News
- 12.10.2011
Chiavazza (Avalon): "We are perceived as a distressed market"
Between 2008 and 2010 the real estate the most important centers like New York and London have seen their values drop sharply.Today, those same markets have returned to levels close to or even higher than before the crisis.
Frederick Chiavazza, Avalon Real Estate Partners (a company specialized in consulting on the subject of evaluations of large estates, investment, design and development) and lecturer at SDA Bocconi, see gray in the Italian property market, but do not lose hope.
"In Italy we have endured for three years by" freezing "the real estate market and hoping for a recovery that has not happened.
However difficult, I think the market will again only through the recognition by all that is no longer possible to work pretending that nothing has changed since 2006, "adds
Q: What are the factors that prevent the breakthrough?
A: I believe that we need to distinguish between retail and residential market, the market of institutional investors.
In the first case we see, the past two to three years, a continuous extension of the time of sale.
In a "normal" market this signal a prelude to a more or less rapid fall in prices.
In Italy the decline in prices has occurred only minimally.
The reasons are still strong in the capital of families and the meaning that the property holds for all of us.
In other words, the average Italian family is not willing (and can still afford) to sell a property at significant discount compared to their expectations unless they are not in a real emergency situation.
The sale of the brick is seen as the "last resort" and, in most cases, this level of emergency has not yet been touched.
Q: And on the institutional side?
A: Since 2008, banks play an extraordinarily important role in the process of "sclerosis" of the market.
The financial crisis of 2008 that affected only marginally our lenders have continued to support it technically bankrupt real estate companies for fear of having to move their accounts on hundreds of millions of euros of property that obviously does not wish to acquire force and especially not would be able to manage.
On the other hand, in the few known cases of bankruptcies of banks operators have been forced to "digest" the property at market values pre-funded crises and therefore now often unsustainable.
Well, no committee of the bank has a strong desire to resolve the sale of property order with discounts of 30-40% of book value.
The effect is that the U.S. market called "extend and pretend" extends the duration of the loans, or reject the offers that come with big discount from the market and pretend to believe that these assets are worth more as reflected in your balance sheet.
Q: How is it made from Italy to the international context?
A: I think, despite everything, the fundamentals are better than many of our Italian neighbors now more considered and less downtrodden.
In the end we continue to be the second European manufacturing economy and we are characterized by excellence and extraordinary talents.
We continue to be one of the top five most visited countries in the world and one of the places where foreigners would buy a house more willingly.
Why, if the wheel should finally start to turn on the right side, the housing market in support of the manufacturing economy, tourism and services should not proceed accordingly?