The sector has shown a promising rebound, with a significant uptick in activity compared to the previous year. The correction in the European real estate investment market, started in the second half of 2022, is coming to an end, which is mirrored in our local market dynamics as well.
Investment volumes have surged by 50%, reaching €3.5 billion in the first six months of the year. The real market (occupiers’) has been on a steady growth trajectory, bolstered by strong demand and escalating rental prices.
However, despite the gradual return of financing, investors face challenges in sourcing high-quality assets, with a noticeable scarcity across all segments and shifting capital distribution goals. Currently, there is heightened interest in diverse sectors such as Hospitality, Living, Healthcare, Student Housing, Data Centres, and Alternative assets, with the logistics sector maintaining its perennial appeal.
In the report we discuss the Italian real estate markets’ dynamics, supply and demand trends, rents and yields, and investments.
Key insights from our analysis:
- Industrial and Logistics: proving to be a robust market with high investment volumes, low vacancy rates and high demand, pushing rents up. The growing need for cloud services exponentially increases data centres need which is not matched by the existing supply: investors are eager to invest in this asset class.
- Hospitality: this is the most dynamic market and has continued its growth since 2023, returning well above pre-pandemic levels. Growing international demand favors the creation of new formats, from luxury to lifestyle, exclusive resorts, high-end hotels and open-air hospitality, designed for modern and local travellers.
- Retail is back! Investment volumes are growing again, shopping centres are back. But the market has changed. Transforming and rethinking existing schemes, leveraging several key trends that reflect changing consumer behaviors (such as technological advancements, and a growing emphasis on sustainability) are crucial to attract investors. Sales and footfall are slowly recovering.
- Caution in the office sector where value add and/or opportunistic strategies prevail, with investors looking for opportunities to reposition and/or repurpose secondary assets. Growing polarisation between prime and non-prime assets will drive up rental values in the coming months, in both Milan and Rome.
