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USA, France and UK are leading the foreign investments in Italy

05 March, Il Sole 24 Ore

The elections don’t scare international investors that continue to bet on the Italian real estate and are looking for the opportunities the market has to offer rather than thinking about the possible instability following the voting. This is what emerges from the 2018 outlook Investment Briefing on Italy, organized by PropertyEU in Milan.

“Investors are worried about the elections, but this is not enough to change their substantial optimism or the positive outlook for Italy”, declared Alexandre Fernandes, responsible for Europe Asset Management for Sonae Sierra. The economic recovery after years of recession is more predominant than the political uncertainties.

“After three consecutive years of record investments in real estate, Italy is one of the favourite destinations in Europe in 2018”, said Simone Roberti, head of research for Colliers International Italy.  Investments have reached 11.3 billion euro last year, nearly double the average of the last 10 years. And the outlook for 2018 is positive, with a great interest especially coming from American, French and British investors”.

“It has been interesting seeing the sentiment of international investors changing – declared Gabriele Pompei, managing partner for Pure Investment Management -. Before they were worried about the weakness of the country, with the economy at a standstill, the many debts of the banks, and the political instability, but now these worries are gone. Investors want to invest their capitals and their only concern is the specific problems of the sector”.

Such problems are of various nature. The most evident is the harsh competition for core assets that are more and more difficult to find and have increasingly high prices. Some international investors have even given up, others have opted for a riskier but more profitable strategy shifting towards secondary markets and alternative assets.

One of the positive factors in Italy is that, even the interest of investors tends to focus on the traditional assets such as offices, logistics and retail (shopping centres as well as shops), the market offers a wide range of opportunities also in other sectors, according to Roberti, including alternative assets such as hotels, assisted living and student housing, where the offer is much smaller compared to the demand.

Hospitality has been one of the success stories of 2017, with investment volumes almost doubled compared to the previous year, reaching 1.4 billion euro and with new brands entering and revitalizing the market. Student housing has just started in Italy; therefore, it has a lot of growth potential. In the meanwhile, the current demographical changes imply that people aged over 65 years will double those aged below 14 years by 2030, making investments in assisted living for elderly people the most reasonable bet in terms of investments.

All the experts that have gathered at PropertyEU believe that, in order to meet the market needs, more investments in real estate development, revitalisation, restructuring and building reconversion and repositioning will be necessary.

“If there is a shortage of prime assets to buy, you have to create them – said Roberti. – But there aren’t Italian institutional investors willing to make real estate development”. Where these investments have been carried out, they’ve been successful, as explained by Federico Sutti, managing partner for Dentos Italia: “Just think about Piazza Cordusio in Milan which have been left abandoned for over twenty years. Now every building is under renovation and property prices are rising”.

Despite these success stories, there is still a general aversion towards taking risks. The excessive caution damages the market, according to Pompei: “There is no other European country where the local players don’t make property development or limit themselves to the safer core segments – he said – There are foreign investors that see opportunities, have a clear strategy and an excellent business plan, but they struggle to find a local partner in Italy”.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

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