Italian real estate investment in a period of uncertainty

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What is happening in the Italian real estate investment market?

2022 has a turbulent start for investment in Italy. In the first three months of 2022, investments amounted to 3.4 billion euros, which is the best figure in the last 10 years, which averaged 1.5 billion euros over the same period.

The main factors of this rapid development of the Italian investment market are the increased demand for new generation office buildings (hybrid office buildings combining elements of hotel, residence, office, self-care and of course green ecology (hospitality living wellness) and further increased demand for logistics sector and residential real estate.

Where has the focus of investors shifted in 2022?

Investor focus is on office property, which became the first asset class with an investment of 1.3 billion euros, this is 4 times more than the volume registered in 2021. Investments in office builings in Italy amount to 39% of the total investment. There was involved mostly foreign capital (83%). The leading cities are Milan (63%) and Rome (15%). In both cities, the share of capital investments in the office segment prevails.

In Milan, the supply of office rentals increased by 30% compared to the first trimester of 2021 and reached 106.600 sq.m. In Rome, the amount of office real estate increased by 105% to 54,600 sq.m.

At the same time, developers in Italy prefer buildings with energy-saving systems according to the “green ecology”, the demand for new completed buildings of class A and A + exceeds supply.

Trends in Italian logistics real estate 2022

The logistics sector is also well performed with an investment of 671 million euros, a very high record in just one trimester of the year.

Logistics real estate is already a consolidated asset class, and the main international market players choose it. In Italy, 708,000 sq.m. area of ​​the logistics sector, which is 7% more than for the same period in 2021.

Increased demand and the international economic scenario confirm these strong figures for rentals as well, with the most active logistics markets in Lombardy (40%) and Emilia-Romagna (32%).

Italian residential real estate investments in 2022

In the residential sector, investments reached 526 million euros, which is 16% of the total investment, which is 10 times more than last year, and almost 70% of the total in 2021.

Milan again leads the way with 60% of all investment in residential real estate. Residential building projects comprise more than 7,600 units of free construction for rent, of which 80% are new housing build to rent.

Trends in Italian hotel market investments

The volume of investment in the Italian hospitality industry at the beginning of 2022 is also not far behind. The capital investment of 534 million euros is 16% more than last year’s result for the same period. The increased demand for hotels confirms that the difficult period of the pandemic has come to an end and investors are more confident about the future.

Geopolitical situation and real estate market in Italy

How does the current geopolitical situation affect the real estate market in Italy? Authoritative experts have revised their forecasts for a decline in the real estate sector, but economic growth has not stopped.

Of course, a climate of uncertainty and rising inflation cannot but affect consumer decision-making, but the removal of pandemic-related restrictions should support demand.

It is difficult to predict the extent of the impact of the current crisis on the Italian real estate sector due to the unstable geopolitical situation, but the demand from investors is expected to remain even stronger in the coming months, fueled by profitability and more competitive conditions relative to other European markets.

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