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Rome has regained trust. Real estate investments for 800 million
16 March, Il Sole 24 Ore
Let’s forget for a moment the neglected city of the last few months. Rome, in fact, has started enjoying the same success that Milan is enjoying. On a reduced scale, of course, but the numbers show a sharp improvement.
The international investors that want to have or to keep a presence in Italy are inevitably looking for an alternative to Milan, where the offer is getting scarce and competition harsher.
However, the market trend in Rome is at least two years behind Milan, but in 2017 the city saw investments for over 800 million and a boom in the demand for leasing retail and office spaces.
According to JLL, the investments in Rome in the past year amounted to 825 million euro, while the investments in the last three months have been 84 million. In addition, the rental market has grown by 110% compared to the same period of 2016.
According to Cushman & Wakefield, the market is becoming more dynamic, thanks to the presence of international investors. “At a first glance, the Rome market appears not very dynamic – says Carlo Vanini from Cushman & Wakefield -, but last year the office segment registered a take-up of 220-230 thousand Sq m, more than the average take-up of the last 10 years, 135-140 thousand Sq m”. On an office stock amounting to 12,141,700 Sq m.
The investments are still far from the 3.6 billion reported by Milan, even though also for Rome 80% of the capitals come from abroad. A positive message for the city, which needs a more effective strategy and image. The first one investing in Rome have been Blackstone, with investments in Via del Corso, along with Kingstreet that has spent 100 million to acquire two buildings to open the first hotel with the brand W, then the French Amundi that acquired last year the complex I Tolentini from Bnl for 200 million as well as other deals.
Whereas in 2016, Morgan Stanley acquired the portfolio Great Beauty from Unicredit. Bmo Real Estate has recently acquired retail spaces in Via Condotti, leased to Lvmh, following the acquisition of Coin Excelsior. Cerberus has bought a part of the Tecla portfolio. The Italian asset management companies are also active. Investire has just put on the market the portfolio Project News worth 150 million with properties located in Via del Quirinale and other central locations.
Many companies are moving to Rome. Starting from Ibm, whose new headquarters are under construction in the Fiera area, and Confcommercio that has bought a building in Piazza dei Navigatori, together with Abbott that has left Aprilia to move to Rome and Engineering that has moved to Eur.
“2017 has been a great year – says Fabio Mantegazza, head of lettings & sales department for Bnp Paribas Real Estate – of the 217 thousand Sq m of transactions concerning offices, 43 thousand are leased to Eni in Europarco, 22 thousand are occupied by Engineering. These deals have also impacted rents for prime properties. Rents are increasing everywhere, except for the suburbs”.
In the Rome central business district, prices have gone from 400 to 420 euro/Sq m, from 380 to 400 euro/Sq m in the centre. According to JLL, the interest in the sector has caused a reduction of net returns in the Cbd (for 4.35% to 4.20%) and in the centre/semi-centre (from 5.15% to 5%).
The dimensions of the properties have also decreased, from 1,000 Sq m to 700-800 Sq m, but the number of transactions is increasing. Companies are moving aiming at efficiency. “The impact of class A properties in Rome is very low – continues Mantagazza – But there are plans for restructuring works. Rome is an interesting alternative to Milan, where the product is scarce”. There are about 780 thousand Sq m of vacant spaces, 50% concentrated in the suburbs.
According to Cbre, the city centre and Eur are the most dynamic areas with a weight equal to 77% of the total value. The pipeline for development project has slightly increased with about 165 thousand Sq m concerning construction and requalification works. In the meanwhile, the investors, aware of the difficulty of funding prime properties, are looking at value-added opportunities.
Source: Il Sole 24 Ore
Translator: Cristina Ambrosi