Real estate news | Dils, Italian market: €3.6 billion investment in 9M 2023 (Report) | Real Estate Monitor

The volume of real estate investment in Italy in the third quarter of 2023

The volume of real estate investment in Italy in the third quarter of 2023 was around €1.5 billion, up 27% from the previous quarter but still lower than the same period last year. According to an analysis by the Dils research team, the figure has reached €3.6 billion since the beginning of the year, slightly more than a third of the volume recorded at the same time in 2022.

Investing in commercial real estate

Investment in commercial real estate continues to be low, in line with other major European markets, but third-quarter results point to''euro, making it the fourth preferred active class among investors, in anticipation of the return of large deals in the Milan and Rome markets, expected in the fourth quarter for over 500 million euro. Expectations for the sector are also supported by developments in the rental market. The Milan tenant market is again showing its dynamism thanks to the results of the third quarter, in which approximately 110,000 square meters of space were occupied, confirming the levels achieved in the first two quarters (total volume at the end of 2023 will exceed 400,000 square meters). Vacancy levels remain extremely low in the most prestigious subdivisions, leading to an increase in occupied space in areas with a higher supply''goods. Grade A/A+ real estate transactions account for over 75% of the market, reflecting tenants' preference for high quality space with performance and sustainability certifications.

Housing market

The Residential sector, which attracted investments of 223 million euros in the third quarter, of which more than 80% are concentrated in Milan, and totaling around 541 million in the first nine months of the year, despite a decrease compared to the figures for 2022, continues to increase its share in the Italian investment market, confirming investors' interest in the sector. Regarding the residential real estate buying and selling market in Italy, around 184,000 transactions were concluded in the second quarter of 2023, 16% less than in the same quarter of 2022.

The hospitality and retail market

In the third quarter of 2023, there is a recovery in investment in the hospitality sector''farms compared to the first two quarters of the year. Around €215 million was raised during the quarter and since the beginning of the year this figure is approaching €490 million, including the completion of a portfolio deal worth over €100 million. The Retail sector, in contrast, attracted investments of around €86 million during the quarter, and since the beginning of the year this figure is around €244 million, continuing the trend whereby investors look primarily at supermarkets and out-of-town sites.

Sector Alternative

It is the Alternative sector, however, that is giving a boost to the overall investment volume, with investments totaling 428 million euros in the third quarter and more than 800 million euros since the''YTD, of which 560 million is concentrated in the healthcare segment, ranking second among investors' preferred active classes for the first time, also thanks to the completion of an important pan-European deal in the third quarter.

The overall performance of the real estate investment market

In general, during the first nine months of the year, investors sought opportunities in non-standard active classes, seeking higher returns, which contributed to their strength in the Italian market. The third quarter showed a cross-sectional polarization of the market between large deals (the three main deals accounting for almost 40% of the total investment in the quarter) and mid- to small-sized deals, which are attracting attention mainly''local investors and developers. According to the Dils research team, the third quarter of 2023 is characterized by an increase in investment volumes, but does not reverse the slowing trend of the real estate sector in Italy and Europe.

Future prospects

Despite the continuing situation of uncertainty at the macro level, the short-term outlook regarding the stabilization of interest rates after 12 months of increases allows us to look at the next year as a period of greater stability in the investment market. The moderately positive view is mainly related to the medium-long term outlook, in which real estate as one of the most interconnected sectors with the real needs of the country should try to anticipate''its future needs, which can be defined, for example, by some of the main items of public spending: education - creating new campuses that complement the outdated public offer; health - solutions for the population in the context of aging, but also more attentive to wellbeing; digital infrastructure - enabling greater network access at the national level, which will also be an activating factor for a revolution in ecology, social development and governance. All this, according to the Dils research team, can be achieved by, on the one hand, introducing new hybrid formats for the more classic active classes such as offices and retail, and on the other hand, supporting''Investors in the study of less institutional active classes, which has already been seen in the first nine months of this year.

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