07/04/2022

Comparison between judicial price and free market in real estates

The project aimed to study the court market and its comparison with the open market.
The following were taken as input data:
• Judicial auction advertisements downloaded from the main auction advertising websites and the public sales portal;
• The open market Property Values (Source Nomisma database);
• Free real estate values (source Nomisma database);
• Public data on the legal stages of executions obtained from the PST - Telematic Civil Process.
An algorithm was then developed that could determine, based on the adjudication values and potential adjudication values related to the legal stages obtained from the PST, the judicial discount percentage of the property value, by type and geographic location.
We then defined a new index called EMI (Index of Market Efficiency) that represents the discount to arrive at the already determined adjudication value, also considering the average adjudication time for that specific property type in that court.
In the map you can see the result data at the Province level.

Review the video of the event Transparency and Efficiency in the NPE Market - Big data and digital tools organized by Nomisma on April 7, 2022

At the end of 2021, the stock in Italy of NPEs (Non Performing Exposure) amounted to about 330 billion euros of which 250 billion euros were NPLs (Non Performing Loan) and 80 billion euros were UTPs (Unlikely To Pay). In turn, 75 percent of the loans were to companies and 70 percent of them secured by real estate. Leading market observers estimate a further increase in the stock of NPEs by 2022 until it reaches a combined total of about Euro 400 billion in 2024. This is what emerged from the event Transparency and Efficiency in the NPE Market - Big Data and Digital Tools promoted by Nomisma at its headquarters in Bologna and broadcast live online on youtube last April 7. The event was enriched by a panel discussion of experienced managers, whose speeches were moderated by Sole 24 journalist Morya Longo, who offered their views about the main trends that will characterize the evolution of the Italian Non Performing Exposures market, one of the most important markets at the European level, and its evolutionary trends. All the main observers now agree that the difficult post-pandemic conjuncture, further complicated by the energy crisis and the recent conflict in Ukraine, will further increase the size of the stock of NPL's and UTP's and the difficulties in managing them, making it even more important to seek maximum efficiency and transparency in the market, both primary and secondary, by adopting new digital tools and developing new ways of managing Big Data.

Speaking of the Big Data theme, the subject of the second presentation offered during the event was the original research developed by QBT sagl in collaboration with Nomisma on the judicial real estate market. In particular, the research focused on the comparison between sale values in the free market and those that characterize the judicial market, as well as the timing of sales in the courts of the main 18 major Italian cities. The purpose of the initiative, is to provide new analytical tools that contribute to the efficiency of the NPE market, including through more accurate assessments of distressed loans with underlying real estate collateral, which account for about 70 percent of the stock of NPEs on the market today, with a total value of more than € 230 billion.