After Ireland and Spain, Italy is again the target of real estate investors attracted by the projections of economic recovery following the quantitative easing campaign promoted by the European Central Bank, lower interest rates and the enforcement of market-oriented regulations.
Already in 2014 did international investors return to Italy. According to Cushman & Wakefield, international investors contributed euro 5 billion to the retail real estate market, showing a 20% increase against the previous year, mainly focusing on retail areas, shopping malls and hotels. Recently, the Qatar state-owned real estate fund took over the Porta Nuova prestige real estate project in Milan. The new modern district close to the Porta Garibaldi railway station features the new headquarters of Unicredit Bank and the “Bosco Verticale” residential tower.

Light at the end of the tunnel
The market scenario in Italy is brightening up again after three years of recessions since 2008. This year GDP is expected to grow approximately by 0.5% and the first signs seem to confirm the trend. The Purchasing Managers Index (PMI) of the processing industry rose in January and February. The most prominent Italian banks – Intesa Sanpaolo and Unicredit – cleared their accounts and are currently giving businesses access to credit.
This is expected to foster also the real estate market with options opening up to the city centres of Milan and Rome. Owners/landlords are putting in the market private estates and assets in excellent locations. Also extremely interesting are shopping malls, which, in the opinion of Massimo Caputi, Vice-President of Prelios, provider of real estate services, generate yields equal to 8% on average, i.e. approximately 2.5% more than in Switzerland and Germany.
Private investors who intend to participate in the process, can think of purchasing a holiday house. In the previous decade the yearly number of purchases completed by foreign investors doubled, reaching nearly 5,500 units; the overall volume of purchases actually quadrupled going from euro 0.7 billion to euro 2.8 billion. According to Scenari Immobiliari analysts especially British and German investors proved particularly active.
Another option is the acquisition of units in a real estate fund. In Italy this segment is currently heavily fragmented. 380 real estate funds  were registered at the end of 2014 with a total net value of euro 41 billion. The majority was addressing institutional investors, while only 26 were dedicated to private investors. The selection of the right real estate fund is all but easy. For the purpose of comparing yields, IPD, an MSCI subsidiary, has introduced two indexes that are updated every six months. The real estate fund index includes 32 real estate funds and measures total yields (price development and yields). In the first half of 2014 the index dropped by 1.3%. Conversely, the direct real estate index provided information about yields deriving from direct investments going up by 0.7%.

The first two funds
Listed real estate funds known as real estate investment trusts in the US are certainly easier to analyse. In Italy these are called “società di investimento immobiliare quotate” or SIIQ (in foreign countries REITs). Igd SIIQ and Beni Stabili SIIQ are the first two funds of this kind. Goldman Sachs recommends Beni Stabili for purchases. The units seem to be undervalued as lower capital costs, the projection for increased rents and the interest shown by foreign investors with regard to real estate assets located in Italy justify an increased listing.  The universe of SIIQs is expected to grow soon as a result of the recent measures implemented by the Italian government envisaging simplified rules and more freedom for investors.
A third option for private investors is the acquisition of shares in listed real estate companies like Aedes Immobiliare, Brioschi Sviluppo Immobiliare, Compagnia Immobiliare Azionaria, Gabetti and Prelios. Prelios, a company, which in the past had belonged to Pirelli,  a tyre manufacturing company, is today an independent provider of real estate services. 2014 closed with a loss equal to euro 48 million, more or less all accumulated in the first nine months. Currently, the outlook seems rosier.
NPL management seems to be a much more promising segment. Recently, Prelios in partnership with Fortress, a global investment management firm, took over  Unicredit Credit Management Bank, a division dedicated to NPLs within Unicredit. Prelios envisages to establish a SIIQ vehicle meant to invest in NPLs  addressed to US investors. Rumour has it that preliminary activities will be completed by the end of March.