ROME-Italian commercial property delivered a healthy 5.2% total return in 2010, a strong improvement on the 0.8% of 2009 but capital values continued to slide for the third consecutive year, dragged down by falling rents, according to the IPD Italy Annual Property Index.
Italy is one of several European commercial property markets still suffering capital value decline. This slowed considerably last year, to a fall of 0.5% compared with a 4.6% slide in 2009. The total depreciation in the three years to 2010 reached 7.8%.
Commercial property rents dropped a further 0.7% in 2010 but vacancy rates fell for the first time since 2007, to 7.3% on average, while income return increased by 10 basis points to 5.7%, the highest in five years.
Only industrial property saw capital growth unchanged, while retail fell 0.4% and office 0.6%. Industrial led income return at 7.2%, with 5.9% for retail and 5.3% for office. Total return for industrial was 7.1%, retail was 5.5% and office 4.7%.
IPD Italy Country Manager Luigi Pischedda commented: “Overall the figures hint at a new phase in the property cycle, where declining values seem to have bottomed out. Early signs of growth are appearing in some segments but are very much dependent on geography and asset class.”
Allan Saunderson is a managing editor of Property Investor Europe and a contributor to GlobeSt.com.
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