Sep 12

Will condominiums become a new market segment in Italy? Scenarios and opportunities from the law reform about condominiums, still under discussion

The condominium’s reform, after the first approval of the Senate in January 2011, continues to bounce between various committees of the Chamber of Deputies. The final approval, expected in summer 2012, has been postponed again. The stakes are high and adverse effects must be carefully evaluated. Moreover, the historical moment suggests other priorities to the Italian Parliament.

The reform has several objectives, including: the reduction of condominium litigations, that are numerous and growing (according to Anaci-Censis, an Italian association of Condo property managers, 14 cases per hundred condominiums administered, i.e. about 130.000 proceedings); the strengthening of the condo manager’s power but also of the control of joint owners and tenant towards the condo administrator; the simplification of various aspects of operational management.

The reform will deeply change the figure of the condominium manager, making him/her more accountable and professional. Moreover, another important elements of the reform concerns the transformation of the condominium into a legal entity, registered to the unborn "List of condominiums and condominium managers", that will contains also "horizontal" condos (townhouses) and "super-condominiums" (mini neighborhoods).

From a business points of view, we could imagine different scenarios and opportunities deriving from the reform. First of all, the reform will deeply change the sectors already involved in the condominium management business: the number of condominium managers will drastically decrease and condominium management societies will become larger than today. Probably new players will start working in this industry, in particular societies already active on neighboring markets, such as facilities management, brokerage and foreign operators. Also banks, insurance companies and professionals performing maintenance works and business applications will have new opportunities and threats.

Always from a business points of view, the effects of the reform could involve also markets not yet linked with the condominium management business. For example, condominium managers could take part in projects promoted by local authorities, as explicitly disposed in the current law draft. Finally, there is a possible scenario that could be the most interesting one, from our point of view: the creation of a new market segment, composed by joint owners and accessible through condominium managers. This scenario is already under development. For example, a network of condominium management professional practices already exists: it involves more than 200 societies in 17 Italian regions, and manages more than 200.000 housing units, with more than 500.000 citizens. This network centralizes purchases and optimizes relationships and communication processes between condominium managers and joint owners. It has also launched several business ventures, in order to reduce joint owners’ expenses. Among the most interesting initiatives there are the creation of a revolving card and the distribution of a discount card. This last initiative gives access to discounts in different stores but it also permits to accumulate credits that reduce condominium fees.

The scenario that we imagine involves large companies in the condominium management business, competing to attract the most interesting joint owners and offering not only excellent services, but also innovative business models, capable of containing condominium fees. The increase in condominium operating costs is in fact a threat that must be carefully considered, according to various condominium management associations. In other advanced countries, there are numerous cases of innovative business initiatives, even up to the bizarre: television screens in the elevator, advertising billboards in public spaces, buying groups that receive goods in the lodge, medical home appointments with shared pool schedule to optimize costs, ... Gentlemen, condominium is served!