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"Italian commercial property capital growth finally fell into negative territory over the six months to the end of December 2008, at -2.5%, according to the IPD Italian Biannual Property Index published today. After posting flat growth for the first half of last year, the delayed effects of the credit crunch have, at last, started to show through.
The six-monthly IPD Index revealed total returns managed to stay in positive territory by the smallest of margins, returning 10 basis points. This, for the second-successive half-yearly period, is entirely owed to resilient income returns. Over the six-month period under review, the most substantial falls in capital growth where in the Retail sector, at -4.3%. In the two years of the bi-annual indices, growth
has fallen in the sector for each successive half-yearly period, posting negativecapital returns in both halves of 2008. By comparison Offices and Industrials, which maintained positive growth in the first half of last year, both fell by -1.6% in H2 2008. Consistent with the pattern throughout most European countries, income returns held up, at 2.6%, insulating the total returns for the six-month period. This was led by Industrials, at 3.2%, followed by Retails and Offices which returned 2.6% and 2.5%, respectively.
As a result of the competing influences of negative capital value movements and robust income returns, the strongest sector total returns were Industrials, at 1.5%, followed by Offices at 0.8%, while Retail slipped into negative territory for the first time, at -1.8%. All property annualised total returns over one and two years were, consequently, 1.3% and 5.7%" (CS della Società).
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