“ESG-related issues, innovation, digitization and technology, and people’s changing and evolving needs. These are the main trends to consider shortly in the real estate world.” This was said by Lia Turri, partner Pwc Italia, real estate leader, at the opening of the 15th edition of CvDay held on December 1, 2022, in Milan at the Allianz MiCo Convention Center, where the health and dynamics of real estate were questioned more than two years after the outbreak of the pandemic and after the recent increase in interest rates and inflation, the rising costs of materials and energy supplies.
But it is such moments of complexity that lead to thinking outside the box to seek innovative solutions.
Investment in Europe and Italy
According to annual data as of the end of September 2022, investment in Europe has been quite dynamic. “Germany, Uk and France are the top 3 countries in terms of volume, while Italy nonetheless earns the 7th place with a flow of investments still increased compared to the year before,” said Turri, who said she was always impressed by the volume of investments on Italy compared to those of Norway, the Netherlands, and Denmark, “also because,” she explained, “if we have to refer to the population of the different countries, it is clear that we could do much more.
Focus on Italy
Regarding the number of residential purchases and sales, based on data compiled by Nomisma, there was growth between 2020 and 2021, post-pandemic. However, forecasts for the coming years are not as optimistic as this year’s, and we are likely to see some reduction linked to the recessionary themes that are intensifying, the reduction in the disbursement of debt, and a higher cost of financing.
Asset class of interest for the future in the real estate world
In Italy, “directional continues to be one of the preferred assets, most likely because it is considered quite safe: in fact, 43 percent of investments were concentrated in this area, so even in times of uncertainty, people are looking for a haven,” commented Turri, who then went on to say that another attractive segment is logistics (27 percent). “This is where Italy lags behind other European countries in terms of e-commerce penetration, so it’s a sector that has come strongly into investors’ preferences,” he explained.
On the other hand, residential focused on only 8 percent of investments, followed by commercial with 6 percent, but the residential sector stands out as attractive because of its various facets. The confirmation comes from the Old Continent. In fact, in Europe, of the top 10 issues to be considered for the future, “5 relate to residential anyway,” said Turri, pointing out that these are social housing, retirement/assisted living, affordable housing, co-living, and private rented residential. “Then there is a new asset class that has come into prominence at the European level: the “new energy infrastructure,” which is that area that boasts all the new facilities related to renewable energy production or the infrastructure network for electric mobility. “As for logistics, while until last year, at the European level, it was at the top level in investors’ preferences, today we perceive a bit of a reduction (8th place), but at the Italian level instead, there are still opportunities,” pointed out the Pwc Italia partner, who then dwelt on the expansion of investment classes in the real estate sector over the past few years. Suffice it to say that the number of asset classes since 2004 has risen from 8 to 27: on the one hand, due to a greater actualization and definition of the classes themselves, and on the other hand, due to a widening of the boundaries of investments in real estate.
What cities are of most interest to investors in the European market?
“For the past three years, the top three places are contested between London, Berlin, and Paris with a peculiarity this year: while in the past the top 10 positions often saw other German cities, such as Frankfurt, Hamburg, Munich, this year these cities will not be so much on investors’ radar because of inflation expectations and Germany’s heavy dependence on Russian gas. So whereas before, Germany was seen as a haven and one in which to invest, today this connotation of Germany is challenged a bit,” Turri explained.
Where does Italy rank among the most attractive cities to invest in?
Milan has moved from 11th to 10th, while Rome is stable in the 21st position. As for Italy, Milan has a fundamentally upward trend from an investor interest point of view, with a peak in 2015-16 linked to the Expo effect. Every time there are significant events, new developments, or infrastructure interventions, such as the M4 or the Olympics, the city of Madonnina enters the crosshairs of investors’ preferences, as it has been since 2020,” illustrated Turri, who then analyzed Rome, saying that unfortunately, the capital of Italy remains very fixed on positions number 22-23-21 in the ranking, with a different market from Milan. For example, if Milan offices represent a fundamentally core investment, Rome’s market is almost perceived as opportunistic because the need for a large part is linked to the public sector.
Italy’s real estate sector: robust market
“Among the factors impacting the real estate buying and selling market are mainly the increase in interest rates by the ECB and the reduction in household purchasing power caused by high inflation. From our observatory on the Italian residential market, however,” said Daniele Pastore, general manager of Intesa Sanpaolo Casa, “we note how this one, in volumes and prices and strong in the positive performance of the last 12 months, does not appear to be affected by the macroeconomic context at the moment. Market developments are also influenced by other elements, such as, for example, the increased propensity of corporate investors to diversify and the renewed interest of families in housing, also driven by the housing needs induced by the pandemic. And this is why among our priorities as a qualified operator of the Italian real estate market, we will continue in 2023 to pay attention to the customer at all stages of buying and selling to contribute to sustainable urban development and to implement the most innovative revitalization solutions for the sector.”
