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Real estate investments are discouraged by uncertainty and scarce quality offer

25 January, Il Sole 24 Ore

Italy is going through a positive phase concerning real estate, although investments have considerably reduced from 2017. This is a summary of 2018 as it was presented at the 26th edition of the forum organised by Scenari Immobiliari which will take place in Santa Margherita Ligure on 14th and 15th September.

As the memo reads, “The uncertainties over the fiscal and employment policies have deterred the market. This slowdown is also due to the lack of quality product on the residential (where the offer dropped by 10%) and the non-residential market, especially in big cities”.

Despite the investments in the first semester – nearly 2 billion euro, two-thirds of which on the office and commercial segments – are almost the half of those registered last year for the same period, the international investors still have a positive sentiment towards Italy. The Italian institutional investors (funds, insurance companies) carried out investments for little over than one billion (-48.2% per year). “Investors are not escaping from Italy, at least not for the moment. It’s rather a natural reduction after an extraordinary year such as 2017, also due to the lack of quality product”.

One of the emerging trends is the growing interest in Rome, especially prime properties to turn into hotels. “Certainly, international investors, especially non-European ones, have become more cautious due to the increased political risk”.

Prices for office properties continued dropping in the first semester of 2018, having decreased by 0.5% from the end of 2017. The outlook is negative also for the end of the year, forecasting a 0.3% reduction from 2017. Rents have also decreased, with the only exception of business districts.

The commercial segment recorded better results, with shops and high-street as the main drivers with growing prices. In the first semester of 2018, prices for small distribution reported positive results for the first time since 2007, with a 0.2% growth over the second quarter of 2017. The trend is meant to consolidate and to further grow by 0.5% by the end of the year.

The first semester registered 290 thousand residential transactions, reporting an 11.5% increase from the first semester of 2017 when they were 260 thousand. The outlook is for an additional growth throughout the rest of the year, reaching 600 thousand transactions, namely 8.9% more than 2017. We must remind, however, that these transactions generally concerned the existing stock.

The consistent reduction of prices has encouraged transactions. Prices further decreased by 0.2% compared to the first semester of the previous year, resulting in a positive outlook for the transaction trend for the end of the year. Milan is still the leading market in Italy in terms of prices and transactions, while Rome is recovering.

The sales outlook for 2018 is positive and estimated at 125 billion euro, 5.3% more than the previous year. Forecasts are positive for all the market segments, after nearly ten years.

Scenari Immobiliari president Mario Breglia commented: “The trend of the real estate market is becoming increasingly similar to the financial one. The general political uncertainty, especially for what concerns the taxation and real estate issues that continue to not being addressed, has slowed down the purchases by investors and families. It would be helpful to give a clear signal about what the economic policy for real estate would be, as the sector represents one-fifth of the domestic GDP”.

The 26th edition of the Scenari Immobiliari forum is titled “Change the world”, and it focuses on the current climate, political and economic global changes. During the event, Cdp will be awarded Excellence 2018 “for its role and commitment in promoting the territory and the attention on the sustainability and the ethics of its projects”.

The need to re-establish a balance between human activity and the planet means re-inventing the spaces where people live, work and produce. The impact of buildings constitutes 35% of the emissions and 40% of the energetic consumption in the EU. The decisions concerning urban planning coming from the EU, the technologic innovations in the actual and virtual world, and the new lifestyles have resulted in a new impulse of construction with the inevitable consequences on the real estate market.

As Scenari Immobiliari General Director Francesca Zirnstein explained: “The contents of this year’s edition offer a global outlook on the new challenges represented by energetic sustainability, going through the urban planning strategies related to smart cities, and finally single buildings. The Observatory aims at evaluating the consequences of the recent innovations in real estate in regards to energy efficiency, the reduction of the environmental impact and the improved comfort and safety of interiors”.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi


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