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The latest data on Italian commercial property shows the sector delivered total returns of 2.6% in the six months to the end of June this year. The IPD Italian Biannual Property Index indicated that capital growth remained flat over the period. Income returns accounted for all the growth.

The Investment Property Databank said that when compared to last year's figures, the index revealed significant capital growth declines over the previous six-month period, at 1.4%, and 2.0% on the first half of 2007. Income return, meanwhile, remained virtually constant compared to the first and second half of 2007 at 2.7% and 2.6%, respectively. Overall, total returns in 2007 were 4.8%, for the first six months, and 4.1% over the second six-month period of last year.

At sector level, the strongest total returns over the period under review was delivered by industrial property which delivered 4%, broadly consistent with the previous six month's 3.9% return and the 4.1% returned for the same period last year. The office and retail sectors both fell considerably over the same period last year, with retail returns at 1.5% compared to 4.1%, while offices were 2.8% compared to 5.4%.

The total value of the 785 properties covered by the IPD Italian Biannual Property Index was EUR 8.6 bn at June 2008.

Luigi Pischedda, IPD's Country Manager for Italy, said: 'The global financial downturn did eventually hit the Italian real estate market in the first half of 2008, the effects of which are likely to be exacerbated in the second half of the year. So far the overall impact of the credit crunch has only partially affected Southern European real estate markets, which traditionally lag behind bigger marketplaces in the Continent.'