Henderson Global Investors believes that investors should sit up and take the Italian property market seriously.

Its latest research paper states that there is more to Italy than meets the eye and concludes that international players may be missing a trick.

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

Despite high debt to GDP ratio, bond investors have historically been less nervous about Italy because the public debt level has been almost stable for ten years and is forecast to increase only moderately.

The high government debt is counterbalanced by low debt levels in the private sector; in fact, Italian households have the lowest consumer and mortgage liabilities of all Western Europe.

Economic strength in Italy is regionally divided and as a result country level economic figures are heavily diluted and therefore often misleading.

As at mid-2010, distressed sellers are nowhere to be seen in Italy, yields for prime products are hardening and rents are close to bottoming out.

The paper also says that in commercial property use of debt has remained conservative, it benefits from equity rich domestic investors, and property capital values have avoiding exaggerations in either direction.
 
Stefan Wundrak, European research manager at Henderson Global Investors, says: “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.”