The Italian office market has remained stagnant, with very little movement over the past six months. Despite this, there has been some evidence of recovery at the prime end of the market, with rents increasing marginally. This can be attributed, in part, to foreign companies seeking office space in Southern Europe choosing Milan and Rome.
In the letting market, an increasing number of companies have continued to take advantage of low occupational costs to rationalize or relocate. Montello, a joint venture between Shell and Montedison, has acquired a new Headquarters building in Via Pergolesi, whilst Kraft General Foods has taken a new HQ in the west of the city centre. In addition, there has been a shift in demand within the service sector, with companies beginning to move back into the city centre.
The office market remains over-supplied, with total availability in Milan at around 570,000 sq m. Of this total, around 100,000 sq m is new. “Prime office rents in Milan have remained unchanged at L450,000 per sq m per annum-around 40% lower than the peak in 1990. In Rome, comparable rents are around L420, 000 sq m per annum.”
Prime yields in the city centre are around 6-6.5%, and at around 7% outside the core. There is unlikely to be any significant shift in yields in the short term. However, the investment market is expected to see an upturn in activity over the next twelve months. You can get estimate value of your property by using our online property conveyancing melbourne calculator. In 1995, the Italian Government passed legislation relating to the country’s social security organizations and the management of their properties throughout Italy.
The new legislation affects all buildings which are surplus to operational activities. The aim of the legislation is the disposal of all surplus buildings within five years. Under the new legislation, the social security organizations must carry out a census of all their real estate assets (some 2,500 buildings in all), and identify a structured sales plan. Although some way off, the new legislative framework should allow more efficient management of these properties and more accurate valuations. The increase in the number of income producing assets coming to the market should make the Italian office market more attractive to both domestic and foreign investors.