Wednesday, June 3, 2020

The Italian Real Estate Market in April

Mario Nicolini, Head Of Valuation in Aura REE Italia

Piazza del Duomo in Milan, empty because of the pandemic

Two months of nearly total inactivity due to Coronavirus will mean for real estate losses for 20 billion euro over the forecasted 132 billion and a contraction of the transaction volumes between 10% and 20%, estimates Scenari Immobiliari. However, there is still too much uncertainty to have a more precise outlook concerning the economy and occupation.

According to Nomisma, an economic downturn seems unavoidable, with real estate transactions likely down by 110 thousand units compared to the 603 thousand reported in 2019.

Colliers stresses how 70% of the market consists of foreign capitals, which are now gone. On the other hand, sectors like hospitality and retail will resume fast, with Milan leading the recovery of the country.

Residential

Kryalos sold an entire building in Turin city centre to a primary international investment fund for approximately 60 million euro. The asset consists of two levels underground and seven above ground and covers a total surface of 21,538 Sq m. The ground floor accommodates the stores of leading fashion brands, while apartments and offices occupy the remaining floors. Kryalos has also been appointed to reconvert the offices into high-end residences.

Banks

Illimity has recently closed four new NPL operations for 84 million euro in total. Three portfolios concern distressed single name credits for a total gross value of 73 million and are mainly constituted by corporate secured loans. The fourth portfolio amounts to approximately 11 million euro and consists of corporate secured UTP.

Meanwhile, UniCredit is currently trying to finalize the sale of four different NPL portfolios for a total value of 3 billion euro.

According to the latest survey by Credit Village, Covid-19 will have a significant impact on NPLs, considered that banks would not be able to issue new credit to companies and households in the short term. As a result, distressed credits are expected to increase in the next 12 months, while credit collections are likely to decrease.

Hospitality

World Capital estimates that the pandemic will strongly affect the hospitality sector in 2020, as the industry is expected to lose 30% of the revenues due to the absence of foreign tourists. Investments in hotels will decrease by 45%-50% from 2019.

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