INVESTING
IN ITALY
2012
IN COLLABORATION WITH
We manage 31 million m2
13 billion
ES
MA TME
NA N
G
CO
p.
Foreword
p.
p.
p.
Guide to Milan
p. 10
Guide to Rome
p. 12
p. 14
ITALY OVERVIEW
INVESTOR TOOLKIT
206,000 m2
p. 16
RO
NS
UL
TI
Italy by numbers
YOU
PE
DE RTY
VE L
O P ME NT
completed across
Europe in 2011
VA L U AT I O N
76,300 valuations
Y
EN
RT GEM
PE ANA
O
R M
INTRODUCTION
INV
NT
T ME
E
across Europe
Contents
NG
IO
TRAN SACT
in 2011
FUTURE ITALY
Key Transport Changes
p. 28
p. 30
www.realestate.bnpparibas.com
NEED TO KNOW
Italy by numbers
Foreword
60M
A country
to discover
Italian cities have a long
1,560bn
Milano
Trieste
Torino
Venezia
Bologna
Genova
Firenze
ROMA
Bari
Napoli
Cagliari
200,000
Average net private
wealth of the Italian
adults in 2010
Palermo
47
Italy is home to the greatest number
of UNESCO World Heritage sites
TOP 10 REASONS
High private
wealth
10 reasons
to invest in
Italy
One of the largest economies
in the world
With a GDP of 1,560bn, Italy represents the third economy in
the Euro area and ranks eight in the world. Moreover, living
standards have a considerable north-south divide: the average GDP per capita
in Northern and Central Italy exceeds by far the EU average, whilst some
regions and provinces in Southern Italy are almost all classified under the
Convergence objective (GPD per capita less than 75% of the EU average).
Diversied economy
Italy has a diversified economy, representing the second European industrial
economy after Germany. The country was the worlds seventh largest
exporter in 2010, mainly towards the other countries of the European Union
(60%). Italy has a smaller number of global multinational corporations than
other countries of comparable size, but there are a large number of small and mediumsized enterprises, in particular in the North where there is an area of intense industrial
and machinery production, notably in their several specialized industrial districts. Finally,
the economic heart of Italy is not concentrated in just one city (i.e. the capital) or in a few
(i.e. the former industrial triangle Turin-Milan-Genoa) but in several cities. Indeed, of the
twenty Italian largest companies, just half are based in Rome and Milan.
Italian property
funds
Italian property funds
started as real estate
financial vehicles for individuals in
1999 (which are listed at the Milan
stock exchange) and since 2004 as
institutional funds (which instead are
not listed). The sector, under the
surveillance and the monitoring of
the Bank of Italy, grew during the last
ten years from some 4bn of assets
under management to 51bn,
continuing the growth also during the
crisis even if at slower pace.
Healthy
banking sector
The Italian banking sector is healthy
allowing, during the 2008/2009 crisis,
Italy to account among one of the few countries
registering no banks bailout. However, some banks
had to recapitalise recently, mainly to respond to
the EBA change in the accounting rules for public
debt. Such characteristics have a stabilisation effect
on the real estate market that, according to IPD
index, is one of the most stable in the world,
showing a limited capital growth in positive times,
but also a limited capital loss in bad times.
TOP 10 REASONS
Rome,
the
Eternal
City
Long
leases
Italian leases for commercial
premises must legally be at
least 6 years in length with an option for
the tenant to renew for 6 additional years.
For hotels, the length is even longer
(9+6 or 9+9 years). This characteristic
gives more stability and security in
revenues for the landlord. Moreover, rents
are annually reviewed, since they are
linked to the Italian inflation Index (based
upon 75% of the Index, although in some
cases it is 100%).
Retail remains
attractive
With a wealth per adult of 200,000,
Italy belongs to the richest
countries in the world. Therefore, retail sector can
count on the wealth of the Italian families.
As a coincidence, retail property market has
experienced a period of strong growth especially
in the last years when retail assets appeared
more secure compared to other ones. Indeed, the
largest deals concerned this kind of product and
were the favourite by foreign investors.
Il Bel
Paese
Italy is, with no
doubt, a global
leader for historical monuments and
artistic works (Italy is the country with
more UNESCO world heritage sites). Thanks
to that there are roughly 43 millions of
tourists coming each year, making Italy the
fifth destination in the world. Furthermore,
even if the hospitality sector is still relying
a lot on familys hotels, Italy has the
highest level of room revenues among the
main European countries.
Lana
(Bolzano)
Pordenone
How we did it
Silea (Treviso)
Cinisello
Balsamo
Brescia
Mestre
Baranzate
S.Donato M.se
Rubano (Padova)
Torino
Piacenza
Ferrara
Lucca
Bastia
Umbra
San Giovanni Teatino
(Chieti)
Roma Laurentina
Roma GRA
Bari
Salerno
Elmas
(Cagliari)
JennIFeR LUCAS
Director - W. P. Carey
MILAN
1.5bn
Guide to Milan
Transacted in
5.80%
Gross Prime Ofce Yield
337,000 m
Take-up in
510/m/year
Immediate supply
Prime rent
404/m/year
CBD average rent
1.395,000 m
11.6%
Vacancy rate
Occupier Breakdown since 2006
exAMpLe DeALS
OffICe
MilanoFiori U15 - Q1 2012
The , m building was sold for m,
reflecting a yield below %.
Via Moscova 3 - Q4 2011
The , m building was bought by
Inarcassa Re fund managed by fabrica for
.m, reflecting a yield of .%.
ReTAIL
Via Certosa 29 - Q4 2010
The , m department store located to
Saturn was bought by Immobiliare Dinamico
fund managed by BNP Paribas ReIM
for .m, reflecting a yield above %.
Rinascente piazza Duomo - Q1 2011
The , m department store was bought
by Ippocrate fund managed today by Idea
fimit for m, reflecting a yield of .%.
14%
4%
29%
7%
11%
23%
12%
Industries
Financial
ICT
Legal - Consultancy
Media - Culture
Public Sector
Other
ROME
850m
Guide to Rome
Transacted in
6.30%
Gross Prime Ofce Yield
182,000 m
Take-up in
420/m/year
Prime rent
344/m/year
CBD average rent
603,000 m
Immediate supply
6.2%
Vacancy rate
Occupier Breakdown since 2006
14%
6%
30%
9%
exAMpLe DeALS
OffICe
Via Cristoforo Colombo 416/420 - Q3 2011
The , m building was bought by
Amundi Re europa fund for .m, reflecting
a yield of .%.
ReTAIL
Casal Bertone Shopping Centre - Q1 2011
The , m gallery of the Casal Bertone
shopping centre was acquired for m by
Union Investment Real estate.
11%
22%
11%
RETAIL
2.4bn
Transacted in
4.90%
High Street Retail Yield
6.90%
Shopping Centre Yield
exAMpLe DeALS
3%
6%
6%
48%
14%
19%
Shopping Center
Department store
Street Retail
Outlet
Retail Park
Hypermarket
Supermarket
NEED TO KNOW
LAnD ReGISTeR
DIFFeRenT TYpeS
OF ReAL eSTATe InTeReSTS
In Italy real estate is usually held as freehold
(propriet), this grants its holder the full right to
use and manage the property. Other rights in rem
over real estate are limited in scope and grant
only one or more of the attributions of the full
property right, these include the following:
surface right: the right to build and maintain
a building over the property of a third party;
right of usufruct: the right to the use and the
benefits of a third party property; and
easements: which impose an obligation on
a property for the benefit of another property
(e.g., a right of way; water right; a limitation
in the building capacity; etc.).
COMMeRCIAL LeASeS:
LeASe TeRM
The minimum term for a commercial lease is 6
years (9 years for hotels). Thereafter the lease is
automatically renewed for a further 6-year term
(9 years for hotels), unless terminated by either
party with prior written notice. However, the
landlords right to terminate the lease upon its
first expiration is limited to very specific
circumstances. The maximum lease term is 30
years. Notwithstanding the provisions of the
lease, the tenant has a statutory non-waivable
6-month prior notice termination right due to
material circumstances (gravi motivi).
COMMeRCIAL LeASeS:
RenT AnD RenT ADJUSTMenT
The initial rent may be freely determined by the
parties and subsequently may be annually
adjusted based on the variation of the consumer
price index. Unless the lease is for a term
exceeding the minimum 6-year term, the
adjustment cannot exceed 75% of the annual
CPI variation.
Rent increase mechanisms on grounds other
than inflation adjustment (e.g., step up rent, rent
based on turnover) are admissible but are
closely scrutinised by the Italian courts and
cannot amount to a means to circumvent the
statutory limitations on inflation adjustment.
COMMeRCIAL LeASeS:
pROpeRTIeS Open TO THe pUBLIC
If the leased premises are used for activities
involving contact with the public (such as retail
units, supermarket, hotels, etc.), the tenant has
certain additional protections.
Right of pre-emption. The tenant
has a statutory pre-emption right if the leased
premises are to be sold.
Goodwill indemnity. If the lease is terminated
for reasons not attributable to the tenant, the
tenant is entitled to receive 18 months rent as
goodwill indemnity (the indemnity is doubled
if a new activity of the same kind is
established in the premises after the
termination of the lease).
New leases of the rented premises. The tenant
has the right of first refusal for the lease of the
premises at the expiration of the lease.
NEED TO KNOW
STRUCTURInG
ReAL eSTATe InVeSTMenTS
eneRGY CeRTIFICATeS
AnD GReen LeASeS
Sustainability concerns and energy efficiency are
an increasingly important features of the Italian
real estate market, and the EU directives on the
energy performance of buildings are currently
being implemented in Italy. Recent developments
include the following requirements:
all deeds of sale and most lease agreements
must indicate that the buyer/tenant has
received the information and documentation
on the energy performance of the building;
new buildings and existing buildings that are
subject to major renovation must satisfy a
portion of their energy requirements from
renewable sources; and
all for sale advertisements (and in some
Regions, also rental advertisements) must
indicate the energy performance grade of the
building.
NEED TO KNOW
GeRMANY
fRANCe
SPAIN
Freehold ownership
Part- or condominium ownership
Ground lease (real estate-like right in rem
entitling its holder to use the land and
construct / own buildings on the land
during the term of the ground lease
Freehold
Leasehold (which can be registered
with the property registry)
Other limited rights in rem
(usufruct, surface right - derecho
de superficie)
Are there
nationality
restrictions on
land ownership?
No.
Who usually
produces the
documentation in
real estate
transactions?
Offer letter
Due diligence report
Property or share sale and purchase
agreement under conditions (promesse)
precedent, if such conditions
precedent are provided
Property deed of sale and purchase
agreement (if no conditions precedent
were provided or if such conditions
precedent have been fulfilled)
What property
documentation do
you need to
register?
Confidentiality agreement
Offer letter / LOI
Due diligence report
Preliminary sale and purchase agreement
Transfer deed to be executed before
a Notary Public
Confidentiality agreement
Heads of terms / LOI
Due diligence report
Sale and purchase agreement
(to be notarized before a notary public)
Freehold ownership
Leasehold
Commonhold
Licence
Heads of Terms
Due diligence report
Sale contract
Transfer document
NEED TO KNOW
Leasing - what is the market standard in Italy vis--vis its European neighbours?
ITALY
What types of real Commercial leases
estate leases exist? Residential leases
Ordinary leases (other than commercial
or residential)
GeRMANY
fRANCe
SPAIN
Commercial leases
Residential leases
Tenancy agreements (Pachtvertrge),
i.e. lease agreements where the tenant is
entitled to reap the benefits from the
intrinsic value of the real estate
Commercial leases
Residential leases
Residential Lease
Non-Residential Lease
(e.g. all other purposes than
residential, such as leases of
retail premises, offices, etc.)
Are commercial
lease provisions
freely negotiable?
Is there a
maximum term for
commercial
leases?
How are
commercial rents
reviewed?
Guarantee that the tenant enjoys To provide and allow the tenant
Hand over the leased premises in
peaceful possession of the property
the agreed condition
to occupy the leased premises
through the lease term and can
Duty to make all repairs necessary
In a multi-occupied building, to
use it for the purposes established
to preserve the property in good
insure and maintain the structure
in the lease agreement
condition for leasing purposes
and common parts of the building
Insure the rented premises (premiums Where there is a superior lease, to The landlord might be obliged to
may be charged to the tenants)
indemnify the tenant (who has
comply with its terms to the
carried out a retail activity in the
extent this obligation has not
premises) in case of refusal of
been passed on to the tenant
extension of the lease term once
(principally this will refer to the
the initially agreed terms expire.
obligation to pay rent under the
This indemnity payment is usually
superior lease)
specifically excluded from the lease
TAX CLINIC
Tax clinic
2. CApITAL
GAInS/LOSSeS
Capital gains from the sale of real
estate, if achieved by individuals
not carrying out a business activity,
are subject to personal income tax,
unless the seller has held the
3. TRAnSFeR
TAxeS
Transfers of real estate are usually
subject to registration assessed on
the purchase price (or the fair
market value of the property
if higher). The standard rate
is 7%, but it may rise to 15%
(e.g., agricultural land).
However, if the sale is subject to
VAT, a fixed EUR 168 registration
tax is due. Transfers of real estate
are also subject to mortgage and
cadastral taxes normally at the
rate of 3% (4% for commercial
property, reduced to 2% if
the buyer or the seller is a real
estate fund).
Real estate leases are normally
subject to registration tax at rates
of 1% for commercial leases and
2% for residential leases.
TAX CLINIC
4. WITHHOLDInG TAx
5. VAT
As a rule, transfer and lease of real
estate assets are exempt from the
application of VAT. However,
specific exceptions apply.
In particular, for commercial real
estate, VAT applies if the
purchaser/lessee is an entity that
is entitled to deduct VAT at a
maximum 25% or is a non-VAT
entity. VAT also applies if the
seller/lessor opts for its
application.
VAT deduction is generally allowed.
Specific rules apply to the
deduction of VAT referable to
exempt supplies.
7. SIIQ
A specific tax regime applies to
Italian listed real estate
investment companies (SIIQ).
If a company qualifies as a SIIQ,
income derived from a real estate
leasing activity and the dividends
received from other SIIQs or
unlisted SIIQs (to the extent these
dividends comprise income derived
from a leasing activity) are exempt
from corporate income tax (IRES)
and from regional tax (IRAP).
In general, SIIQs apply a 20%
withholding tax on all profit
distributions made to shareholders
(other than SIIQs) on profits
derived from real property leasing
activities or from the participation
in SIIQs or unlisted SIIQs.
Alessandro Balp
Partner
Bonelli Erede
Pappalardo
Riccardo Ubaldini
Partner
Bonelli Erede
Pappalardo
Lucia Lancellotti
Associate
Bonelli Erede
Pappalardo
Italian Railways
Brenner
Gotthard
Simplon
Ljubljana
Paris
Lyon
Milan
Padua
Novara
Turin
Trieste
Venice
Verona
High-speed lines
Tortona
Existing
Under construction
Planned
Alessandria
Genoa
Bologna
Savona
Marseille
La Spezia
Normal lines
Florence
Existing
Upgrading
Livorno
Milan Underground
Milan underground network is the strongest in Italy, and is continuing to grow. Two new metro lines,
representing almost 17 km with 22 new metro stops, will be operating in view of the 2015 Expo. This
will take place in several stages. The first part of Line 5, opened in 2012, connects the north-eastern
periphery with Line 3 in Zara station. Successively, the line will arrive in 2015 to the stadium, passing
through the new business district of Garibaldi-Repubblica (planned to open in 2013) and CityLife
(former exhibition area). Secondly, the first part of Line 4 (three stops, representing 4 km) will open in
2015, connecting the Linate airport with the city railway network in Forlanini FS.
Foggia
ROMA
Since 2009, the high-capacity/ high speed
rail lines are operating from Turin to Salerno
through two corridors representing a T:
Milan-Salerno (north-south) and Turin-Trieste
(west-east). If the first one is completed, part
of the second one (from Milan to Trieste) is
still under construction or under planning.
Bari
Naples
Taranto
Salerno
Gioia Tauro
Palermo
Messina
Reggio Calabria
Catania
MM1
MM2
MM3
MM4
MM5
HOT SPOTS
Preliminary rendering
Crespi 26 Milano
CRESPI
26
ROMA
TIBURTINA
Bernina 12 Milano
BERNINA
Architect: Studio fZ S.r.l.
and Consorzio ReD S.r.l.
Certification: Leed Gold
Completion: Q
12
Architect:
+aa
Completion:
Q
32
HOT SPOTS
Dalia Milano
Residenze Dalia is new residential
development taking place in Milan
on a former office building, in the
West part of the city.
Each apartment, from the little
two-roomed flat to the penthouse
duplex all with balconies or
terraces, is already furnished with
a purpose-made kitchen signed
Ernestomeda. This brand, known
for its design and constant stylistic RESIDENZE
DALIA
and technological innovation,
offers a product featuring carefully
Architect: Architetti Associati
crafted details, quality, safety and
Certification: High Energy Performance - Class A
environment-friendliness.
Completion: Q4 2013
All users have common places on
Our consultants will make you profit from our deep knowledge of the Italian
real estate market. Dynamic analysis of different actors, including their
investment criteria and their acquisition or arbitrage policy, allows us to offer
you a personalised view whatever your strategy.
CONTACTS
Cesare Ferrero
Ivano Ilardo
Country Manager
& Property Development
cesare.ferrero@bnpparibas.com
Investment Management
ivano.ilardo@bnpparibas.com
Roberto Nicosia
Simone Roberti
Advisory
roberto.nicosia@bnpparibas.com
Research
simone.roberti@bnpparibas.com
Vincenzo Noviello
Property Management
vincenzo.noviello@bnpparibas.com
www.realestate.bnpparibas.com