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Discover how the Italian Research Forum (IRF) is working to improve market transparency in the Italian property market and respond to clients' requirements. Learn about the progress made so far, the challenges faced, and the proposed definitions for key market indicators.
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The Italian Property Market A Question of Transparency IRF Italian Research Forum
Agenda Introduction to IRF Claudia 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, Where Valentina Puleio, Research Analyst – BNP Paribas REA Italy IRF Proposed Definitions: Stock, Vacancy, Take-up Rezarta Tasellari, Director & Head of Research – DTZ Italy IRF Proposed Definitions: Prime rent, Prime yield, Pipeline Mirko Baldini, Director – CBRE Italy Conclusion Raffaella Pinto, Senior Research Analyst – JLL Italy
Introduction to IRF Italy Research Forum Claudia Buccini, Associate & Head of Research – Cushman & Wakefield Italy
Introduction Italian Research Forum (IRF) • The IRF started in 2003 – first approach C&W and JLL • Current and future market trends • Macro level market data • Progressively structured: BNPP RE, CBRE, DTZ, Savills • Property market definitions • Why have we decided to promote the IRF? • Improve market transparency • Professionally respond to our Clients’ requirements • The Italian Property Market: the last ten years • Increasing volume of activity • International players • Credit Crunch
Introduction Italian Research Forum (IRF) • Transparency Confidentiality • Improve market transparency • Respect the confidentiality of sensitive information • Sharing information Independency • Open discussion on facts and figures • Company background Interpretation of market trends • Office sector as a starting point • Broader availability of information • Weight in the asset allocation • Retail and Logistics are the next steps
A European Lesson Forum and Network across Europe Susan Trevor-Briscoe FRICS – Associate & Head of Research, Savills Italy
A European Lesson • Different types of market • Different setups for data exchange • No data-exchange structure requiredForums establishedInformal networks
A European Lesson Russia • No data-exchange structure required • Forums established • Informal networks UK Ire- . land Germany CEE: Poland Netherlands Ukraine France CEE:Czech Republic CEE: Hungary CEE: Romania ITALY Spain Port-ugal
A European Lesson High transparency – e.g. UK FEATURES • Independent data providers(e.g. EGi, Focus) • Pre-existing co-operational environment • Data collection - Data analysis WAY FORWARD • Weakness - Basic data • Birmingham • Manchester?
A European Lesson Good/Average transparency – e.g. Germany (GIF) FEATURES • Structured data exchange organisation • Market acceptance and trust • Shared definitions • Agreed data series • Independent publications • Training seminars • Data collection WAY FORWARD • Expanding membership • Data analysis
A European Lesson Low transparency – e.g. Spain FEATURES • No formal agreement • Quarterly meetings • Exchange letting info. • Discuss markets • Researchers / Agents • Partial data collection WAY FORWARD • Formalisation • Extend market coverage • Complete data collection
A European Lesson • Data exchange Data analysis • Agreed definitions … Data series … Publications … • Privacy Confidentiality • Reliability Market acceptance and trust Market maturity and transparency Type of exchange structures
IRF Why? How? Where? ValentinaPuleio, Research Analyst – BNP Paribas REA Italy
Italian Research Forum (IRF) The main reasons for lack in transparency : • Young market • No law to publish data • Unwillingness to share knowledge • Competition • Direct transactions • Research “culture”
Italian Research Forum (IRF) Why? • Before international real estate firms came in Italy, there were really few official statistics on commercial property-related issues in Italy. • Sources • Public • Private
Italian Research Forum (IRF) Our main activity • Quarterly office market reports: • almost all aligned in the content • different according to the client’s distribution method or in the timing of publishing • Letting and sales activity: providing information on: • supply (stock, pipeline, completions, vacancy) • demand (take-up) • values (prime rents, average rents and prime yield) • Covering two markets: • Rome • Milan
Italian Research Forum (IRF) How? • Coordinating quarterly meetings • Players exchange information on the office market • Discuss deals and data • Information shared: • Leasing Transactions • Key office indicators and Market views • Confidentiality • Tenant information is not shared by the group if confidential • Only the business sector’s activity is shared • Each company is not obliged to published data shared during the meeting • Data is subject to revision before publishing • However, as for the key data, the gap between agents has been reduced during the years
Italian Research Forum (IRF) Where? IRF next steps • In the Short term: • Unique 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 activity has already started in this direction
Italian Research Forum (IRF) Where? IRF next steps • In the Medium–Long term: • Agreement on clear geographical definition of markets areas for Milan and Rome • Increase the number of shared items: Investment transactions • Publish an annual press release consisting of market facts and market trends
Italian Research Forum (IRF) Market indicators: • Stock • Vacancy • Take Up • Prime Rent • Prime Yield • Pipeline
Italian Research Forum (IRF) These are currently characterised as follows: • Independently-determined Market Indicator figures for each company. • Agreement of Market Indicators shared by all IRF participants has not yet been fully achieved. • Quantity and quality of market evidence and other relevant inputs remains variable within the IRF group. • Professional ‘expert opinion’ may differ between companies.
IRF Proposed Definitions Stock, Vacancy, Take-up Rezarta Tasellari, Director & Head of Research – DTZ Italy
IRF Proposed Definitions : Stock EXISTING STOCK : Total amount (occupied and vacant) of completed office space in buildings mainly used for office purposes within a market as at the survey date (at the end of each quarter period). • Includes: • Commercial and public sector offices • Purpose-built offices • Converted offices (from retail/residential/industrial to office space) • Sources: • No public source for office stock that fits the RE definitions • Weaknesses: • The cadastral definition for “office” is different from the RE definition • It is an estimated value • The information on withdrawal is usually only available in few cases • State of the art: • Each advisor has an ESTIMATED total stock figure • Different methodology and geographical submarkets • Actions: • Share and agree on a unique geographical definition of the market • Census of office building, dividing the Milan market by brokers
IRF Proposed Definitions : Vacancy VACANCY : Completed floor space offered on the open market for leasing or sale, physically vacant for immediate occupation on the survey date (at the end of each quarter period). • Includes: • All vacant accommodation inclusive of space for sub-letting • Sources: • Agents’ mapping • Funds’ financial balance sheets • Websites of RE companies • Weaknesses: • Different methodologies to calculate total vacancy • Immediate availability concept • Different geographical submarkets • State of the art: • Each advisor has its vacancy data (different methodology and geographical submarkets) • Actions: • Share and agree on a single geographical definition of the market • Revise and share current property databases
IRF Proposed Definitions : Take-Up TAKE-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. • 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. • Sources: • Agents mapping • Press releases and newspapers articles (to be checked/confirmed by the landlords) • Weaknesses: • This definition is still open to the influence of some variations within IRF • Normally is considered as “gross” area and sometimes also includes archive space • The exact taken-up space is often rounded up or slightly increased • State of the art: • Exchange of the list of transactions made by each member’s own team • Maintaining the confidentiality of information • Actions: • To share the “proposed” definition • To co-operate with local brokers in order to increase market knowledge/data • To agree on a single annual take up figure
IRF Proposed Definitions Pipeline, Prime rent, prime yield MirkoBaldini, Director – CBRE Italy
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. • Companies’ “market view” constructed by : • Market evidence (transactions closed and asking rents) • Expert opinions • Weakness • Open to the influence of a series of variables (objective and subjective) • State of the Art • Independently-determined Prime Rent figure by each IRF Participant different expert opinion • Action • IRF goals: an agreed IRF Prime Rent on an annual basis, using • a definition • a method
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. • Source • Rental Income ÷ Purchase Price • Weakness • Gross Yield as market practice in Italy • No relevant transactions Quoted hypothetical yield - expert opinion • State of the Art • Not “fact” but market view by each IRF Participants Different expert opinion • ActionIRF goals: • improve the transparency of investment volume • not harmonize the overview of Prime Yield
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 • Weakness • No official source of information • Hard to obtain the details & to follow the changes of the project • State of the Art • Independently managed pipeline data/info. by each IRF Participants • ActionIRF goals: • Share Office Pipeline • Expand collaboration to include developers and public authorities
Conclusion Raffaella Pinto, Senior Research Analyst – JLL Italy
Conclusion • What the European experience teaches us • Lack of official statistics across all the countries • Confidentiality is a shared issue • Geographical market definition a key issue to reach consistency • What are the main weakness that IRF is facing in sharing definitions… • Geography issue supply • Quality issue supply • Confidentiality (privacy statement) • Subjective factor influencing definitions • …and achievements reached • Agreement on take up definition • Agreement on the Goal of the Forum • Share increasing number of information's reducing gap
Conclusion What are the next steps for IRF? • Set rules • Glossary • Geographical definition of market • Extend the working group to local players • Annual press release on key market data shared within the group A greater involvement from our clients will help the IRF to grow further in order to reach the same goal: market transparency.
Conclusion WHAT ’S YOUR COMMITTEMENT TO ACHIEVE A BETTER TRANSPARENCY IN THE ITALIAN MARKET?
Conclusion THANK YOU
THANK YOU Claudia Buccini, Associate & Head of Research - C&W Italy Susan 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