ITALY IN BRIEF

•  In 2012, the deceleration in the economic growth of some important European countries contracted even the international growth, especially if compared to 2011. This consequently reduced the GDP of some areas like UK and USA

•  The global environment negatively affected the economic activity in Italy. In 2012, GDP was expected to fall by 2.3% in real terms as a result especially of a reduction in domestic demand, but lately OECD recognized for Italy a negative variation of approx. 1.0% only and released forecasts of a limited increase in 2013

•  Besides its historical performances, Italy shows a quite similar performance to the Euro area, if compared with other relevant economic areas

ITALY IN BRIEF

Comparison among different GDPs (2007-2013)

-6,00%

-4,00%

-2,00%

0,00%

2,00%

4,00%

6,00%

8,00%

10,00%

12,00%

2005 2006 2007 2008 2009 2010 2011 2012 2013

Italy

EU

U.K.

U.S.

Spain

Germany

Source OECD

REAL ESTATE MARKET IN ITALY

The persisiting international crisis heavily hit the Italian economy, but the real estate business performed much better than others.

We will focused on the total number of transaction (TNT) in:

•  Residential Market

•  Non-residential Market (office, retail, hotel and productive plant)

Our research will present the market situation from the year 2008 to the year 2013

All the data are taken from the report of the National Observatory of the Real Estate Market (http://www.agenziaentrate.gov.it/wps/content/Nsilib/Nsi/Documentazione/omi/)

RESEARCH CRITERIA

We divided the italian Real Estate Market in five macro-areas:

•  North-East area (Emilia Romagna, Friuli Venezia Giulia, Veneto);

•  North-West area (Liguria, Lombardia, Piemonte, Valle d’Aosta);

•  Central area (Lazio, Marche, Toscana, Umbria);

•  Islands (Sardegna, Sicilia);

•  South area (Abruzzo, Basilicata, Calabria, Puglia, Molise, Campania);

We will present all the data aggregated by macro-area.

RESIDENTIAL MARKET

RESIDENTIAL MARKET I AND II QUARTER 2013

AREA TNT NORTH-EAST 35.646 NORTH-WEST 67.502 CENTRAL 42.449 ISLANDS 18.836 SOUTH 38.688

0 20.000 40.000 60.000 80.000

NORTH-EAST

NORTH-OVEST

CENTRAL

ISLANDS

SOUTH

RESIDENTIAL MARKET TREND 2008-2012

0

50000

100000

150000

200000

250000

2008 2009 2010 2011 2012

South

Islands

Central

North-West

North-East

IMPACT OF THE INTERNATIONAL CRISIS

As shown in the graph above the Italian Real Estate Market follows a decreasing trend especially in the North-East area.

The following table shows the percentage reduction in the total number of residential building transaction from 2008 to 2012, the volume of transaction has been more than halved (- 54,05 %) by the crisis:

AREA PERCENTAGE CHANGE

NORTH-EAST - 64,69 %

NORTH-WEST - 54,65 %

CENTRAL - 48,86 %

ISLANDS - 59,21 %

SOUTH - 46,38 %

NON-RESIDENTIAL MARKET

NON-RESIDENTIAL MARKET I AND II QUARTER 2013

AREA TNT NORTH-EAST 4.441 NORTH-WEST 6.993 CENTRAL 4.684 ISLANDS 1.479 SOUTH 3.850

0 2000 4000 6000 8000

NORTH-EAST

NORTH-WEAST

CENTRAL

ISLANDS

SOUTH

NON-RESIDENTIAL MARKET TREND 2008-2012

0

5000

10000

15000

20000

25000

30000

2008 2009 2010 2011 2012

CENTRAL

NORTH-EAST

NORTH-WEST

ISLANDS

SOUTH

IMPACT OF THE INTERNATIONAL CRISIS

As shown in the graph above the Italian Real Estate Market follows a decreasing trend especially in the North-West and Central area.

The following table shows the percentage reduction in the total number of non residential building transaction from 2008 to 2012, the volume of transaction has been more than halved (- 66,54 %) by the crisis:

AREA PERCENTAGE CHANGE

NORTH-EAST - 66,65 %

NORTH-WEST - 75,11 %

CENTRAL - 72,39 %

ISLANDS - 62,63 %

SOUTH - 45,49 %

APPRAISAL OF THE TOTAL ITALIAN ASSET VALUE 2006-2011

The life cycle of the real estate market is still in a downturning phase as it can be shown by the historical series of transactions, but taking into account the fact that the number of transaction are halved, there has not been a corresponding reduction in values as the follow graph shows:

0

1000

2000

3000

4000

5000

6000

7000

2006 2007 2008 2009 2010 2011

RESIDENTIAL

OFFICE

RETAIL

HOTEL

INDUSTRIAL

Euro/bn

REAL ESTATE FUNDS IN THE MARKET

•  The Real Estate Investment Funds plays a role that is getting bigger and bigger

•  Their presence is getting more important, especially in some major segments, like offices in which their assets rapresents the 6.6% of the total value of the existing private assets

•  Their contribution in other submarkets is smaller: industrial (about 3%), followed by hotel (about 1%). Very limited investments by RE Funds can be found in the residential sector at the moment.

WEIGHT OF REAL ESTATE INVESTMENT FUNDS

0 5

10 15 20 25 30 35 40 45

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Euro/bn

CONCLUSIONS

CONCLUSIONS

•  The crisis affected the overall economy over the last years but the Italian real estate market showed a substantial stability in values, thus revealing a more limited risk.

•  The diminish of the transactions does not mean the market is completely frozen.

•  Even the Italian real estate market, in comparison with other European markets, lack of dynamism in consideration of its structure, there has been over the last 10 years a positive trend that involves a more active role played by institutional investors, through Real Estate investment Founds, able to stabilize the market, make it more transparent and more effective