Market Outlook
The volume of real estate investments in 2022 amounted to €11.7 billion, the second-best result ever recorded.
The Italian real estate market experienced significant growth in investment volumes in 2022, reaching the second-highest value ever recorded, following the record-breaking results of 2019.
The fundamentals of the demand for office and logistics properties remained strong, as evidenced by the record take-up volumes recorded at the end of the year in the Italian logistics market (2.7 million square meters) and the Milan office market (480,000 square meters). For high-quality properties with strong ESG performance, prime rental growth remains robust, mitigating the impact of yield decompression observed in recent months on property values.
Conversion and repositioning activities have also affected the hotel and residential markets. The hotel market has seen a growth in value-add operations in primary urban locations and resort markets. On the other hand, the residential market continues its expansion through development and conversion activities, as evidenced by the intense acquisition of areas and a pipeline of new developments, totaling over 9,000 new units in multifamily complexes set for delivery in the next three years in Milan alone.
The alternative market demonstrates great resilience, being the only sector experiencing growth compared to the previous quarter, despite the absence of large-scale operations. The market for distressed credits is also growing, with an increase in transaction volume, particularly in secured operations, mainly backed by real estate assets.
Office Market:
The Italian office market has shown resilience and positive growth, with strong demand from end-users. The take-up volumes in major cities, especially Milan, have reached record levels, indicating a healthy demand for office spaces. High-quality office properties with good ESG performance continue to experience rental growth. However, the market has been impacted by the increase in capital costs and reduced financing availability, which has slowed down investment activity.
Logistics Market:
The logistics sector in Italy has experienced significant growth. The market has witnessed record take-up volumes, with a substantial increase in demand for logistics spaces, driven by e-commerce and the need for efficient supply chain networks. Investors are showing positive sentiment towards logistics properties due to their strong fundamentals and long-term growth potential.
Hotels Market:
The hotel market in Italy has seen activities focused on conversion and repositioning. There is a growing trend of value-add operations in prime urban locations and resort markets. Despite the absence of large-scale transactions, the alternative market has shown resilience and continues to grow. The market for distressed credits, particularly those secured by real estate assets, has seen an increase in transaction volume.
Retail Market:
The retail sector in Italy has faced challenges, especially with the rise of e-commerce and changing consumer preferences. The market has experienced a decrease in investment volumes due to cautious investor sentiment. Financing new retail operations has become more challenging, and investors are exercising caution in this segment. However, there is potential for growth in the retail market, especially with the right strategy and focus on high-quality retail assets.
Alternative Market:
The alternative real estate market in Italy has demonstrated resilience and growth, outperforming other sectors. This segment includes assets such as student housing, healthcare facilities, and co-living spaces. Despite the absence of large-scale transactions, the alternative market has shown positive momentum. Investors are attracted to the stability and long-term potential of these non-traditional assets.
Mixed-Use Market:
The mixed-use real estate segment in Italy has gained prominence, offering a blend of residential, commercial, and retail spaces within a single development. Mixed-use projects have been successful in meeting the evolving demands of urban dwellers, providing convenience and a vibrant lifestyle. Developers and investors are increasingly focusing on mixed-use developments, creating integrated communities that cater to various needs. These projects often involve a combination of residential, office, retail, and leisure components, offering a diverse range of opportunities for investors.
