Thursday, December 06, 2007

Italy's High Speed Rail (TAV) Naples to Turin Coming Together

The ANNOTICO Report

The high-speed train service, known by the Italian acronym TAV, or "treno ad alta velocit`", already functions most of the way between Rome to Naples and a portion of the new Turin to Milan route opened two years ago. The rest of that route and the Milan-to-Rome service are scheduled to be operational at the end of 2009.

This article focuses on the impact  the Rail Stations will have on adjacent Real Estate prices, echoing the Ryan-Air effect. It also explores the Italian aversion to train commuting.

With High-Speed Train, Italy on Track for Increasing Real Estate Prices

International Herald Tribune 

By Eric Sylvers

Thursday, December 6, 2007

MILAN: Italy is, piece by piece, rolling out its high-speed rail network and - much like the oft-publicized Ryanair effect, in which property values rise as budget airlines arrive - many experts are anticipating real estate values to increase as the trains reach new locations.

The high-speed train service, known by the Italian acronym TAV, or "treno ad alta velocit`", already functions most of the way between Rome and Naples and a portion of the new Turin to Milan route opened two years ago. The rest of that route and the Milan-to-Rome service are scheduled to be operational at the end of 2009.

"When we open a new station there is a 30 to 40 percent rise in real estate values in just a few years," said Carlo de Vito, who is in charge of overseeing the 2,400 train stations in Italy for the state railroad company Trenitalia. "A new station near the center of a big city makes that area more appealing to the middle class willing to commute, and the same will happen with the high-speed train."

Trenitalia is investing 2.5 billion, or $3.7 billion, in completely renovating stations in Turin, Milan and Rome and building new stations in Bologna, Naples and Florence, which has a design by Norman Foster, a British architect.

There is some question of exactly how speedy the trains are. Italy's service now is severely limited by the age of the tracks and congestion on the main lines. While high-speed trains can reach about 300 kilometers, or 190 miles, an hour, the average is slower because the trains still have to use the existing tracks near cities to reach the centrally located stations.

While most experts agree there will be a rise in real estate values linked with the arrival of high-speed service, there is disagreement on which of the areas affected will benefit the most.

Mario Breglia, the chairman of market research firm Scenari Immobiliari, said Turin prices are inching higher because residential real estate costs half as much as it does in Milan - and when the new train will require only 50 minutes to get from city to city, compared with 90 minutes now, a daily commute will be possible.

"For some time already there has been an improvement in the residential real estate market near the Porta Susa station, where there will be the stop for the fast train," Breglia wrote in an e-mail interview. "Italian families move very unwillingly from one city to another, because links to family and friends are very strong. So the high-speed train will surely stop the small exodus of managers from Turin to Milan, but it won't lead Milanese to move to Turin."

Marco Tirelli, the senior partner of Tirelli & Partners, a real estate agency in Milan, said real estate values would rise when the high-speed network was expanded to vacation spots on the coast. Tirelli said the most appealing link would be from Milan to Genoa, which sits on the Mediterranean close to numerous famous resorts like Portofino, though that route is still in the planning stages.

"When the high-speed trains arrives in a touristic place, you can be sure there will be a spike in real estate prices, like what happened with Ryanair," Tirelli said. "Ryanair means I have many more options for vacation from Milan; the train can have the same effect."

Housing prices in Girona, Spain - near Barcelona - and numerous other European towns near major cities have risen more than the general market rate because their secondary airports are being used by budget airlines.

The result is what is popularly called the "Ryanair effect": If there is a cheap flight, they will come - and later they will buy real estate.

The idea is the same when it comes to high-speed trains. Service like France's high-speed TGV, or train ` grande vitesse, is one example.

When a new line between Paris and Strasbourg opened earlier this year, it set off a small real estate boom, industry experts say. Strasbourg's hotel and tourism industry is expecting 30 percent more tourists thanks to the high-speed train, and real estate prices in the city center now are on par with some of the midrange neighborhoods of Paris.

Whether Italians will accept the idea of long-distance commuting on high-speed trains is open for debate.

"If I offer my clients something that is 30 minutes from their office, they won't even consider it," said Tirelli, who deals with high-value properties in Milan. "There is a whole segment of the market where 30 minutes on a tram or on a scooter in the city is too far, to say nothing of Genoa."

"What could change are for those who are already commuting - but what has to be understood is that, for Italians, commuting is a tragedy," he said.

Part of that attitude is deeply rooted in the train service's notorious lack of punctuality, although Trenitalia says that will improve considerably when the high-speed tracks are completed and traffic can be shifted from the existing lines.

http://www.iht.com/articles/2007/12/04/europe/retrain.php

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