Real Estate Development and Economic Change: Integration and/or Specialization? A Survey of Italian Companies

In line with the economic and financial context in which it operates, real estate development has recently undergone radical changes. It is certainly significant, hence, that the range of firms operating in the building sector in Italy is now extremely varied. Two extremes remain: on the one hand, small companies which often operate exclusively in the construction sector and, on the other, companies which manage large real estate ventures and tend to turn activities into major financial operations. The latter prove that the real estate development does in fact not exist ìoutsideî of the national and international economic and financial system, and that its operators ñ real estate developers and builders ñ are capable of ìevolvingî in order to adapt to change. On the other hand, recent repercussions of the financial crisis on real estate markets, and the related fall in investments and employment in the sector, would seem to support those who maintain that real estate investment is nonetheless still rooted in its own specific risks, the irrational behaviour of its operators, lengthy time frames and its division into sub-markets, defined by product type and location. This work will illustrate the results of a survey carried out among Italian companies adopting new operating strategies. As well as a different use of financial capital ñ e.g. in the use of project financing ñ these procedures propose a integrated real estate development (area identification/negotiation, design, construction, sale and/or asset management). In other words, it is a case of clarifying whether new operating procedures are, in fact, representative of the entire sector, qualitatively and quantitatively speaking, or whether traditional forms of intervention, characterised by low corporate risk and an atomised business structure, actually still coexist with more advanced strategies. Such conditions would be consistent with the sectorís cyclical trend and would not necessarily point to the existence of a backward structure.