Qatar in talks to buy major Milan project
Doha, April 13, 2013
Qatar is in talks to buy some or all of Milan's newly-built Porta Nuova business district as Italy's economic crisis squeezes its US developer, sources said.
Texas-based Hines declined to comment on any move to cut its stake in the 34-acre project, planned during the last boom.
Three sources spoke of discussions on selling Qatar at least part of a development that has so far cost some 1.8 billion euros ($2.4 billion) and has transformed the skyline of Italy's commercial capital with a series of towers 1.5km north of the historic centre.
A fourth property sector source said other investors had looked at Porta Nuova but that no formal sale process was underway for the estate of offices and high-end apartments, which has been likened to the larger Canary Wharf in London's docklands.
Work started in 2007, months before the global financial crunch, and office lettings and apartment sales are now behind projections as the Italian economy stagnates and lags even other European states, two sources said.
"The timing has been bad and Hines is keen to cut its exposure or get out at the right price," one of them added.
With the final stage due for completion next year, Hines has said about half the 370 apartments have been sold for an average of 1.5 million euros and 55 per cent of the 130,000sqm of offices are let - to Italian bank Unicredit.
The bank is among lenders to the project and now occupies its eponymous Unicredit Tower, Italy's tallest building.
Milan's property market reflects Italy's economy, however; data from consultant CBRE show a drop of 28pc in the amount of office space being newly taken up in the city last year compared to five years earlier in 2007; the vacancy rate rose from 7.4pc to 11.6pc over the same period.
Luxury Milan home prices have fallen by about 8pc in that time and, for all its glamour as an international hub for the fashion and design industries, the northern city of 1.4m has not seen the non-European rich lining up to deposit their cash in its real estate in the way that London has.
As well as Italian money, investors in Porta Nuova include the US teacher's pension fund TIAA-CREF. About two-thirds of funding was from lenders including Commerzbank's Eurohypo and Banca Popolare di Milano.
Qatar's major deals in Europe include Harrod's department store in London and the British capital's new Shard, the tallest building in western Europe.-Reuters