With a total of €8.3 billion in investments in the first semester of 2024, the Southern European regions together recorded a 5% increase in volumes compared to the same period last year. Italy, Spain, and Portugal displayed varied market dynamics, however Hospitality emerged as the main sought after asset class in each market, followed by an increasingly attractive Retail sector and by Logistics and Living which continue to gain a strong interest but are constrained by a lack of supply in line with institutional standards and a gap between buyers and sellers’ expectations.
Italy Investment Market
The first half of 2024 confirms a moderate recovery in CRE investments , supported by the ECB’s 25 basis point rate cut in June. Investment volume in H1 reached 3.5€Bn, recording a 50% increase compared to the same period of 2023, which had been the lowest semester in the last 10 years. There is a trend towards diversifying investments across various asset classes, with Hospitality sector confirming its attractiveness and leading the market alongside the Office sector. Despite a quarter-on-quarter decrease, the Office sector reached above 800€Mn confirming the investors' selective interest towards this asset class, which keeps solid and positive occupier fundamentals. Strong interest in logistics and living sectors, however, in these markets, the supply of products that meet institutional investors' expectations remains limited, and the gap between buyer and seller expectations is still significant.
Sustainability and ESG criteria are becoming increasingly crucial in the real estate sector, with developers and investors integrating sustainable practices to stay competitive in the long term. However, risks related to rising inflation remain, which could slow down the ECB’s rate-cutting policy.
Continued interest in Alternatives assets and Value-add opportunities is expected to support investments in the second half of 2024 and into 2025.
