Italy: H1 investment volumes rocket to €5.1 billion in best ever recorded first half, says BNP Paribas Real Estate

The transactions activity comprised more than 60 deals which contributed to a tally of €5.1 billion for H1 2019, the best first-half ever recorded, according to BNP Paribas Real Estate.

Approximately four-fifths (80%) of all transaction were by international investors, as confidence increases within the international investment community for Italy’s sustainable economic recovery. In particular, French and US investors deployed more than €1bn each in Q2.

Hotel investment dominated in Q2 2019 with the transactional activity of more than €1.8 billion across more than 20 deals, reflecting more than 50% of the total volumes for the quarter. Over the entire first half, €1.7 billion was invested in the office sector, an increase of more than 45% on H1 2018, according to BNP Paribas Real Estate data, including €670m in Q2 for transactions exclusively located in Milan.

Around €600m of retail assets were traded in Q2, up 25% compared to Q2 2018. However, over the entire H1, retail investment volumes are down 40% compared to H1 2018. In the logistics sector, more than €170 million was traded in Q2 and €310 million in H1, reflecting a far more embryonic ecommerce market.

A tale of two cities

In Q2, around €1 billion of investments in Milan were recorded, a result that contributed to around €2 billion the total in the city since the beginning of the year. While the office sector dominated the transaction volumes recorded, a significant late flurry of deals in high street retail were also noteworthy, according to BNP Paribas Real Estate.

Investment activity in Rome over Q2 was around €600 million, and around €1 billion for H1. Yields in Rome offices were stable at 4% for the third consecutive quarter, as they were in shopping centres at 5.5%, which high street yields moved out by 10 bps to 3.1%. In logistics, yields in Rome were also unchanged – for a fifth consecutive quarter – at 5.25%.

Cristiana Zanzottera, head of the research at BNP Paribas Real Estate Italy, explains:

The Italian commercial real estate market is interesting for international investors that maintain a good allocation of liquidity on our country. The high number of [hotel deals] express the will to invest in our country, in an asset classes different from the traditional sectors [which helps to] expand the potential size of the market and [increase] liquidity in commercial real estate.”

james.wallace@realassetmedia.com