Deals: In the first quarter of 2024, 1.9 billion was invested in real estate in Italy (+98% compared to the first quarter of 2023).

In the first quarter of 2024, the volume of investments in real estate in Italy amounted to approximately 1.9 billion euros, which is nearly a twofold increase (+98%) compared to the same period in 2023. This confirms the trend of gradual market stabilization that began in the second half of the previous year, according to data from analysts at Dils.

Key growth factors

The main factors contributing to this result were the completion of two major deals inMilan andRome, which continue to be key investment hubs, accounting for more than two-thirds of all investments in the country during the reporting period. The alternative real estate sector and mixed-use properties emerged as the largest contributors, raising around 600 million euros. The highlight was the acquisition of the former Scalo Farini area inMilan, which will become the site of one of the largest urban regeneration projects in the next ten years.

Investments in the education sector

There is also a growing interest in investments in the education sector, which amounted to nearly 50 million euros in the first quarter. Investments in office real estate continued the positive trend from the end of 2023, totaling around 530 million euros. One of the most significant deals was the acquisition of a "trophy asset" on Via Vittorio Veneto in the Central Business District ofRome, marking the largest transaction for a single asset in the Roman office real estate market.

This deal once again highlights the attractiveness of the Roman market, which is drawing increasing interest from international investors. Stable performance in the prime sectorprime net yieldThe levels of 4.0% inMilan and 4.5% inRome demonstrate stability this quarter. InMilan, the absorption of office space amounted to about 100,000 square meters, which is in line with the results of the same period last year. High activity in the rental market is confirmed by a significant number of transactions, especially in the medium and small space segments.

Rental rates

The average rental rate still stands at 700 euros per square meter per year, and it is expected to rise due to the limited supply of Class A/A+ spaces, alongside stable demand for such properties. Rentals inRome reached 34,000 square meters, matching historical figures for the first quarter, although it is lower than the record set in the first quarter of 2023. The high potential of the Roman market is somewhat constrained by a lack of quality properties, as evidenced by the concentration of most transactions in Class B assets.

Investments in logistics

In the logistics sector, investment volumes amounted to around 300 million euros, showing a 15% increase compared to the same period last year. This sector, which has seen growing interest, especially in light industry, remains active throughout the year, during which a number of sales transactions with subsequent leases were concluded.sale & leasebackThus, after six consecutive increases, the primary yield levelprime net yieldIt has now stabilized at 5.5%.

In terms of absorption in the logistics market, 540,000 square meters have been registered, which is 16% less than in the first quarter of 2023. Lombardy continues to be the most sought-after region, accounting for about a third of the total volume. InRome, rental rates have increased to 66 euros per square meter per year, while rates in other major cities remain close to their peak - 67 euros per square meter inMilan and Bologna.

Hotel industry

The hotel industry sector is also showing positive results, with investments totaling 240 million euros, which is 90% higher than in the first quarter of 2023. This asset category continues to attract significant investment across the country, with particular attention given to the Northwest and Southern regions, which account for about 40% of the total transaction volume.

Residential real estate

The residential real estate sector continues to show growing interest from investors, having raised nearly 140 million euros in the first quarter, with over 80% directed towardsMilan, which remains a key market.

Most transactions in this segment fall into the categoryvalue-addThis refers to the repositioning of ineffective commercial properties into residential real estate, which can continue to generate value in the context of urban regeneration. In 2023, the Italian market recorded nearly 710,000 transactions, which is 9.5% lower compared to 2022, but still above the average annual figures before the pandemic (around 535,000 transactions from 2015 to 2019).

General statistics

The total value of transactions is estimated to be just below 100 billion euros, withMilan andRome increasing their market shares, each accounting for about 9 billion euros. In the fourth quarter, the residential real estate market inMilan showed some slowdown, closing with a figure of -2.2% compared to the same quarter in 2022. Despite this, there was a 13% decrease over the year, reflecting reduced activity in the first half of 2023. At the same time, the market did not show significant price fluctuations, and new construction continues to maintain strong demand, which continues to exceed supply, although the time to complete transactions has slightly increased.

The size of deals and the market inRome

In terms of average deal sizes, most transactions involve smaller apartments, with over 60% of all sales consisting of apartments under 85 square meters, which is significantly different from the national averages. At the same time, theRome market is showing a slowdown in the recovery of transaction volumes. In the fourth quarter, a decline of -11% was recorded compared to the same period in 2022, and the overall annual trend was -14%. Prices remain relatively stable after a slight decrease in the first half of the year.

Interest in large apartments

Interest in large apartments is growing; they are becoming more in demand and less susceptible to a decrease in transaction volumes. In the retail sector, investment volumes amounted to about 80 million euros in the first quarter of 2024, which is less than in the successful fourth quarter of 2023, but 90% more compared to the first quarter of 2023. The retail sector continues to grow, especially in the out-of-town segments and supermarkets, as evidenced by transactions that include end-user elements or...sale & leaseback.

Street trading sector

The street trading sector is also showing activity, with a promising lineup of major deals set to be completed in the coming quarters. Notably, Kering's decision to acquire a landmark property on Via Montenapoleone inMilan stands out. After significant growth in the fourth quarter of 2023, when numerous deals were recorded, the first quarter of 2024 continues to show a trend towards gradual stabilization. Positive dynamics in attracted capital have been observed mainly within a series of medium and large-sized deals, while the overall number of recorded transactions indicates a continued decline in investor activity in anticipation of a new, less stringent monetary policy.

Dils' forecasts

In the future, Dils predicts that the market will depend on the recovery of already established asset classes, such as offices, logistics, and retail, which will be able to contribute positively to the revival of investment activity. There is also an expectation of increased interest in new asset classes, such as education and infrastructure, as well as the continued resilience of the residential real estate market.