01 March, La Repubblica
Real estate is once again present in the big portfolios. Alternative assets such as luxury hotels and resorts are especially present in the assets of the high net worth individuals (hnwi), with personal assets over one million euro. According to Jll H&H Group, last year in Italy the transactions concluded for this segment amounted to 1 billion and 100 million euro, slightly lower than 2016 with 1 billion and 142 million, but way more than 2015 with 892 million.
This trend is growing, supported by institutional investors. The low interest rates and the research for new income-paying assets have brought investments in luxury hotels from sovereign funds, retirement funds, insurance companies, all investors with a long-term perspective. They’re followed by private banking and wealth managers.
The hunt for luxury assets has greatly concerned Italy, with 5% of the total deals concluded in Europe. 24% of the transactions concluded between 2007 and 2017 was with hnwi, that have become one of the main investors right after institutional investors. There are the private operators of the hospitality sector, which covered 13% of the operations, followed by private companies, with 11% of the operations.
The number of hnwi is increasing everywhere in the world, as wealth becomes more and more concentrated in a small group of people, there is an increasing necessity to find alternative investments. The global real estate has been one of the investment targets, and now it has finally taken off. The report by Cushman & Wakefield shows an investment boom with volumes that last year exceeded the pre-crisis levels. This is the fifth year in a row that operations have increased, reaching in 2017 11.3 billion euro, with an 18% increase on a yearly basis. The outlook is positive also for 2018.
Logistics registered the best performance, with the transaction volumes tripled, thanks to the growth of e-commerce. Offices are still the main segment, with Milan being the most dynamic market, even though Rome is starting to emerge. Concerning retail, its main component is represented by high street, covering 50% of the total investments and registering a consistent increase in the rent prices. Milan is still the most sought-after location for what concerns national and international brands. The second edition of the Main Street Across the World report shows how Via Montenapoleone is at the fourth place in the world, and at the second in Europe only after New Bond Street in London.
“The core assets continue to be the most requested”, says Carlo Vanini, Head of Capital Markets for Cushman & Wakefield. He explains: “But the combination of low availability, increasing prices and reduction of returns has brought several investors to look for alternatives in order to obtain more attractive returns. More in particular, we can see an increased attention towards property enhancement opportunities in the city centres or in areas of solid real estate value; the diversification of the location, in cities as well as in secondary markets; the structuring of operations in partnership with developers in order to create a new investment product”.
The new trend sees institutional investors aiming at alternative assets. This is a vast category, including student houses, data centres, and casinos. Even hospitals and police stations. This type of assets has the advantage to balance the portfolio protecting from the cyclic phases that affect the other segments, like offices.
Obviously, it depends a lot on the location of such assets and on the legislation of a specific country. In those countries where prisons are private, also these are seen as an investment.
Source: La Repubblica
Translator: Cristina Ambrosi