Real estate: investors in waiting. The results of Quo Vadis Italia? 2023 from Dla Piper.

The challenging market, subject to increasingly high inflation and geopolitical instability, puts investors in a position of expectation, but also realizing that elements of "disruption" are structural trends that require long-term strategies and vision. This was highlighted at the "Quo Vadis Italia?" real estate summit, organized by DLA Piper inMilan and now in its ninth edition. Among the participants of the summit were BNP Paribas Real Estate, CBRE, Colliers, Cushman & Wakefield, DILS, JLL, Savills, Urban Land Institute.

While real estate in Europe is experiencing significant volume declines across all different asset classes, industry professionals are facing a host of challenges that were addressed at the event: although the effects of the pandemic seem to be behind us, today''The main challenges are high interest rates and construction costs, ongoing uncertainty at the geopolitical level, social tensions related to migration flows, and rising inflation that is affecting consumers' purchasing power.

All''participants showed interest in investing in Italy next year, covering different asset classes: from logistics, the first segment to take a revaluation, to hospitality driven by tourist flows, from alternative housing such as student and senior housing, linked mainly to demographic trends, to new segments such as data centers.

Trends in the global real estate market

In the plenary session, Simon Durkin, head of research and analytics at BlackRock's real estate portfolio, presented the outlook for the global real estate market in the coming years. While it is impossible to predict with certainty what will happen in 2024, Durkin analyzed''s macroeconomic situation in the post-quota era to draw some important conclusions in anticipation of a market recovery soon.

Although the peak of inflation is behind us and the restrictive policy cycle of the monetary authorities is probably coming to an end, inflation will remain high in the long run. Raising interest rates by central banks to combat inflation takes a long time, but economies have shown their resilience and real estate should be able to continue to adapt to what have already become permanent changes.

Durkin also presented five major structural forces, as analyzed in BlackRock Investment Institute's Mid Year Outlook, that could potentially impact the global situation in 2024:''Demographic change, the transition to a low-carbon economy, geopolitical fragmentation, digital disruption and artificial intelligence, and the future of finance.

Segments

The discussion touched on specific market segments where disappointing figures were recorded in the first nine months of 2023: Italy, in fact, saw a 58% drop in investment compared to the same period of the previous year, amounting to 3.9 billion euros. The data is in line with the pan-European trend, where investment fell by 60% to 96.7 billion euros.

Investors, however, have detected encouraging trends in certain segments and identified potential investments that could drive''structures to which tenants are increasingly paying attention, as well as compliance with the European taxonomy;

The retail sector is seeing an increasing focus and space in Italy for the development of structures offering a shopping experience as a leisure destination;

Hospitality continues to be an attractive asset class in Italy after the post-Covida period, characterized also by a reorientation towards luxury offerings;

The main challenge facing logistics is to manage new technologies to standardize processes in a market that requires increasing customization and is subject to constant geopolitical instability. Logistics was the first asset class,''which has accepted the revaluation and therefore trading and development activities are resuming at higher yields.