The first quarter of 2024 closed with a total investment volume in the Italian commercial real estate market reaching €1.35 billion. This represents a significant 27% increase compared to the same period in the previous year, according to data from CBRE. This recovery is a reflection of the improving signs observed over recent months, despite the impact of a slowdown in new transactions which began with the initial interest rate hikes in the latter half of 2022.
The gradual return of Eurozone inflation towards target levels is boosting confidence in future, more accommodating monetary policies, helping to narrow the gap between the market and investors’ price expectations. Although the market has continued to see price adjustments downward, the outlook for real estate returns at the end of the first quarter is predominantly stable, except in markets with a more pronounced slowdown in demand.
Silvia Gandellini, Head of Capital Markets and Head of A&T High Street at CBRE Italy, states, “The first quarter of 2024 confirmed investor interest in strategically valuable investment opportunities with long-term prospects. Concrete signs of recovery are emerging, thanks to purchase agreements signed during the first quarter, which demonstrate a lively investment activity for the coming months, pending encouraging signs from more favorable credit access conditions. This recovery will also be supported by strong performances across all market sectors, including office, logistics, residential, hotel, and retail.”
The Hotel market was the second main investment target in the first quarter of 2024, totaling €330 million, thanks to transactions in prestigious vacation destinations and art cities. Confidence among investors and operators in the sector remains very high, with a progressive normalization of the hospitality industry’s performance expected in the coming months compared to the extraordinary price increases per room seen in recent years.
Investment volumes in the Alternative segment remained limited during the first quarter of 2024, partly due to an adjustment phase in the sector of assisted living facilities (ALFs), traditionally the most significant component of healthcare investments. Investor interest remains high due to the sector’s fundamentals, but increased operational costs of healthcare facilities and a recovery in occupancy rates still partial compared to pre-COVID results have often required renegotiation of rental agreements, delaying the introduction of new products to the market. Volumes of investment also remained contained for infrastructure and data centers, with significant platform transactions expected throughout the year, while the market continues to be characterized by land acquisition operations by operators for the development of their centers.
Dynamism in the high street segment remains limited due to a lack of meeting between demand and supply, yet in the coming months, the investment operation at Via Monte Napoleone 8 in Milan, which has attracted great interest among investors both for the size of the investment and for its capital value, is expected to be finalized.
In regional markets, investment volumes continue to be driven by the specific vocations of the territories, such as the hotel sector in Florence, logistics in Veneto, and student residences in Bologna. However, there is growing interest in office-use properties in major provincial capitals, where a limited supply of quality products intensifies the demand pressure from occupiers.
