If the current positive trend in residential real estate sales (which comprise a massive slice of the Italian real estate market) continues throughout 2017, this will make it four straight years of growth (beginning in 2014). “General tendencies remain positive,” explains Nomisma general manager Luca Dondi, “and the residential market, which rose in 2016, is expected to grow to more than 550,000 sales in 2017—a 7% increase over last year. Our 2016 year-end estimates have shown that sales have increased by 57,000 transactions (+16.3% more than 2015)”.
During the last 8+ years of the real estate crisis, Italian real estate property values have dropped significantly. Average prices have fallen by 30%, with suburban and less-appealing locations suffering the worst (down 50%). Over the course of the last two years, interest in real estate purchases has been rekindled, which has led to more transactions and mortgage applications. “Now we have entered a new phase, but growth remains delicate due to a series of external factors,” claims Dondi.
According to preliminary data from the CBRE group, 2016's non-residential investments currently total €8.9 billion, 9% more than 2015's total. However, overall volume for the fourth quarter is 107% greater than the previous quarter, and 18% more than the last three months of 2015.
The office segment has performed the best over the course of the year, with €3.5 billion in investments, followed by retail with €2.48 billion.
On a European level, over the next few months elections will be held in Germany and France, and possibly in Italy as well. These elections have the potential to affect the market's stability. However, many investors remain optimistic about the outlook in the Italian real estate sector.
More than three years ago, when American giants Blackstone trailblazed the return of large international investments to Italy, numerous deals were launched with foreign counterparts. “We have a fund that invests in Italy, which is still a potentially-attractive country for our strategy, but it depends on single assets,” states Tony Smedley, head of Continental European investment for Schroders, “We're investing in cities with growth potential. Thus, we are looking carefully at demographic changes and infrastructure developments. At the moment, we are concentrating on Milan and Rome”.
Schroders, which manages €6 billion in assets throughout continental Europe, is looking at all sectors: from retail to offices to logistics, what matters is potential. “We have the most defensive medium-term retail investments,” states Smedley. And many investors are also looking at hotels.
“2016 was a record year,” claims vice president of JLL Italy and foremost luxury hotel segment expert Roberto Galano, “which ended with a total of €1.1 billion in investments”.
Many transactions have taken place over the last quarter. In particular, Intesa Sanpaolo's sale of €500 million in assets to Poste Vita, Generali, and Banca IMI; Hines's €220 million purchase of a property in Piazza Edison in Milan; and expiring real estate fund portfolios, which were sold at a heavy discount. In 2017, final terms will likely be defined for the sales of the opportunistic portfolio of CDP and Prelios's Cloe fund, which Ardian is close to signing.
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