Offices Underpinned Italian Property Return but Segment Performance Widely Dispersed

Italian property returns slowed to 1.2 percent for the first six months of 2020 —from 3.0 percent in the second half of 2019.

Italy Biannual Property Index

Source: MSCI

Italian property returns slowed to 1.2 percent for the first six months of 2020 —from 3.0 percent in the second half of 2019. This was according to the MSCI Italy Biannual  Property Index, which showed that the largest decline was in the industrial sector, where returns fell to 2.0 percent from 7.4 percent. Hotel assets, directly impacted by the COVID-19 pandemic, returned -0.3 percent, which was down from 4.7 percent in the prior six months.

Offices, comprising 52 percent of the index’s value, returned 1.2 percent and provided the largest weighted contribution to the overall return (70 of 120 basis points). Returns within the office sector, however, were widely dispersed, as the performance of Milan’s central submarkets contrasted with those of its periphery, Rome and outlying markets.

All Milan’s office submarkets saw positive capital growth during the first six months of 2020 while Milan’s hinterland and the country’s central and south eastern markets saw capital growth decline by in excess of -5 percent. Time will tell whether the COVID-19 pandemic further exacerbates this performance spread.

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