Will Rome be the next Milan in the real estate sector? That was the topic under discussion at the business breakfast organised by ARECneprix and Dealflower on 26 June. On the table was an analysis of the differences between the two cities in the real estate market, the steps already taken and above all the capital’s potential. A wide-ranging issue, hard to cover as a whole but one for which the meeting was able to establish the essential features. Starting from the Italian experience and passing on to international models.

Marco Raccah, General Manager ARECneprix: “Close collaboration with the local administration in Rome”

In the Milan discussion interesting points emerged for sector operators in search of new investment opportunities. Marco Raccah, General Manager of ARECneprix, retraced the steps that led the company to turn its spotlights on Rome.

“History and our experience as a company teach us that the political capital always follows the financial capital in terms of real estate development”, reflected Raccah. “At a personal level I’ve seen this happen in China, a country that I’ve visited on several occasions since I was a small boy and one that I know well. Shanghai, the financial heart, was an early developer compared to Beijing, where as we know the government resides. The latter hadn’t yet undergone any significant urban regeneration, the prerequisite for raising average building quality. But one could see that the potential was there: in the first few years of the new century I began to invest in Beijing and had the opportunity of watching the transformation take place that led to the rethinking of whole areas, with the construction of iconic buildings such as the CCTV public television tower, in my opinion one of the finest in the world”. The 2008 Olympic Games were a key turning point for the Chinese capital, which for two weeks was under the world’s spotlights with the city filled with thousands of athletes, spectators and commentators.

There is a recent example in Europe too: Berlin. “Today”, Raccah continued, “Berlin is one of the most interesting cities from a real estate standpoint. I’m speaking in particular about the eastern sector, which had specific features due to the division experienced by Germany. For this reason, Berlin didn’t know about the development that was taking place in the economic centres of Munich and Frankfurt: but aided by the drive of an enlightened and far-sighted administration, one also having vision, it recouped land in the space of just a few years”.

Looking ahead with an elaborate idea of the future, the ability to imagine the city in the long term by taking account of socio-economic transformations taking place over the past few years at a pace never seen before, that’s the linchpin for carrying out projects that can resist over time and improve the quality of life for residents. “As happened in Milan and as is currently being repeated in Rome, where the local administration has acted in continuity with its predecessor. Because one of the classic Italian problems is the fact that work has to start from scratch again with every change in the city council: what is really needed, though, is a common approach to rethink a city and enhance its value, one that is able to go beyond political colours. I believe that it is essential for the public and private sectors to work together: the Rome administration is leaving a great deal of room for institutional investors”.

Projects in progress: the former Fair area, Bufalotta, Eur

Whereas a great deal has been written about Milan and real estate, how would you describe Rome?  “For decades it’s being a city characterised by a certain fragmentation”, Raccah remarked, “where developers had a typically non-institutional nature. And what is more, historically they often worked in opposition to the administration which, don’t let us forget, had the responsibility to defend a city that is an open-air museum”.

Continuing, he noted that “the capital has changed over the years. And also the approach is different today. Rome currently offers enormous opportunities, with whole areas needing regeneration”. A comparison with the country’s financial capital should also be made in this case; Milan “arrived first and what is more has had vision and continuity over the years, building the backbone of the city that we now have before our eyes”.

Has a cycle come to an end in the Lombardy capital? “Prices in Milan are currently very high, with entry barriers for developers also high. Rome on the other hand has extremely interesting prospects. The generational change in investors should not be underestimated. In short, the paradigm has mutated and this has also benefited the activity of the capital’s administration, which has worked very hard to let its potential be known, for example by presenting the city at the Cannes Mipim, Europe’s biggest real estate fair”.

ARECneprix has various projects in the pipeline. “At the moment”, stated Raccah, “a tender is in progress for the drafting of a masterplan for the redevelopment of Rome’s former fair area, close to the Aurelian Walls, which will close in September when the winning project will be announced. This is an area of 76 thousand square meters, currently not in use but located at the heart of the city’s urban fabric and still to be fully valorised”. “The project we have presented envisages the development of 44,360 square metres of gross floor area, of which 80% residential: 20% of this component will be built as social housing. The remaining 20% will on the other hand be commercial, divided between offices and retail. We are expecting a great deal from this project: if carried out successfully, it will give a significant push to the rebirth of the area and serve as an example for further activities. Besides, a large part of Rome’s real estate heritage is out-of-date and doesn’t comply with the standards you expect to see today”.

Another interesting urban regeneration plan is No.Mo. District, a project aiming to valorise the area and complete the development of the Bufalotta – Porta di Roma quarter. This is being conducted through Fondo Tulipa, a real estate fund fully owned by Fondo Olympus that is managed by Finint Investments and has ARECneprix acting as asset manager and loan special servicer. “We are talking of 240 hectares in the northern quadrant of the capital where we are developing homes having a high architectural quality and on the cutting edge in terms of environmental and social sustainability”. The most significant public works regard the redevelopment of the Sabine Park, one of the city’s largest green spaces, which will be provided with sports equipment, cycle paths, socialising areas and new woodlands.

Then there is the U Turn fund, between the Eur and the Torrino, 44 thousand square meters of residential area and 74 thousand square metres of commercial area, where regeneration measures have also seen the creation of an urban wood with 400 species and an open-air public art space available to everyone.

“What we have seen”, concluded Raccah, “confirms that if we want to carry out really sustainable urban regeneration projects we must establish close and constant collaboration between the institutional players involved to the greatest extent possible. The growing demand calls for responses that must be identified in a strategic manner. And the city’s best interest is achieved by working side by side. With its significant presence in the area, ARECneprix acts as asset manager and originator in order to collaborate with its institutional investors in this precise sense. All of which with the aim of pursuing the objective that is in line with our Group’s mission: ‘make profits and be useful’, meaning having a positive impact on the local communities and area by carrying out socially useful projects”.