Real Estate News | Dils: In the first quarter of 2024, investments in real estate in Italy will amount to 1.9 billion | MonitorImmobiliare

According to an analysis conducted by the Dils analytical department, the volume of real estate investments in Italy in the first quarter of 2024 amounted to approximately 1.9 billion euros, representing a twofold increase (+98%) compared to the same period in 2023. This confirms the ongoing trend of market stabilization that began in the second half of last year. The main contributions to this result came from two significant deals inMilan andRome, which once again emerged as the primary centers for attracting investments, collectively accounting for more than two-thirds of all capital investments in Italy for the quarter. The alternative investment sector and mixed-use components in new projects make up the most significant portion of the investment volume for the first quarter of 2024, totaling nearly 600 million euros. The largest contribution was the commissioning of the former Scalo Farini site in Milan, which will become the foundation for one of the largest urban renewal projects ever implemented in Italy over the next ten years.

There is also a growing interest in investments in the education sector, where the investment volume reached nearly 50 million euros in the first quarter. The office real estate sector continues its positive trend as we close out 2023, recording investments of around 530 million euros in the first quarter of 2024. Notably, there was the sale of a landmark asset on Via Vittorio Veneto in the central business district ofRome, which is the largest single-asset deal in the capital's office sector. This transaction highlights the increasing interest in the Roman market, particularly from international investors.

As for the initial net revenues, they remained stable:4.0%inMilan and4.5%InRome. In the first quarter of 2024, Milan recorded an absorption volume in the office market of about100,000square meters, which corresponds to the same period of the previous year. The liveliness of the rental market is confirmed by the high activity of transactions, especially in segments with small and medium-sized spaces. Initial rental rates are700€ per square meter per year, and further growth is expected, driven by a decrease in the supply of high-quality A/A+ spaces, while the demand for such properties continues to rise. InRome, the absorption volume reached34,000square meters, balancing at the level of the historical average for the first quarter, although it has decreased compared to the record figures of the first quarter of 2023.

The potential of the Roman market is being constrained by a lack of high-quality properties, as evidenced by the concentration of most transactions in the B segment. Following recent increases, primary rental rates remain at a level580euros per square meter per year. In the first quarter of 2024, the volume of investments in the logistics sector amounted to approximately300millions of euros, which is15%more compared to the same period in 2023. This sector, in particular, is supported by the light industry segment, which already attracted potential investments last year, and in the first quarter, in particular, is recording two major deals for the sale and subsequent lease of assets.

Despite six consecutive increases, primary net income remains stable at the level of5.5%In the acquisition segment, a volume of about540,000square meters, which is16%less than in the first quarter of 2023. The most in-demand market remainsLombardy...covering about a third of total absorption.

After demonstrating resilience in the second half of 2023, the hospitality sector is once again showing positive results in the first quarter of 2024 with investments amounting to240millions of euros and a height of more than90%compared to the first quarter of 2023. This asset class remains the most common in terms of the geographical distribution of investments, although there is a significant concentration of transactions in the first quarter both in the Northwest and in the South of the country (approximately in both regions).40%each).

The housing sector continues to gain popularity among investors, with volumes reaching nearly140millions of euros in the first quarter. Of these, more than80%Concentrated inMilan, which remains the leading market for this sector. However, there is noted caution among developers due to the increasing level of uncertainty related to administrative procedures, the consequences of which may affect plans for new projects, primarily in residential construction, leading to a restriction in the supply of new housing in cities in the medium term.

Most transactions in this segment fall into the categoryvalue-addand involve the repositioning of unprofitable third-party assets that, however, have the potential to create value, especially in the context of urban redevelopment. As for the buying and selling market, in Italy, nearly at the end of 2023, it was recorded710,000deals that on9.5%less compared to 2022, despite the fact that this figure is still significantly higher than the average level of the years preceding the pandemic (approximately535,000transactions, normalized from 2015 to 2019). The total value of the transactions is estimated to be slightly below100 billioneuro, whileMilan andRome are increasing their market shares with results around9 billionEach euro. In the fourth quarter, the residential real estate market inMilan shows a slowdown in the decline, stabilizing at a level-2.2%compared to the fourth quarter of 2022, although the annual result amounted to-13%Due to the slowed activity in the first half of 2023, no significant price changes are being recorded, indicating a dynamic demand for new properties that continues to exceed the available supply, although the time to close deals is increasing.

As for the average area of residential properties, this segment is dominated by a share of smaller sizes: more60%All sales in the cities concern properties with an area of up to85Square meters is a figure significantly different from the average values across the country. Compared to other major Italian markets, Rome is slowing down the stabilization of transaction volumes: in the fourth quarter, a decline is observed.11%compared to the same period in 2023, the overall annual dynamics amounted to-14%Prices remain virtually unchanged after a slight decrease in the first half of the year. There is a growing interest in larger properties, which are gaining market share and are less susceptible to a decline in transaction volumes.

The retail sector attracted about80millions of euros in investments in the first quarter of 2024, which is a decrease compared to the positive fourth quarter of 2023, although it is better than in the first quarter of last year (+90%The activity in segments outside the city and supermarkets continues to grow, which has been observed for several quarters. Often, these involve transactions where operators are directly engaged in end user or sale and leaseback formats, indicating a strategic reassessment of their real estate portfolios. SectorHigh streetIt also demonstrates significant dynamism and an important sales funnel, with deals expected to close in the coming quarters. In this context, it is worth noting the outstanding deal involving Kering's acquisition of a property on Via Montenapoleone inMilan for...1.3billion euros.

After a sharp increase in the fourth quarter of 2023, characterized by a high number of transactions and investment volumes comparable to the average values of the last five years, the first quarter of 2024 continues to show signs of gradual stabilization. The positive dynamics in terms of investments are largely associated with a small number of medium and large-sized deals, while the overall number of registered transactions indicates a continuing phase of low activity from investors, who are awaiting the anticipated less stringent monetary policy, which has already been partially predicted by the markets with the cessation of rising financing costs. In the coming quarters, the market is expected to rely on the recovery of more resilient asset classes, such as offices, logistics, and retail, which can contribute positively to the recovery of investments, including through the updating of their formats, promoting greater integration and mixing of spaces. There is also a focus on the continued growth of new asset classes, such as education and infrastructure, as well as the resilience of the housing sector.