MILAN - Eight hundred billion euros of real estate savings managed in the world. This is the goal reached at the end of 2004 by the so-called paper brick, which in the last two years has had a sprint, in terms of global capitalisation, of 20.5%. «It is a stock of over 540 million square meters, that is to say around 100 thousand properties like the one that hosts us» explained Mario Breglia, president of Scenari Immobiliari, presenting the data yesterday in Milan. Furthermore, for the first time, Europe has surpassed the United States in terms of capitalization of real estate funds (which overseas are called Reits), with 268 billion euros against 240 billion.
2004, according to the Scenari Immobiliari report, was a positive year for these instruments in Europe, with a capitalization growing by 12.7%, bringing the total to more than double the numbers relating to 2000. In particular, the collection was 15 billion euros, with an annual increase of 14.2%, and the current year is also proving to be positive, according to operators. Scenari Immobiliari, in the period March-April 2005, interviewed the managers of the top 50 European funds to verify their expectations and the answers can be translated, according to the research company, into a substantial attitude of confidence in the prospects of the real estate sector, convinced that the introduction of the technical form of Reits also in some European countries starting from 2006 will further expand the sector (the estimate is a 5.5% increase in capitalization in 2005).
The situation differs considerably from country to country, with a substantial contrast in the markets. At the opposite extremes, the German open funds and the Belgian Sicafi: the former are going through a period of strong crisis, both due to the decline in real estate prices in Germany and the episodes of mismanagement that have alarmed subscribers in the entire sector; the latter, however, performed better than expected, with an increase in capitalization of 56% in 12 months. The English funds and the French Siic also performed very well. Spanish FIIs have grown considerably and a further boost is expected for 2005, while Dutch products are stable, a country which also boasts the largest European capitalisation. And Italy? According to operators, a market that is significantly increasing, with gross collections in 2004 of 3,260 million euros and net collections of 2,987.9 million. The real estate assets owned by the 34 funds operating in our country recorded an increase of 193% compared to the end of 2003, reaching 6.6 billion euros. The average value of the real estate assets of these funds is equal to 402 million (+87%) and the average performance in 2004 was 5.7 percent. A profitability which, however, is below the European average (5.9%), especially below the French one which stood at 10.4% (4.9%, however, the United States). Profitability was one of the topics of in-depth discussion among the managers, some of whom, such as Giulio Malfatto of Pirelli Re Sgr and Clemente Di Paola of Investire Immobiliare Sgr, underlined the greater suitability of the Irr (the internal rate of return) as a performance indicator. However, the problem remains of the poor liquidity of the shares of listed funds, penalized by a large discount on the Nav and by less than exciting stock market performances: if an investor had purchased, as of 31 December 2003, a share of each real estate fund on the stock market, he would have increased his investment by approximately 5 percent as of 31 December 2003.
source: Real Estate Observatory
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