The best time to invest in Italian commercial property? Now!
Italy is preparing to sell as much as €1.8 billion (£1.5 billion) of state-owned real estate as it seeks to rein in soaring debt. The public debt figures reached an all-time high in November of 2.35 trillion euros, which is over 133% of the nation’s estimated output last year. That is second only to Greece among countries in the euro-zone, as figures released last month showed the country falling into its first recession since 2013.
The Italian state, regions and other public entities own property assets across the country that are worth a combined 283 billion euros, according to government figures from last year based on some one million assets for which the Treasury has drawn up an inventory. Earlier official estimates covering a larger number of properties have placed the value as high as 425 billion euros. The budget plan, which was approved last year, featured a goal of receiving 950 million euros in revenue from real estate sales in 2019 and 150 million euros in successive years.
Prime Minister Giuseppe Conte has said his government expects measures included in its budget to fuel a recovery in the second half of 2019, even as figures released last month showed the country falling into its first recession since 2013. Most economists expect growth this year to be well below the government target of 1 percent.
The finance ministry is identifying properties owned by the state and by regional and local administrations that could be sold off – mainly army barracks, hospitals and office buildings that are no longer in use.
This is not Italy’s first attempt to raise money by selling property, but past efforts have not been very successful thanks in part to difficult rezoning procedures. The government of Silvio Berlusconi failed to attract bidders for disused military barracks in the north, damping prospects for the sale of thousands of state-controlled properties. The administrations led by Matteo Renzi and Paolo Gentiloni also failed to sell non-core public real estate.
This new venture could see high rates of foreign interest, the main players coming from the United States, France and Germany, utilizing the Italian financial vehicles to invest in national markets. The lifestyle on offer in Italy remains the primary motivation for most international buyers. The first properties could hit the market before the end of the year as discussions are continuing on how to package the properties, possibly by splitting them into various portfolios based on location and intended use.
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