Assoimmobiliare proposals for the real estate industry

(Virtual Press Office) -- A summary is provided below of Assoimmobiliare proposals for a real economic policy for the real estate infrastructure, similar to those arranged for other strategic industries in Italy, not least of which those for the transport industry.

From numerous, even recent, surveys it clearly emerges that “renewal of the Real Estate Industry” is increasingly becoming the key player in the real estate/building industry, so much so that it has become more important than new construction. This strengthens our conviction regarding what we have been illustrating, on several occasions, at institutional level: modernisation of the current stock, widespread, environmentally sustainable and without further land consumption has to be the Italian route towards recovery of the building industry.

Enhancement of Real Estate Assets, both public and private, in addition to the obvious need brought about by the vital reduction in the public national debt and that of local authorities, could also be an incredible development and growth opportunity for employment in Italy - perhaps more important than being a good means of decreasing the public debt.

Taking action on the Real Estate Infrastructure (housing, offices, schools, prisons, hospitals, etc.) means extensive and expansive fuelling of small and medium enterprises in the building industry - not to create a new product, perhaps pointless given the demographic development and saturation of the country, but rather to make more efficient the physical infrastructure in which the population lives, works, consumes and spends its free time.

Public and private investments in real estate assets, also with respect to the albeit indispensable investments in large infrastructures, offer unquestionable macroeconomic advantages both in terms of diffusion across the country’s economic fabric and in terms of returns in Italy’s overall efficiency.

An economic policy for Enhancement of the immense Public Real Estate Assets and of the equally significant Private Assets, now at risk of becoming obsolete, has to pass through a number of particularly urgent and mostly necessary “action areas”:

a) Promote a mass structural analysis and reorganisation of the assets, through accurate segmentation of the assets and concluding with clear enhancement action that can also be implemented at a time of economic difficulties as experienced now.

b) Offer funding incentives for the assets to render them liquid and financeable through various sources of funds. By using the two macro-structures (Real Estate Funds and Italian REITs) for property possession and management available under Italian law, it is possible - first and foremost by remedying certain regulatory imperfections - to converge the Italian and international capital needed (to get the market moving again) into the various real estate asset sub segments, segmented and provided with business plans in advance.

(Without international capital, in fact, any large-scale revitalisation and disposal would be impossible, and without recourse to standard vehicles such as Real Estate Funds and REITs/SIIQs, easy to understand and known in general to all major international investors, the Italian market could not expect to be appealing at international level.

Assoimmobiliare has for some time sustained and promoted a reforming input that can be developed along two basic lines:

• correction of a certain distortion in regulations governing the set-up and management of Italian real estate funds and SIIQs (Italian REITs);

• promotion and offering of incentives to new listed real estate companies (listing is in fact a prerequisite for SIIQs) to remedy the anomalous situation of the Italian market, which on a like-for-like stock basis with the French market offers no market depth, nor can it be compared to the market in France despite the fact that SIIQs are not very different from the French SIICs, which represent and confirm an absolute success story in the global scenario.

Promotion and incentive action for the set-up of new listed companies that are SIIQ candidates should be particularly pursued by the large institutions in possession of vast real estate portfolios (banks, insurance companies and pension funds), which in other countries have known how to create a new finance sector that has also significantly enhanced the stock exchange listings).

c) Any funding or disposal would be impossible or ineffective unless it is accompanied by an evident willingness to modernise existing real estate stock, mainly from energy and functional points of view, making use of the impressive Italian production means operating in the real estate-building industry. Offering jobs to thousands of small and medium enterprises capable of working on property renovations generates an upturn in employment levels and in the infrastructural enhancement of the country that is clearly of anti-cyclic importance.

Incentives should therefore be given to this type of stock modernisation, for example through the reward mechanisms envisaged in Milan’s new Land Management Plan and other urban planning instruments.

d) Short-term generation of a radical simplification and reasonable level of standardisation of regional land management regulations. For some time Assoimmobiliare has been working on an “open” document containing its proposal for a new national land management law, to be formalised at institutional level during the next legislature.

e) Updating of the risk assessment and capital absorption models, and of the overall banking system approach to property restoration projects. Assoimmobiliare has recently set up a trilateral working party with ABI and ANCE to achieve this objective.

f) Promotion of a new real estate culture based on recovery, revitalisation and best management practices of the country’s innovative infrastructure, using transversal methods involving society, the economic sectors and political intervention.

Laura Spillare
Segreteria di Direzione

Associazione dell'Industria Immobiliare
tel. 06.3212271 - fax 06.3219534
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