Where do you see Italy in the real estate investment cycle?
The massive foreign capital inflow we saw during the last 18 months clearly proves there is the perception that the cycle has reached its bottom, or it is getting very close. This has brought yield compression for core products, therefore we expect the focus in the future will shift towards more value-added strategies.
Do you see more international investors becoming more active? What do they look for in Italy?
International players have been the most active, making most of transaction volume in 2014. Office, shopping centres and retail parks have been particularly sought after, not only in primary cities, but also secondary locations.
Should investors continue to look at Milan & Rome? And which are the most interesting secondary cities?
Thanks to a wise use of leverage and active asset management, secondary locations can provide satisfactory returns to investors, and most cities are still undiscovered. Sound fundamentals are obviously most important, as it is local knowledge and expertise. The usual Venice, Florence, Turin come to mind, but the list might be much longer: asset type, fundamentals and right local partner make the difference. Allocation has to be selective, cherry picking each asset.
Retail: How do you see retail format evolving in the next 10 years?
Retail is one of the most dynamic asset classes, and e-commerce growth forces us to question and challenge the way we see and conceive both retail and customer experience. Italy is the most interesting place to be part of this challenge, thanks to the presence In-town and High-street retails in historic city centres, shopping centres and big retail/outlet parks. Retail players must learn how to take the best of each category and apply to the others. For shopping centres we will see a big focus on technology, social entertainment and services.
Hotels: Will the sector flourish finally in the short term and where?
Hospitality in Italy presents the best potential, but massive work is required: current ownership is still too fragmented in order to attract institutional players, the physical assets need significant CapEx plans, and the legislative framework does not help. As such, I do not see big changes in the short term, besides selected opportunities in few cities.
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