Italian property market worth a look

China facing potential property ‘bubble’

Italian property market worth a look

The Italian property market is a property investment destination worth looking at despite the global recession earning it an association with the struggling economies of Greece, Portugal and Spain, according to Henderson Global Investors.

Stefan Wundrak, European research manager at Henderson Global Investors said: “It becomes obvious that a closer look at the Italian economy reveals a rather more differentiated picture often missed by international observers. As far as the property market is concerned, inside and outside views on Italy can be widely divergent. Foreign players mainly see risks, whereas locals praise the achievement of relative market stability.

“Investors who stick to the caricature of the Italian economy and property market are quite likely to miss a trick.”

Italy has the seventh biggest global economy and has been part of the European Union since its foundation, with a broad based economy and an export industry almost on par with France and well ahead of the UK.

Distressed sellers are virtually unseen across the country, whilst yields for prime products are hardening and rents are close to bottoming out and according to Wundrack, Italy has a relatively resilient banking system.

China facing potential property ‘bubble’

Property prices in China will rise by 10.3% during the rest of 2010 and as a result will become a risk to the country’s economic growth, resulting in a classic bubble situation according to Standard & Poor's.

David Wyss, chief economist at S&P, said: “The property market looks darn good, it's been going up, and this is a classic bubble. Prices are rising to an unsustainable level.”

The property sector contributes about 20% to the Chinese economy through real estate investments and related industries, according to Citic Bank International. China since April 2010 has placed restrictions on pre-sales by developers and curbed loans for third home purchases in an effort to cool the market after excess liquidity stemming from record credit growth in 2009 pushed up demand.

Wyss said: “While China's growth trajectory remains solid, we expect some softening in the coming quarter largely on the back of uncertainties in Europe. Rising commodity prices may also constrain the nation's economic growth.”

Property prices are starting to show signs of slowing down as they have only increased by 10.3% in the year to July 2010, the slowest pace in six months.