The Italian public administration is impressively aligned on taking forward a planned modernisation of the property sector to, among other things, assist inward foreign capital investment, says Aldo Mazzocco, new head of real estate for state financial institution CDP.
Mazzocco moved over in January from many years heading Italian REIT/SIIQ Beni Stabili, an affiliate of French REIT Foncière des Régions. At the MIPIM trade fair last month, he outlined a four-pronged initiative by CDP (Cassa Depositi e Prestiti), where he now heads real estate, but he told PIE: “This is still a work in process, the first synthesis of a huge universe we need to tackle… What is true – and I live every day now in the environment of the public administration – is that there is an impressive alignment of will… We meet together every week to share points and ideas, and it is evident that there is now government pressure to all go in one direction.”
The four initial elements of his plan are: First, a focus on development of affordable housing to provide stock to accommodate young professionals who need to be increasingly mobile to stay in work. “People no longer work their whole lives in a bank or something but are employed for a couple of years here and there in different cities,” he says. “This is obviously an impressive engine of transformation because this is introducing something needed by the market and not, you know, dreams. We aim to deliver affordable stock that can attract the new generation we need to support.”
Second is the development of cultural infrastructure to profit from Italy’s immense wealth of national treasures – including modern museums and affordable hotels. “Italy has 80% of the world’s culture but we don’t have 80% of the infrastructure to gain profit from this. We spent years and years saying we have a lot of wealth in our culture but this richness is producing nothing apart from maintenance costs and so on, so we need to invent a new way of extracting value. Again, this is a another powerful way to promote urban redevelopment because every time you transform something old into something new you are giving life to cities. In this case Italy is rich, with treasures everywhere, so the Cassa can really play a nationwide role.”
Third element of the CDP plan is to promote and support new real estate infrastructure to accommodate innovative firms and start-ups – “something like small integrated districts, replicating in small scale Silicon Valley – but in small scale because we need to put this new concept in at least 15 cities. Italy is a country of cities, not like France or UK centred around Paris and London, so we need to be active everywhere.”
The fourth element is support for upgrading the “really obsolete infrastructure” of the Italian public administration so that the buildings currently used can be freed up and refurbished to modern standards. “In this case we also have the powerful leverage in that the public administration holds, let’s say, one-third of the real estate in the centre of the cities. So every time we create a new federal building concentrating the new functions of the public administration, we can re-transform the old sites that today are obsolete, expensive and not so stable.”
Mazzocco told PIE he hopes to have a draft in place by summer, but full implementation of the plans could take up to three years. While the initiatives aim at boosting the Italian economy in a wide, general sense, they will also facilitate access by international capital. “All these things I hope to be able to propose to global investors in the form of global vehicles or projects where equity and debt are very easy to be invested,” he told PIE. “Their role will be a financial not a developer role only. Cassa is at the end of the day a bank, a national promotional bank, so I would like to propose to my old friends in the international market to invest in the equity and debt in a plain vanilla way… If you want to invest in one of these streams you will find a vehicle already organised with reasonable leverage, with good governance – and Cassa should also should be the guardian of this vehicle.” ( as/pie)