The Italian Property Market - A Question of Transparency 24 06 10
Transcript of The Italian Property Market - A Question of Transparency 24 06 10
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The Italian Property MarketA Question of Transparency
IRFItalian Research Forum
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Agenda
Introduction to IRFClaudia Buccini, Associate & Head of Research Cushman & Wakefield Italy
A European Lesson: Forum and Network across EuropeSusan Trevor-Briscoe FRICS, Associate & Head of Research - Savills Italy
IRF: Why, How, WhereValentina Puleio, Research Analyst BNP Paribas REA Italy
IRF Proposed Definitions: Stock, Vacancy, Take-upRezarta Tasellari, Director & Head of Research DTZ Italy
IRF Proposed Definitions: Prime rent, Prime yield, PipelineMirko Baldini, Director CBRE Italy
ConclusionRaffaella Pinto, Senior Research Analyst JLL Italy
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Introduction to IRFItaly Research Forum
Claudia Buccini, Associate & Head of Research Cushman & Wakefield Italy
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Introduction
Italian Research Forum (IRF)Transparency Confidentiality
Improve market transparencyRespect the confidentiality of sensitive information
S haring information Independency O pen discussion on facts and figures
Company background Interpretation of market trends
O ffice sector as a starting pointBroader availability of informationWeight in the asset allocationRetail and Logistics are the next steps
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A European LessonForum and Network across Europe
S usan Trevor-Briscoe FRIC S Associate & Head of Research, S avills Italy
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A European Lesson
o Different types of market
o Different setups for data exchange
o No data-exchange structure required
Forums established
Informal networks
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A European Lesson
Russia
ITALY
France
Ire-. land
Spain
Germany
CEE: Romania
Ukraine
UK
Port-ugal
CEE: Poland
Nether lands
CEE:CzechRepublic
CEE:Hungary
1. No data-exchange structure required
2. Forums established
3. Informal networks
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A European Lesson
High transparency e.g. UK
FEATURESo Independent data providers
(e.g. EGi, Focus)
o Pre-existing co-operationalenvironmento Data collection - Data analysis
WAY FO RWARDo Weakness - Basic datao Birminghamo Manchester?
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A European Lesson
Good/Average transparency e.g. Germany (GIF)
FEATURESo S tructured data exchange organisationo Market acceptance and trust
oS
hared definitionso Agreed data serieso Independent publicationso Training seminarso Data collection
WAY FO RWARDo Expanding membershipo Data analysis
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A European Lesson
Low transparency e.g. S pain
FEATURESo No formal agreemento Quarterly meetings
o Exchange letting info.o Discuss marketso Researchers / Agentso Partial data collection
WAY FO RWARDo Formalisationo Extend market coverageo Complete data collection
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A European Lesson
o Data exchange Data analysis
o Agreed definitions Data series Publications o Privacy Confidentiality
o Reliability Market acceptance and trust
Market maturityand transparency
Type of exchangestructures
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IRFWhy? How? Where?
Valentina Puleio, Research Analyst BNP Paribas REA Italy
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Italian Research Forum (IRF)
The main reasons for lack in transparency :
o Young market
o No law to publish data
o Unwillingness to share knowledge
o Competition
o Direct transactions
o Research culture
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Italian Research Forum (IRF)
Why?
o Before international real estate firms came in Italy, there werereally few official statistics on commercial property-relatedissues in Italy.
o S ourcesPublic
Private
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Italian Research Forum (IRF)
O ur main activity
o Quarterly office market reports:almost all aligned in the contentdifferent according to the client s distribution methodor in the timing of publishing
o Letting and sales activity: providing information on:supply (stock, pipeline, completions, vacancy)demand (take-up)values (prime rents, average rents and prime yield)
o Covering two markets:RomeMilan
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Italian Research Forum (IRF)How?
o Coordinating quarterly meetingsPlayers exchange information on the office marketDiscuss deals and data
o Information shared:Leasing Transactions
Key office indicators and Market viewso Confidentiality
Tenant information is not shared by the group if confidentialO nly the business sector s activity is shared
o Each company is not obliged to published data shared during
the meetingData is subject to revision before publishingHowever, as for the key data, the gap between agents has beenreduced during the years
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Italian Research Forum (IRF)
Where?IRF next steps
o In the S hort term:
U nique shared glossary for the Italian market
Introduction of agreed rules for the Forum
Involvement of other local real estate companies in the Forum
Extension to other markets, beginning from Rome: some activityhas already started in this direction
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Italian Research Forum (IRF)
Where?IRF next steps
o In the Medium Long term:
Agreement on clear geographical definition of markets areas forMilan and Rome
Increase the number of shared items: Investment transactions
Publish an annual press release consisting of market facts and
market trends
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Italian Research Forum (IRF)
Market indicators:
o S tock
o Vacancy
o Take Up
o Prime Rent
o Prime Yield
o Pipeline
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Italian Research Forum (IRF)
These are currently characterised as follows:
o Independently-determined Market Indicator figures for eachcompany.
o Agreement of Market Indicators shared by all IRF participantshas not yet been fully achieved.
o Quantity and quality of market evidence and other relevantinputs remains variable within the IRF group.
o Professional expert opinion may differ between companies.
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IRF Proposed DefinitionsS tock, Vacancy, Take-up
Rezarta Tasellari, Director & Head of Research DTZ Italy
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IRF Proposed Definitions : S tockEXISTING STO CK : Total amount (occupied and vacant) of completed office space in buildings mainlyused for office purposes within a market as at the survey date (at the end of each quarter period).
o Includes:Commercial and public sector officesPurpose-built officesConverted offices (from retail/residential/industrial to office space)
o S ources:
No public source for office stock that fits the RE definitionso Weaknesses:
The cadastral definition for office is different from the RE definitionIt is an estimated valueThe information on withdrawal is usually only available in few cases
o S tate of the art:Each advisor has an ESTIMATED total stock figure
Different methodology and geographical submarketso Actions:
Share and agree on a unique geographical definition of the marketCensus of office building, dividing the Milan market by brokers
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IRF Proposed Definitions : VacancyVACANCY : Completed floor space offered on the open market for leasing or sale, physicallyvacant for immediate occupation on the survey date (at the end of each quarter period).
o Includes:All vacant accommodation inclusive of space for sub-letting
o S ources:Agents mappingFunds financial balance sheets
Websites of RE companies
o Weaknesses:Different methodologies to calculate total vacancyImmediate availability conceptDifferent geographical submarkets
o S tate of the art:Each advisor has its vacancy data (different methodology and geographical submarkets)
o Actions:Share and agree on a single geographical definition of the marketRevise and share current property databases
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IRF Proposed Definitions : Take-UpTAKE-UP: Total floor space known to have been let or pre-let to tenants, or sold or pre-sold to owner-occupiers, during the survey period. A property is deemed to be taken-up only when contracts are signed.
o Includes:Also pre-lets/ pre-sales (this refers to a space that was planned or in construction stage).Lease renewals are counted as take-up with the additional size only.
o S ources:Agents mapping
Press releases and newspapers articles (to be checked/confirmed by the landlords)o Weaknesses:
This definition is still open to the influence of some variations within IRFNormally is considered as gross area and sometimes also includes archive spaceThe exact taken-up space is often rounded up or slightly increased
o S tate of the art:Exchange of the list of transactions made by each member s own teamMaintaining the confidentiality of information
o Actions:To share the proposed definitionTo co-operate with local brokers in order to increase market knowledge/dataTo agree on a single annual take up figure
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IRF Proposed DefinitionsPipeline, Prime rent, prime yield
Mirko Baldini, Director CBRE Italy
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IRF Proposed Definitions: Prime Rent
PRIME RENT: The top nominal (not effective) rent for standard size (>500sq.m) property of highest quality & specification and best location in the market.
o Companies market view constructed by :Market evidence (transactions closed and asking rents)Expert opinions
o WeaknessO pen to the influence of a series of variables (objective and subjective)
o S tate of the ArtIndependently-determined Prime Rent figure by each IRF Participant different expertopinion
o ActionIRF goals: an agreed IRF Prime Rent on an annual basis, using
a definition a method
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IRF Proposed Definitions: Prime Yield
INITIAL YIELD: The achievable yield for fully let & immediately income producing property of highest quality & specification and best location in the market.
o S ourceRental Income Purchase Price
o WeaknessG ross Yield as market practice in Italy
No relevant transactions Quoted hypothetical yield - expert opinion
o S tate of the ArtNot fact but market view by each IRF Participants Different expert opinion
o ActionIRF goals:
improve the transparency of investment volume
not harmonize the overview of Prime Yield
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IRF Proposed Definitions: Pipeline
PIPELINE: Total amount of floor space for: All developments under construction and/or Potential schemes (incl. major refurbishments) in the future
o WeaknessNo official source of informationHard to obtain the details & to follow the changes of the project
o S tate of the ArtIndependently managed pipeline data/info. by each IRF Participants
o ActionIRF goals:
Share O ffice PipelineExpand collaboration to include developers and public authorities
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Conclusion
Raffaella Pinto, S enior Research Analyst JLL Italy
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Conclusion
What the European experience teaches usLack of official statistics across all the countriesConfidentiality is a shared issueG eographical market definition a key issue to reach consistency
What are the main weakness that IRF is facing in sharing definitionsG eography issue supplyQuality issue supplyConfidentiality (privacy statement)Subjective factor influencing definitions
and achievements reached
Agreement on take up definitionAgreement on the G oal of the ForumShare increasing number of information's reducing gap
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Conclusion
What are the next steps for IRF?
o S et ruleso Glossaryo Geographical definition of market
o Extend the working group to local playerso Annual press release on key market data shared within thegroup
A greater involvement from our clients will help the IRF to
grow further in order to reach the same goal: markettransparency.
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Conclusion
WHAT S YO UR CO MMITTEMENT TO ACHIEVEA BETTER TRANS PARENCY IN THE ITALIANMARKET?
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THANK YO U
Claudia Buccini , Associate & Head of Research - C&W Italy
S usan Trevor-Briscoe FRICS,Associate & Head of Research - Savills Italy
Valentina Puleio , Research Analyst BNP Paribas REA Italy
Rezarta Tasellari , Director & Head of Research DTZ Italy
Mirko Baldini , Director CBRE Italy
Raffaella Pinto , Senior Research Analyst JLL Italy