“The introduction of REITs in the Italian Property market”

The Italian property market, compared to other European markets, is not well established. It is dominated by the two major cities of Rome and Milan and, within those cities, the principal property investments available are offices and retail. In the residential sector, the 80% of families own their house, so that the investments in this sector are very limited. There has been a period of sustained growth in the market since the end of the 1990s and the timing of the introduction of funds in 1999 coincided with the upward trend of the property cycle. Capital value growth has been strong in all sectors, as has income return on the commercial real estate sector. The nature of the Italian market meant that it experienced significant growth from a relatively low base level. However, the lack of maturity also makes it is difficult to judge performance against an established benchmark due to data issues and the lack of transparency. Within the Jones Lang LaSalle global transparency index, Italy registered a significant improvement in its transparency score. The main issue is a paucity of available information at a national level and while there are many local databases of price information for all sectors and some national databases relating to rents and market value, none of these are complete performance indices showing full return information. In the contribution we discuss the introduction of Italian Property Funds and Reits and what they changed in the property sector.