, but there are only a few left due to the complex legal matters related to them.
In Milan, construction sites span from Porta Vittoria (recently restarted) to Manifattura Tabacchi (tobacco factory) which is slowly proceeding, till the Adriano area and the Carlo Erba residences, where the works have resumed. Meanwhile, Residenze Visconti is stuck pending the authorisation for the implementation of a social housing project. Failed projects and delays are not uncommon in Milan. Enzo Albanese from Sigest says: “In Milan, the small projects have restarted. Construction sites consisting of less than 50 units represent 80% of the market in Milan, and their completion generally presents fewer issues”.
For what concerns mixed-use properties, there are several significant projects in Milan. While Santa Giulia is pending the green light from the city administration to start the works, now that the Australian multinational Lendlease took over the site, Milanosesto has recently got the authorisation to begin the development activities along with a new credit line from Intesa Sanpaolo. In Milanosesto, a Hines-Prelios partnership to relaunch the project and find the necessary capitals is very likely.
In the rest of the country, the situation is even worse. In the Lazzaretto neighbourhood of Bologna, the construction sites are still. The area was supposed to radically change with the university and the new residents who were supposed to occupy the 2 thousand apartments, but the roads are still under construction, and many apartments are empty. Once completed the first lot, the remainder of the project had been delayed due to the recession and the change of plans concerning the university. The first residential area is still empty, the sidewalks and the parks are yet to be completed. The future of the whole development is uncertain. Same situation for the neighbourhood of Navile, as the area has gone through alternate phases and it struggles to find an identity. The difficulties incurred by the construction company Galotti have left empty buildings and vacant areas.
Similar examples are distributed all over Italy. In Savona, for instance, the Regional Administrative Court accepted the appeal of the residents of the former Gavarri area against the Executive Plan concerning its conversion into a residential and commercial complex. The petition had a sort of domino effect on other similar appeals.
According to Scenari Immobilairi, the PP1 in Padua is currently stuck. The plan implied the construction of prime residential, commercial and office units. In Modena’s former steelworks, the masterplan concerning their requalification has been reviewed after ten years, resulting in the reduction of the residential component and the cancellation of the planned commercial properties.
In Bari, in the Sant’Anna neighbourhood, some projects have never been completed and properties that are not habitable. In Naples, Bagnoli is a never-ending story. The area was occupied until the early Nineties by the industrial complex Italsider, and its reconversion has never started despite the various projects and ideas proposed throughout the years.
Alessandro Ghisolfi from Abitare.Co. commented: “There are many construction sites in several Italian cities, even though with significant differences between big and small cities”.
Source: Il Sole 24 Ore
Translator: Cristina Ambrosi