IPD: Italian property capital values fall as income return holds steady (IT)

Capital growth for Italian commercial property remained flat over the six months to end of June 2008, according to the IPD Italian Biannual Property Index. The six-monthly IPD Index revealed total returns were 2.6%, constituted entirely of income return for the period.

Comparing the returns to last year's figures from the IPD Italian Biannual Property Index revealed significant capital growth declines over the previous six-month period, at 1.4%, and 2.0% on H1 2007. Income return, meanwhile, remained virtually constant compared to the first and second half of 2007 at 2.7% and 2.6%, respectively. Overall, total returns in 2007 were 4.8%, for the first six months, and 4.1% over the second six-month period of last year.

At sector level, the strongest total returns over the period under review was delivered by the Industrial sector which delivered 4.0%, broadly consistent with the previous six month's 3.9% return and the 4.1% returned for the same period last year. The Office and Retail sectors both fell considerably over the same period last year, with retail returns at 1.5% compared to 4.1%, while offices were 2.8% compared to 5.4%.

The falling returns for the half year period were caused by falling capital growth of underlying assets. The Retail sector felt the brunt of the then emerging property price correction, dipping into negative territory at -1.1%, while the Office and Industrial sectors both managed to stay above water at 0.5% and 0.8%, respectively. Income return, over the period, was the Italian property market's saving grace, with the Industrial sector leading the way at 3.2%, followed by the Retail sector, at 2.6%, and offices at 2.4%.

The total value of the 785 properties covered by the IPD Italian Biannual Property Index was

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