9th Report on Real Estate Finance 2016

On the eve of a new ascendant phase in the market, which promises to be far more modest and uncertain than the previous one, the financialization of the Italian real estate market still appears to be inadequate to the needs of households and businesses, as well as insufficient to structurally increase the market’s size and attractiveness. Nomisma’s survey of Italian households on issues regarding savings, debt related to the purchase of housing and the intention to invest reflects a contrasting picture of the economic situation of the country for 2016. On the one hand, there is an improvement in indicators reflecting the short-term earnings capacity, on the other, there is an ongoing uncertainty of prospects, which inevitably penalizes the medium-term scenario and justifies the caution that today permeates the decisions of households and businesses.

Contributing to dampening the enthusiasm is the lukewarm response from the banking sector in responding to requests for support from households, demonstrated by the fact that the striking increase in the amount disbursed for housing purchases actually obscures a significant share of subrogation and substitution. The continuation of the selective approach of lenders is induced by a number of factors, among which the most important appears to be the inability to dispose of the enormous amount of non-performing loans in a still illiquid market without incurring further massive writedowns. While the season for real estate funds aimed at the retail audience seems destined to end, with its epilogue weighed down by uncertainties relating to the effective capacity to liquidate assets, a new season could open up for the listed real estate investment companies (REITs), though not without difficulties. Besides the now historic teams operating in the market for almost a decade, new ones are being laboriously added. Nevertheless, their target, at least judging by the outcome of recent public offerings, continues to be that of qualified operators.

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