The Italian market delivered a total return of 9% in 2005, according to the IPD Italian Property Index, with capital growth of 2.9% and an income return of 5.9%. Total returns were slightly ahead of 2004s 8.9% return. Davide Manstretta, Italy project coordinator at IPD, said The Index shows the market has remained stable over the last 12 months, both in terms of capital growth and income return.
At the sector level, retail which made up 32% of the capital value weighting of the databank at end December 2005 took over from offices as the best performer, returning investors 11.2% up from 8.6% in 2004.
Industrials slightly underperformed the market average at 8.7% down from 8.9% in the previous 12 months. Offices last years star performer, earned investors 8.0% while Other properties (strongly dominated by residential), returned 7.5%, down from 2004s 8.2%.
Despite producing slightly higher income returns (7.1% and 6.2% respectively), capital growth for both the Industrial and Other sectors lagged the market average at 1.5% and 1.2%. Capital growth in the retail sector at 4.3%, outstripped the market average.
In 2005 capital value growth was supported by a 2.5% rental value growth, just below that of 2003. Rental value growth in 2004 was 3.2%.
The total value of the sample of properties contributing to the IPD Italian Index amounted to €12.0 billion at the end of 2005, while the overall size of the Italian Databank reached €13.8 billion representing an estimated 25% of the overall domestic institutional property market.
The size and market coverage of the IPD Italian databank is growing and the quality of our Index is improving year by year. This is a good step toward the development of ever more advanced benchmarking and research tools for the Italian property market, Manstretta concluded.