IPD, the world-leader in commercial real estate performance analysis services, today released the results for the 2007 IPD Italian Property Index. The index shows a total return of 9.2% for 2007, an increase compared to the previous year's result of 8.0%, and the second highest over the history of the index. Property by far outperformed the bond and equities markets in 2007, which returned 2.0% and -4.7% respectively.
In 2007 the income return on All Property remained steady at 5.3% as in 2006. Capital growth rose to 3.8% compared to 2.6% in the previous year. Over three years the total return on All Property is 8.7%.
The Retail sector was the top performing main sector in 2007 with a total return of 9.7%, although this was down on the two previous years. The Office sector came second with a total return of 9.1%, followed by Industrials at 9.0%. The weaker performance by Industrials was due to low capital growth over the year, of only 1.9% which led to the lowest sector performance despite having the highest income return of 7.0%.
In comparison to other IPD country indices already released for 2007, the Italian results are at the lower end of the group. Other IPD index results for 2007 published so far are: South Africa (27.7%), Korea* (26.9%), New Zealand (22.4%), Norway (18.3%), Australia (18.1%), France (17.8%), Canada (16.1%), Sweden (14.9%), Spain (12.5%) Portugal (12.4%), Finland** (11.3%), Netherlands (11.3%), Denmark (10.2%), Ireland (9.9%), and the UK (-3.4%).
Davide Manstretta, Head of IPD's Italian service, comments: "The credit crunch conditioning global financial markets and the uncertainty of the evolution of the Italian economy have only partially affected the Italian property investment sector. In particular the IPD Italian Property Index shows some signals of recovery in the performance of the Office sector, which is still driving the All Property returns and represents 45.8% of the IPD Italian Database sample. On the other hand, Retails and Industrials have reported weaker total returns mainly linked to significantly lower rental values."