Despite being one of Europe's (PIIGs) most heavily indebted countries, and well wrapped up in the whole sovereign debt crises, Italian pooled funds have posted some pretty decent returns in the first half of this year.
According to the IPD's Italian Pooled Property Fund Indices (Italian PPFI), the average return for pooled funds was 1.2% in the first half of this year. While this is a slight drop on the 1.4% returns recorded in the second half of 2010, it is still positive news none the less. Piling on the positive, annual returns for pooled funds in the year ending June 2011 were the strongest since the downturn began at 2.6%.
According to the indices, as is being seen in the UK and across Europe, specialist Italian funds are performing much better than their balanced counterparts. The latter is exposed to all segments of the market, and as the recovery is far from balanced, the returns from balanced funds are suffering for their exposure to the volatile segments that are struggling in the recovery. Specialist funds returned 1.4% in H1, while balanced funds saw returns fall to -0.4%.
'Italian property funds have posted relatively strong returns, despite the turbulent regulatory context which is causing much debate even as we publish these results,' said Luigi Pischedda, IPD's country manager for Italy. 'However, the slight contraction of the Index performance compared to December numbers and the variety of behaviors in the sub-indices should not be overlooked.'
A closer look at the numbers shows negative NAV growth, implying the overall return was kept in positive territory by dividend distributions. Furthermore, the performance gap between balanced and specialist funds has remained wide, with the former slipping below zero.
This performance in Italian funds is evidence of two things; one that investors should look for opportunities everywhere, and that they should judge opportunities on an individual basis, rather than excluding markets because of a country's economic performance.
Anyone looking at the UK or US residential property markets right now may be tempted to steer clear of property investments in those two countries, because of uncertainty over just how long it will take for prices to stabilize. Meanwhile those who take a deeper look realize that the volume of bargains and massive demand for rental property in many areas makes for plenty of excellent and high return property investment opportunities. The same can be said of residential property in Spain and Greece.
Thank fully many investors are taking this approach. Investment in the UK and America has of course been intensifying for over a year at least, but now evidence suggests growing investment in residential properties in Spain, Greece, Portugal, and Italy, with investors picking up prime real estate at prices bordering on the ridiculous.
- Monday 10 October 2011