Between 1997 and 2007, Italy experienced a period of sustained growth in the real estate market and capital value growth has been strong in all sectors, as has income return on the commercial real estate sector. The real estate market was expansive and has been transformed by the introduction of new financial instruments as well as through foreign investors. During this decade, different innovations and changes have been introduced in the market as bank mortgages’ securitization, real estate spin-off, public real estate assets disposal, investment opportunities in new developments as well as in re-use of brownfields, new forms of professional management of real estate portfolios, and the introduction of property funds. Those opportunities and trends opened the domestic market to foreign investors, improving the sector and its overall transparency. Cross-border investors remained focused on high quality assets, mainly in the two major cities of Rome and Milan and, within those cities, the principal property investments available were offices and retail. In 1999, the first Real Estate Investment Funds (REIFs) were introduced in the market. The timing of the introduction coincided with the upward trend of the property cycle and REIFs have been one of the investments that contributed to the development of the market. Their rapid diffusion was predominantly related to their status of as a tax efficient vehicle for property investments as well as a good opportunity for portfolio diversification. The chapter will discuss the history of the Italian REIF of the last 15 years across different real estate cycle, focusing in the recent downturn, which has affected the performance and attractiveness of Italian Real Estate Investment Funds.
Fifteen Years of Italian Real Estate Investment Funds Across Different Market Cycles
L. Gabrielli
2013-01-01
Abstract
Between 1997 and 2007, Italy experienced a period of sustained growth in the real estate market and capital value growth has been strong in all sectors, as has income return on the commercial real estate sector. The real estate market was expansive and has been transformed by the introduction of new financial instruments as well as through foreign investors. During this decade, different innovations and changes have been introduced in the market as bank mortgages’ securitization, real estate spin-off, public real estate assets disposal, investment opportunities in new developments as well as in re-use of brownfields, new forms of professional management of real estate portfolios, and the introduction of property funds. Those opportunities and trends opened the domestic market to foreign investors, improving the sector and its overall transparency. Cross-border investors remained focused on high quality assets, mainly in the two major cities of Rome and Milan and, within those cities, the principal property investments available were offices and retail. In 1999, the first Real Estate Investment Funds (REIFs) were introduced in the market. The timing of the introduction coincided with the upward trend of the property cycle and REIFs have been one of the investments that contributed to the development of the market. Their rapid diffusion was predominantly related to their status of as a tax efficient vehicle for property investments as well as a good opportunity for portfolio diversification. The chapter will discuss the history of the Italian REIF of the last 15 years across different real estate cycle, focusing in the recent downturn, which has affected the performance and attractiveness of Italian Real Estate Investment Funds.
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