Inflation and real estate: a forecast for 2024

In Italy, in the first nine months of 2023, investments in capital markets amounting to 3.5 billion euros were recorded, still lower than in the same period of 2022. However, the third quarter of 2023, with an investment volume of 1.5 billion euros and a change of +53% compared to the previous quarter, shows a positive trend compared to previous quarters. This follows the most recent report from the Gabetti Research Directorate, which predicts a slight improvement already from 2024.

The effects of inflation on real estate investments

As expected, the decline in investment recorded in these first nine months of 2023 continues to reflect the uncertain macroeconomic environment in''world. This is due to inflation, which in Italy, although it has started to stabilize around 2%, is still around 5%, and interest rates are still dependent on the ECB's monetary policy. This situation is likely to characterize investor indecision and uncertainty throughout 2023.

But macroeconomic forecasts suggest that things will become much more favorable for corporate investment from as early as 2024, with expected inflation around 3.5%, European monetary policy that will stop raising interest rates, and a projected GDP of around 1.2%.

"Stabilizing economic conditions are key to a successful corporate market recovery, which will allow investors to gain more confidenceto investments in our country," said Claudio Santuucci, Director of Capital Markets at Gabetti Agency in Italy. - Investors, mostly foreign, in these first three quarters of the year have focused on value-added transactions and have confirmed a strong interest in our country. This shows that the gap between supply and demand for quality real estate is still significant, especially in the hotel and office segment.".

The best real estate investments

Logistics and housing

Among the various asset classes, logistics gained 970 million euros in investments in the first nine months, representing 28% of the total, and has thus become the preferred asset class for investors. In this sector, more than 80% of operations''concentrated in northern Italy, where new building projects with LEED or BREEAM certification are underway. The residential sector follows with 585 million euros, representing 17% of total investment.

Offices inMilan andRome

The office sector is in third place, having gained 540 million euros over the three quarters, representing 15% of the total. Operations are mainly concentrated in the main markets of Milan and Rome.

Hotel business

The hotel sector (520 million euros) is followed by the healthcare sector (430 million euros, 12% of total investment), which covers hospitals, clinics and treatment facilities and is predominantly concentrated in the Piedmont region in terms of the number of transactions.

Retail and alternative sectors

The retail sector, with 300 million euros, accounted for 9% of total investment in the first nine months, with an emphasis on shopping streets in the main cities, while secondary cities are dominated by shopping center transactions and the retail segment. The mixed-use sector (60 million euros) accounted for 2% of the total, while''Alternative sectors, including land and network facilities, accounted for 3% of the total with 100 million euros.

Regional real estate investment

In the first nine months of 2023, the bulk of investments related to a specific geographical area were concentrated in northern Italy (63%), followed by the center (16%) and the south (3%). The remaining 18% is made up of scattered investments across the country.

In terms of capital origin, foreign investors (57%) were the most active participants in the market. They were mainly American, French and British and focused mainly on logistics, housing and offices. Italian capital accounts for 37%, while 6% failed to identify their''origin.