“Milano will bounce back fairly quickly and for some asset classes the scourge of Covid-19 will actually be an accelerator.” Luigi Aiello, Chief Corporate & Business Development at the Prelios Group, was speaking at the first Milano Capitali round table on 12 May presented by Class CNBC editor-in-chief Jole Saggese, with journalist Teresa Campo, who reports on the Real Estate sector for MF Milano Finanza, in the studio.
“We have to remember the point we were at: 2019 was an extraordinary year both for real estate and the financial markets,” added Aiello during the panel entitled Construction Capital. How Real Estate projects, valuations and financing are changing. “For property, 2019 was a record year, with 12.6 billion euro of deals on the capital market, of which around 40% in the Milan area, with a population of 1.5 million inhabitants.”
Why Milan? “Because it has particularly strong and stable fundamentals, a transparent administration, and because it lags behind the other large European capitals in terms of property values and offer,” is Aiello's point of view. “This is why Milan is an investment target, and these conditions still exist. There will be a slowing in demand over the next 12/18 months, a repricing, but then the market will pick up again.”
The situation in the rest of Italy, however, worries the Prelios Group Chief Corporate & Business Development. “In addition to real estate, our Group manages distressed loans, in particular UTPs relating to companies in trouble but still with a chance to recover. The lockdown has hit these companies hard, and at the moment there is no legislation providing them with support. We're talking about 30 thousand firms experiencing difficulties, 60 billion euro of collateral credit and more than one million jobs. If we don't intervene in time with system tools to support these companies, they risk going under fast.”
The gap between Milan and the rest of Italy, Luigi Aiello believes, “will widen in the next few years and I wonder how sustainable this distance will be in the future, and for how long. I wouldn't like the gap to become a sort of boomerang for Milan, triggering a process of social selection that could endanger all the positive things that have been achieved over the last few years.”
The last question put to Aiello by Jole Saggese concerned new city lifestyles: “Coronavirus has provoked serious debate about cohabitation and co-working, but the need to ensure that our children have safe places where they can live their university years continues to be decisive,” Aiello replied. “Italy is still light years away from the offer in the other European capitals. I’m convinced this asset class will grow a great deal over the short term.” The residential asset class will be a determining factor in the future, too: “We have to remember that a significant portion of our population are Millennials, people born at the end of the 20th century whose residential requirements are completely different to those of previous generations. There will no longer be any need for property rights, but rather for a service that includes a house and that adapts to our new way of life. You could call it a 'plug and play' lifestyle.”