Q1 2024 transaction volumes in Italian market up 98% on Q1 ’23

Activity is picking up in the Italian real estate market: transaction volumes in Q1 this year reached €1.9 billion, a 98% increase on Q1 2023, according to the latest research by property consultancy Dils, continuing the upward trajectory seen in the last months of last year.

Source: Dils

Milan and Rome continue to dominate , accounting for over two thirds of transactions in the January to March period 2024. The alternatives and mixed-use segments have seen the biggest inflows, attracting €600 million in investments in the Italian market.

Offices accounted for €530 million, confirming the strength of the sector. Prime net yields have been stable in both cities, at 4% in Milan and 4.5% in Rome. The occupier market remains healthy, with a take-up of 100,000 sq m in Milan and 34,000 sq m in Rome, which has attracted growing interest from international investors. The biggest single investment in Q1 was the sale of a trophy asset in via Veneto, in Rome’s CBD.

The Logistics sector attracted investments for €300 million, a 15% increase on the same period last year, largely due to two large sale & leaseback deals. Take-up, on the other hand, has declined by 16% to 540,000 sq m, a third of which was in Lombardy, the region around Milan which has long been the most sought-after by investors.

Unlike offices and logistics, investments in the hospitality sector are more evenly distributed across Italy. They reached €240 million in Q1 2024, a 90% increase on the same period of last year as tourist arrivals continue to increase.

The residential sector, on the other hand, has seen 80% of Q1’s €140 million investments focused on one city: Milan. Most transactions have been value-add deals to repurpose obsolete offices and other assets into residential accommodation as part of the urban regeneration plans underway in Italy’s economic and business capital.

The retail sector attracted €80 million in investments in Q1 this year, a 90% increase on the same period in 2023 but less than the Q4 2023 figure. Supermarkets and food retail dominate transactions, but high street retail is also on the rise and luxury continues to be a winning segment, as shown by the recent acquisition by Kering of a period building in via Montenapoleone in Milan from Blackstone for €1.3 billion.

Looking ahead, the Dils research team believes prospects for the market are positive as interest rates decline, with mature sectors like offices, logistics and retail leading the recovery. Fast-emerging asset classes like infrastructure, education and all living sectors should also attract more investments.