Low rates push the brick, but make it less efficient

The segments that suffer
"The least penalized segment was that of shopping centers, the one most penalized by logistics, which lost 300 basis points in just six years," said UBS. A trend that is strongly influenced by the growth of ecommerce. The demand for more and more online purchases pushes investors to focus on logistics and expose themselves less in retail ».

To influence the scenario also the fact that in the years of the heavy economic crisis, while countries like Spain, Greece, Ireland and Portugal were grappling with rescue plans, Italy has avoided this road and therefore has not registered peaks at 7 % for their bonds. Italy has therefore experienced a very slow recovery, even in the real estate sector. So much so that even today, alongside rising sales, house prices are still falling, excluding some large centers like Milan.

From August 2016 to May 2018 the interest rates on ten-year bonds moved from around 1.05% to 1.5-2.5% up to 2.5-3.5% the following year, in the at the same time real estate prime yields remained stable at 3% for High Street and 3.4% for offices. Therefore the gap between the two returns (real estate and ten-year government bonds) was very limited for about 12 months. After the spread it rose to record levels.

INTEREST RATES ON 10-YEAR STATE SECURITIES

As a percentage (Source: UBS)

Forecasts for the future
For the future, UBS emphasizes that Italy, far from resolving the economic and public debt challenges that concern it, will remain vulnerable to the volatility of interest rates on bonds. The Italian public debt has not been reduced even now that many other European countries are taking advantage of low rates and economic growth precisely to reduce debt.

The strategy of the European Central Bank will also be decisive in the future of real estate trends. But periods of instability could, as happened in the past, have no impact on real estate returns.