The Real Estate Market in Italy Records Investments for Approximately 1 Billion Euros in Q1 2023
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Loading... - Grant Berger
- 27 Apr 2023
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Fundamentals are solid despite the still uncertain macroeconomic context. green transition and urban regeneration are the drivers of the future.
The volume of real estate investments in Italy in the first quarter of 2023 amounted to approximately 1 billion euros. Compared to previous quarters, the result highlights a lower activity across all asset classes as a consequence of the changes in the international capital market, mainly due to the rise in interest rates which took place in the last twelve months. However, the performance beats the estimates made at the beginning of the year.
In Q1 2023, the Logistics sector is back to being the leading asset class, attracting 258 million euros corresponding to 27% of quarterly total investment volume, however down by 17% compared to the previous quarter.
Take-up volume of logistics spaces amounted to 626,000 sqm in the first quarter of 2023, showing a slight contraction (-12%) on the same quarter of 2022, still in a context of always limited vacancy. The growing trend of prime rents continued in the main markets: the highest rental levels are reached in Rome and Milan, where they stand at €63/sqm/year, but increases are registered in Bologna (€60/sqm/year), Piacenza (€54/sqm/year) and Torino (€50/sqm/year) as well.
With investments for 195 million euros, Living is proving to be one of the most sought-after asset classes by investors as well as the only asset class to show a growing trend compared to the previous quarter (+45%), with Milan leading the market in terms of invested volumes (83%).
Results from the residential sales market are once again positive: in 2022 the national volume of NTN touches 784,500 – hence the best year ever - with an increase of 4.8% on 2021 and +30% on 2019. Milan registers another record, thanks to over 28,500 NTN (+6.2% on 2021 and +32% on 2019) representing the highest value ever recorded. Also in the Rome market growth continues, as 2022 ends with over 40,000 transactions (+3.2% on 2021 and +22% on 2019), a value that had never been seen in the last decade and that approaches the pre-2008 levels.
In the first quarter of 2023, investments in the Office sector showed a contraction, with invested volumes equal to approximately 114 million euros, against absorption data in line with the previous quarters. A growing number of investors, especially foreign investors, adopted a wait-and-see attitude. This is due to the combined effects of the increase in the prime net yield (equal to 3.75% in Q1 2023), and consequent mismatch between supply and demand, in addition to the exhaustion of an important pipeline of core deals in the previous months. The outlook for the next two quarters expects growth in terms of investment volumes, with the rise in interest rates mitigated by the inflationary effect on rents.
Take-up recorded on the Milan office market in the considered period almost reached 100,000 sqm: a result that, although showing a slight contraction - mainly due to the smaller average surface area of the operations - is positive compared to the number of registered leases, indicating the vitality of the market. A figure to underline during the quarter concerns the Rome market, where the absorption of office spaces equaled that of Milan, marking a 69% growth compared to the previous year also thanks to a large-scale operation in the EUR district. For both markets, the strong preference of tenants for A/A+ grade spaces was confirmed, which represent 75% and 80% of the absorbed volume respectively in Milan and Rome. The prime rents of the two markets remained constant during the first quarter of 2023, standing at €700/sqm/year in Milan and €540/sqm/year in Rome. Read More…
