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Investor insights: An overview of the Italian real estate market March 23, 2018
Investor insights: An overview of the Italian real estate market

HLB provides investor insights into the Italian real estate market.

Italy’s real estate market is thriving. In 2017, the real estate market recorded an impressive 18% growth. Supported by the ongoing strength of the Eurozone, the recovery of the Italian economy slowly gained pace throughout the year. Findings from CBRE’s Europe 2018 Real Estate Market Outlook show that economic indicators continue to improve and have a positive effect on the real estate market. Italy is seeing surprisingly high levels of consumer confidence after the results of recent elections. We continue to see positive macroeconomic trends in the first quarter of 2018. And these trends are reflected in the sentiment of real estate investors.

In Italy’s investment market, foreign investors remain the majority, with 79% of investors being foreign. Subsectors that mainly drive the Italian real estate market are Office, Retail and Industrial & Logistics. However, other subsectors such as Hospitality, Student housing and Care homes are also showing great prospects.

Office property market

According to a report by Crushman & Wakefield, the Office property market remains the most active within the real estate market. It is expected that this part of the market will continue to drive investments throughout this year, as has been the trend in previous years. Transaction volumes have recorded a 70% increase from 2015 to 2017.

Foreign investors have dominated the Italian investment market in past years – representing 73% of the 2017 investment volume. The levels of interest both domestic and foreign investors show in Milan confirm the northern Italian city continues to evolve and can compete with large European and capital cities.

High value properties are most desired, though hardest to come by. Factors such as scarcity, rising prices and decreasing yields will lead investors to look for alternative opportunities, especially when there is the prospect of achieving higher returns. As a result, Italy has recorded an increase in investments in alternative secondary locations.

Retail property market

The Retail property market covered circa 20% of the overall investments in real estate, with foreign investors playing a dominant part (80% in 2017, 75% in 2016). The lion’s share of investors originate from the UK, Germany, France and US. Among domestic investors, have SGRs and private investors have been the most active.

Offering and transaction of high value properties has been low. As a result, a strong demand for retail property investments is focusing on core plus opportunities and off market deals - especially for core high street property and single asset transactions, which represent some 53% of the market.

Industrial & Logistics property market

In 2017, the logistics sector registered the highest volume of the last 10 years. Portfolio deals have confirmed their important role in the market (which represented the 76% of total volumes in 2017).

The limited availability of high value properties is creating competition. This is reflected both in a yields’ compression and in the increase of new ways of investing: pure developers and institutional investors are more involved in forward funding and forward purchase. We even expect to see JV’s in the near future.

The evolution of the logistics market and a dynamic occupier market, driven by the presence of primary and international companies, continue to attract the attention of foreign investors.

We foresee growth in this sector as new foreign investors are increasingly showing interest in the Italian property market. Especially the Northern regions are in high demand and worth keeping a close eye on.

Industry forecast

2017 showed a 22% year on year growth in investment activity in property from both local institutional investors (mainly insurance and pension funds), and foreign investors. We expect this trend to continue through 2018. We also expect to see growth in opportunistic and value-add investments, in response to investor search for greater returns. 

Despite gradually increasing restrictions on monetary policy in Europe, we expect increasing interest in the Italian real estate industry. Among the asset classes, 2017 has been a record year for property markets once considered as a niche. Hotels saw a 12% increase compared to 2016, and the industrial & logistics property market almost double compared to last year. In 2018 this trend will continue, especially in industrial & logistics property.

We also believe the weight of niche asset classes considered will continue to grow. Real estate for healthcare (including RSA, hospitals, clinics etc.) accounted for approximately Euro 600m of investments; a large increase compared to 2016. We expect to see more growth in this area in the near future. 

Article by Francesco Dori, Partner at Studio Alfuor & Associati, member of HLB's Real Estate Group. Contact Francesco on f.dori@alfuor.com





What Should You Know about Bitcoin March 23, 2018
What Should You Know about Bitcoin

Bitcoin is one of the most popular forms of virtual currency, and the only one most people recognize.

You have probably heard the term Bitcoin and all the media buzz about this new technological evolution of currency, but you may not understand the clamor. Supporters of Bitcoin, particularly the millennial generation that is accustomed to electronic transactions, will tell you it’s a different, some would say better, type of currency, and it’s unique in that it has no physical form, just a digital one. Cryptocurrency, also referred to as virtual currency, is just what it sounds like: digital money, but with one basic difference from the dollars and coins residing in your pocket. While the value of Cryptocurrency may go up or down, that value exists solely with the people that create it and those that accept it as a replacement to the more recognized forms of payment.

Bitcoin is one of the most popular forms of virtual currency, and the only one most people recognize. But it would probably surprise you to know that there are more than 1,000 other cryptocurrencies in circulation.

Taxation in General

In United States, the IRS says that Bitcoin is to be treated as property for federal tax purposes. This means that the same general tax principles that apply to property transactions will apply to any transaction involving cryptocurrencies. Under these principles, taxpayers receiving Bitcoin in exchange for providing goods or services will recognize income equal to the fair market value of the Bitcoin received on the date of receipt. With the volatility of Bitcoin over the last few years, and particularly the last few months, this could indicate a very wide range of values.

Taxpayers must document the cyrptocurrency’s fair market value (in dollars, if a U.S. taxpayer) at the time of receipt, as this value establishes both the taxpayer’s income on the transaction as well as the taxpayer’s basis in the cryptocurrency that will be used to determine the taxpayer’s future gain or loss when the virtual currency is disposed or used.

If a taxpayer mines Bitcoin or other virtual currency as a trade or business, and the mining is not done as an employee, the net earnings from this mining will be subject to self-employment tax. And, any independent contractor who is paid in virtual currency for their services will be subject to self-employment tax on the cryptocurrency’s fair market value as well. In addition, if a company pays its employees’ wages in virtual currency, the fair market value of said wages will be subject to the usual federal income tax withholding, and will need to be reported on their W-2. Note that all of those U.S. taxes due will be paid in U.S. dollars—the IRS does not accept Bitcoin or other cryptocurrencies.

Since cryptocurrencies are not classified as currency for U.S. tax purposes, international taxation can add another layer of complexity. 

Bitcoin is still a fairly new technology, which means tax treatment of virtual currency transactions is still being developed. However, with the increase in use and established values, it is likely to gain more interest from the IRS. We will have more articles exploring the various aspects of taxation when using Bitcoin or other cryptocurrencies, as well.

Article by Andrea Mouw, J.D., Principal, EideBailly, An independent member firm of HLB International.





French Agricultural employers must submit their waivers no later than March 31, 2018 for wages paid to casual workers in 2017 March 15, 2018
French Agricultural employers must submit their waivers no later than March 31, 2018 for wages paid to casual workers in 2017

Agricultural employers may benefit from total or partial exemption from employer contributions.

Employers have until March 31, 2018, to waive the contribution exemption for the employment of casual workers in favor of the "Fillon" reduction. 

Agricultural employers may benefit from total or partial exemption from employer contributions (social insurance, vocational training, supplementary pension, etc.) on the remuneration they pay to casual workers. 

Reminder: Casual workers are those recruited, in particular, on seasonal fixed-term contracts, on fixed-term contracts and on a contracts linked to the performance of tasks related to the animal and plant production 

cycle (crop, livestock, etc.), forestry work and activities that directly extend the act of production (processing, packaging and marketing). But when they benefit from the partial exemptions which are available for such 

contracts, agricultural employers cannot claim the general reduction of employers' social security contributions, known as the "Fillon" reduction, on the remuneration paid to casual workers at the same time. 

However, they have the opportunity to waive the exemption for casual work to take advantage of the reduction Fillon instead. Until now, agricultural employers had to waive their renunciation by January 10 of each year. 

Example: they had until January 10, 2017 to waive the exemption for the employment of casual workers in respect of remuneration paid in 2016. 

From now on, agricultural employers have until March 31 to waive the relative exemption. The waiver must be made in writing (paper or electronic mail) with the Mutualité Sociale Agricole. 

Agricultural employers must submit their waivers no later than March 31, 2018 for wages paid to casual workers in 2017.


For more information and assistance, please contact Bettina CASSEGRAIN (bcassegrain@cogep.fr) of French HLB member firm COGEP for more information.