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Italy readies 1.8b euro property sale to slash debt

Milan

ITALY is preparing to sell as much as 1.8 billion euros (S$2.8 billion) of state-owned real estate as it seeks to rein in soaring debt, people with knowledge of the plan said.

The finance ministry is identifying properties owned by the state and by regional and local administrations that could be sold off - mainly army barracks, hospitals and office buildings that are no longer in use - said the people, who asked to not be named because the plan has not been made public.

Italian Prime Minister Giuseppe Conte has said his government expects measures included in its budget to fuel a recovery in the second half of 2019, even as figures released last month showed the country falling into its first recession since 2013.

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Most economists expect growth this year to be well below the government target of 1 per cent. The three-year budget plan approved in December 2018 included a target of 950 million euros in revenue from real estate disposals in 2019 and 150 million euros in each successive year.

The Italian state, regions and other public entities own property assets across the country that are worth a combined 283 billion euros, according to government figures from last year based on some one million assets for which the Treasury has drawn up an inventory. Earlier official estimates covering a larger number of properties have placed the value as high as 425 billion euros.

Italy's public debt in November reached an all-time high of 2.35 trillion euros, over 133 per cent of the nation's estimated output last year. That is second only to Greece among the countries that use the euro currency.

This would not be Italy's first attempt at raising cash through property sales. The government of Silvio Berlusconi failed to attract bidders for disused military barracks in the north, damping prospects for the sale of thousands of state-controlled properties. The administrations led by Matteo Renzi and Paolo Gentiloni also failed to sell non-core public real estate.

The main hurdle for buyers: Italy's exhaustive rezoning procedures, which can take up to three years. BLOOMBERG