The availability of bank financing in Italy has shrunk dramatically over the summer, putting a halt to investment in the country, Alberto Albertazzi, managing director of Henderson Global Investors' Italian office told PropertyEU in an interview during the Expo Real fair in Munich.

'The impact of the sovereign debt crisis was immediately felt in the property financing market, with a number of operations being put on hold or falling through,' Albertazzi said. As a result, financing costs for retail properties have risen to records of 400 to 500 basis points over Euribor in the country, from 200-250 bps just before the summer.

Looking ahead, prospects look even grimmer after Moody's Investors Service cut Italy's credit rating by three notches yesterday to A2 from Aa2, with a negative outlook.