Practices

Italy property investment market

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2019 kicked off with a pipeline full of opportunities for institutional investors. Some real estate deals have been on hold since last year and have been waiting for someone to seize the opportunity; others have been waiting for timing and conditions to be defined. The trend is caracterized by private equity funds which continue to buy strategic assets in order to enhance their portfolios whilst trying to commercialize already held assets to regain liquidity and maximize their total returns. Even in the banking sector top properties have been placed on the market.

 

After all, the main challenges faced by the Italian banks today are to remain faithful to their derisking plans, cope with an efficient management of real estate assets following M&A operations and finally tackle the phenomenon of multi-channel services leveraging new technology, which requires banks to increasingly drop out of the concept of physical branches. Hence, top tier banks have decided to dispose their instrumental properties, in addition to their direct properties, creating a market that currently is worth billions of euros. In such a dynamic context, Q1 2019 saw the Italian property investment market totaling €1.6 billion: a slight in increase compared to the transacted value observed in Q1 2018.

 

The office sector was the main driver of the Italian property market capitalizing €900 million of investments, followed by the hospitality sector, at €370 million, and then by the logistics sector which recorded investiments for €100 million; the remaing transactions concerned retail assets for €50 million, other real estate assets and mixed use properties for a total amount of €150 million.

 

From a geoghraphical perspective, North-West confirms itself as the macro region with the highest number of deals for an amount of over €900 million followed by the Center macro region with €200 million whilst North-East, South and Islands recorded transactions totaling slightly over €50 million combined. Finally, the transacted value in “property portfolios” was at €370 million, the equivalent of 23.7% of nationwide transactions.

 

In terms of investment flows, international investors continue to dominate the market with €1.1 billion of investments, or 72.5% of the nationwide transactions, with capital hailing mainly from the USA, Germany and Switzerland.