Outlook 2024: Logistics success story set to continue in Italy

The Italian market needs more success stories like logistics, delegates heard at Real Asset Media’s European Outlook 2024 – Focus on Italy briefing, which took place in Milan last week and was hosted by CMS.

Jean-Luc Saporito, MD Italy, Panattoni

“In contrast to other countries, logistics demand is very strong in Italy,” said Jean-Luc Saporito, managing director Italy, Panattoni. “It’s partly because it came to the party late, both on e-commerce penetration and on developing modern warehouses, so there’s been an element of catching up as well as the re-shoring trend that together continue to attract investments.”

The sector’s growth has been rapid and investments have been driven by the prospect of rental growth as well as belief in its strong fundamentals. But other factors played a role as well.

“Logistics was the star in Italy in 2023 because of the repricing that has taken place,” said Sandro Campora, country manager Italy, CBRE Investment Management. “Usually Italy is a lot slower than other countries, but in this case the repricing happened quickly. The same should happen in other asset classes to get the market moving.”

There is a supply crunch ahead, as land is increasingly difficult to come by and permits increasingly difficult to obtain. At the same time, construction costs are coming down and demand is strong.

Sandro Campora, Country Manager Italy, CBRE IM

“I believe the repricing process isn’t finished yet in logistics,” said Saporito. “But the time to act is now: those who move and acquire land or assets will emerge as the winners. They will have a real competitive advantage in a year or a year and a half’s time.”

A combination of red tape, a cumbersome bureaucracy and growing opposition from local authorities and some environmental groups has slowed down developments of new logistics assets in strategic regions like Emilia-Romagna.

“Land is difficult to come by, but there are many tired and obsolete warehouses that can be upgraded and there is a great opportunity to make them ESG-compliant,” said Chiara Ambruzzi, deputy general manager, head of real estate finance Milan, Bayerische Landesbank.

Looking ahead, experts agree that logistics’ rags to riches story in Italy is set to continue as the tailwinds are far stronger than any headwinds.

“I am sure logistics will continue to attract investments,” said Sameer Godbole, investment director, Coima SGR. “If only other asset classes grew and expanded like logistics has, then Italy would attract more liquidity and more interest from investors, its market would grow beyond Milan and Rome and it would catch up with other European countries.”