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Good performance of retail investments

13 November, Il Sole 24 Ore

Real estate investments slowed down in the third quarter of 2018 (-23% compared to the same period of the previous year), although the performance of the first nine months is aligned with the average reported in the last five years.

According to a report by Ipi, the volumes recorded in the third quarter of 2018 are set at 1.7 billion euro. 40% of the investors prefer investing in retail (nearly a 14% increase from the second quarter of 2018). The segment, in fact, is a strategic asset for investments. The biggest transaction reported concerns a shopping centre in Turin.

There is an increasing interest in the various alternative asset types such as assisted living, student housing, and cinemas, representing a growing portion of the total investments.

Milan is generally Italy’s most liquid market. Investments in Milan are substantially stable, while the capitals invested in Rome are decreasing. Turin reported an excellent performance.

In Milan, office investments in 2018 have concerned a surface of 115 thousand Sq m with a slight decrease from the previous period.

The transaction volume registered since the beginning of the year amounts to 320 thousand euro with a 15% growth compared to the same period of 2017.

Milan reported 90 transactions during last quarter, including four deals above 6 thousand Sq m not far from Duomo.

Rents are steady (580 euro/Sq m for prime offices in the city centre and 500 euro/Sq m in Porta Nuova), while the vacancy rate decreased by 11.5%, especially in the business districts in the city centre and Porta Nuova.

Concerning investments, Milan has been attracting since the beginning of the year capitals for two billion euro, 63% of which in the office segment.

The situation in Rome is rather complicated. The office market has slowed down with a total surface of 28 thousand euro, corresponding to 118,500 Sq m. As the Ipi report reads, “Concerning dimensions, 58% of the transactions concerned spaces below 500 Sq m. Only two transactions, both on the outskirts of the city, were for properties bigger than 3,000 Sq m”.

Prime rents have slightly increased from the previous quarter in CBDs (central business districts), Eur and the city centre.

The investment volume in Rome amounts to 215 million and has significantly decreased for the office segment.

In Turin, offices rents have plummeted. In the city centre, prime rents are set around 200 euro/Sq m. The market has stabilised after a dynamic phase. The office market is cautious due to the weakness and uncertainty of the political and economic situation which reflects on the real estate market.

The vacancy rate has slightly increased, although not homogenously throughout the city. Investments have tripled compared to the previous period with a focus on retail.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi