The brick is back in fashion. The recovery of the real estate market is consolidating, in Italy and throughout the world, and in particular the real estate fund sector: this is revealed by the 2018 report presented in Milan by Scenari Immobiliari, entitled "Real estate funds in Italy and abroad". If on the one hand the recovery in prices sees Italy lagging behind the world average ("This is because in the years of the crisis we have lost less than other countries and in any case the market is already recovering strongly in large cities such as Rome and Milan", he explains to FIRSTonline Francesca Zirnstein, editor of the report), as regards managed savings in real estate assets, our country in 2018 is aligning itself with the rest of Europe.
Indeed, Scenari Immobiliari forecasts the Net Asset Value (NAV) of real estate funds in Italy should reach 55 billion euro, from 53 billion in 2017 which represented a growth of over 10% compared to 2016, with a number of funds now exceeding 420 (more than France and Germany), up from 7 in 2001. But 2017 was a golden year globally: the assets of the various forms of real estate funds (listed, unlisted, REITs or Real Estate Investment Trusts) at the end of last year reached 2.830 billion euros, up 8% on 2016, with the second best historical result. Most of this assets, 77%, is in the hands of REITs, a particularly agile tool for investors: these are companies listed on the stock exchange, exempt from tax on profits, in which you can invest easily, even with a few euros and diversify.
Even better was the result of the European countries examined according to the report, namely Italy, France, Germany, Great Britain, Luxembourg, Holland, Spain and Switzerland: after the decline in the two-year period 2008-2009, the total assets of the funds started to grow again at an average rate of 7,3% per year in the period 2010-2013, to accelerate in recent years, with growth of around 10% in 2015 and 2016 and more than 16% in 2017, when it recorded the best performance (in terms of percentage growth) of the century in course, reaching over 590 billion. In Europe two-thirds of the assets are still managed by traditional funds (which went from 143 in 2000 to the current 1.550), both listed and unlisted. The forecasts for 2018 are for a further increase of 5%, going to exceed 600 billion.
The performance of these investments is also improving: the Roe, i.e. profitability, of European funds was 3,8% in 2017, the best figure since 2007 (4,3%), tripled the 2012 figure (1,3% ). “This is due – explains Zinstein – to the decrease in vehicles with negative performance, to the differentiation of the type of investments and to the results obtained by Great Britain”. In fact, London, as a result of Brexit, had recorded a very negative figure in 2016, only to then rebound the following year with a Roe of 8,4%. In terms of profitability, however, Italy is still running slowly: 2017 was better than the previous year, but with a Roe still at 0,4% ("This is also because it is the average between very diversified realities", explain the authors of the study) and no Italian SGR in the ranking of the 10 best in Europe.
“In 2017 – he declared Francesca Zirnstein, general manager of Scenari Immobiliari, illustrating the Report – the activity of real estate funds in Europe was important. Asset sales and acquisitions, as well as the construction of new vehicles, were supported by positive results in the real estate sector and by a climate of renewed optimism due to the consolidation of economic growth, substantial liquidity in circulation and the substantial stability of interest rates which contributed to confirm real estate investment as more attractive than bond investment. The forecasts collected for 2018 among the main European operators are for a growth in assets of over five percent. The number of funds is also expected to increase and the trend in the first quarter of 2018 confirms the forecast picture".
“In Italy – he added Mario Breglia president of Scenari Immobiliari – the real estate assets held directly by the funds amount to 58 billion euros, including foreign investments, with an increase of 8,4 per cent on 2016. Active funds are on the rise, 420 in total, also for use as vehicle by foreign subjects who increasingly operate in the Italian real estate market. The debt of the funds system is in constant decline and now amounts to 24 billion euros, with an incidence of 41,3 per cent on assets. In 2010, for example, it was 57 percent of the system. This Report also presents, for the first time, the data relating to the asset management companies in the system, whose total turnover in 2017 was around 320 million euros, with around 1.200 employees. Purchases during the year amounted to 7,6 billion euro against 4,4 billion disposals. The prospects for 2018, based on the indications collected from the asset management companies, are positive and in line with the previous year. At the moment, the political change does not seem to have changed the strategies of the operators who, on the contrary, are optimistic about the next three years and believe in the growth of the sector, with more funds and greater product diversification."
REAL ESTATE MARKET: PRICES AND DYNAMICS
The report also carried out a survey among asset management companies in the real estate sector, on expectations relating to purchase and sale prices in the period 2018-2020, in the various sectors (residences, offices, shops, industrial warehouses, hotels). Significant growth in trade in this sense is generally not expected: on shops nearly half of respondents expect stabilitymoderate growth prevails over the other sectors, while growth of more than 10% is expected only for warehouses (one out of five asset managers interviewed thinks so).
It is right on the sheds though that on the other hand, a significant contraction in prices is expected, exceeding 7% in the coming years. In the other sectors an expectation of stability also prevails on prices, with moderate increases for residences, offices and hotels. Substantial balance also with regard to rents: one asset management company out of three expects stability, 26% predict a moderate contraction and always 26% a moderate increase.
Finally, as regards the areas, at national level, able to intercept the best investment opportunities in the next three years, it should be noted that the asset management companies operating in the real estate sector consider the regions of the North and Center to be most interesting . The big news, especially in the North-West, is the expected boom in shared work spaces (93% of the interviewees consider it probable), but also that of student houses and offices. In the North-East, on the other hand, interest in industrial and logistics sheds prevails, while in the Center investments in shops and (especially in Rome) hotels should soar. Once again the South is lagging behind: only the hotel and shopping center sectors are of interest, but in any case with modest percentages. No offices, no coworking, no industrial plants.
