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The Italian real estate is recovering

10 October, Milano Finanza

The Italian market is improving. After a weak first semester, investments have recovered in the current one, reporting numbers aligned with those of the same period of 2017, a record year with investments for over 11 billion euro. According to the figures from the Bnp Paribas Real Estate Italia, the third quarter reported investments for 1.9 billion, with about fifty operations and a 10% growth from the previous quarter. Nevertheless, the total performance for 2018 reflects a slowdown of the prior year. In the first nine months, investments have set at 5.1 billion, 25% less compared to the same period of 2017, although the last quarter partly filled this gap.

There are many reasons for the slowdown: the physiological trend after a record year, the political uncertainty and the country risk, the shortage of core buildings (the favourite of international investors, the main buyers), the high prices (the returns for offices in Milan are currently at 3.3%). However, volumes are still high, definitely higher than those of the last few years on average.

The retail segment is performing well, absorbing 36% of the total investments (700 million in the current quarter and 2 billion since the beginning of the year) and reporting a 20% growth from 2017. Good results also from logistics: 450 million have been invested since the beginning of the year, especially in Milan and Rome, along with a good number of projects in the pipeline. Offices reported a decrease (-26% in the current quarter and -38% in the last nine months). Offices represented the main segment of Italian real estate, with investments for 530 million (1.7 billion since the beginning of the year). Such a reduction is mainly due to the shortage of quality buildings. Hotels have also reduced, with 500 million euro invested in the first nine months (-20%). Alternative assets (assisted living, student housing, data centers, barracks, cinemas) also reported investments for 500 million, confirming the great interest in these assets since 2014.

Milan is still the primary market with investments for 2 billion in the first nine months, while Rome slowed down (-10%), although it has recovered in the last quarter. “The market is still dynamic, but it suffers from the lack of significant operations that characterised 2017”, explains Cristiana Zanzottera, head of the research for Bnp Paribas Re Italia. “Nevertheless, it still attracts investments, especially from abroad, which have represented the main quota this year”.

Source: Milano Finanza

Translator: Cristina Ambrosi