Coima: investments in Italian real estate market up 50% in H1

Recovery is continuing in the Italian real estate market: investments in H1 2024 have increased by 50% compared to H1 last year, Coima said yesterday in their quarterly market update, as demand continues to outstrip supply.

“Market timing is favourable and the repricing of real estate assets has started,” said Gabriele Bonfiglioli, chief investment officer, Coima. “Investments have picked up in the first six months of 2024 at €3.4 billion, but they are still 20% below the average of the last five years. We expect volumes to reach €7 billion by the end of the year, a far cry from 2022’s figure of €11 billion.”

International investors continue to dominate the market, accounting for 66% of transactions in H1.  

The residential sector is continuing to show strong market fundamentals, especially in Milan where values in the city centre have increased by 50% since 2018, while rents have gone up by 60% in the last ten years. The BTR sector is still underdeveloped and accounts for less than 5% of the resi rental stock in Milan, compared to an average of 27% in Europe run by professional landlords.

The Italian government has recognised that there is a structural gap in the student housing sector and has approved a decree to create 60,000 beds by mid-2026, allocating €1.2 billion to the scheme. At present there are less than 70,000 PBSA beds in Italy – less than 5% of the 2.1 million students in the country.

Coima is doing its bit, as the Olympic village it is developing for the 2026 Winter Games in Milan will be converted into the largest student housing scheme in Italy, with 1,700 beds.

Another sector that is ripe for expansion is hospitality, given the increase in tourist numbers above pre-pandemic levels. Last year Rome attracted 31 million visitors and Milan 12 million, and the 5-star hotel segment has done particularly well. Institutional capital is attracted by the sector, and investments have increased by 45% in H1 this year.

“With record tourist arrivals, the market is offering a favourable context for consolidation or expansion”, said Manfredi Catella, Coima founder and CEO. “The Italian hospitality sector is still characterised by the low penetration of the big hotel chains, at 5% compared to a EU average of 18%.”

The office and logistics sectors are seeing a similar trend: both have seen a slight reduction in take-up this year, but the supply/demand imbalance is continuing to drive rental growth and vacancy rates are low.

“There’s an increasing polarisation between high quality buildings in prime locations and the rest of the market,” said Bonfiglioli. “New office leases are for Grade A, ESG-compliant assets. As for logistics, the Italian market remains attractive because assets are trading at a discount compared to other European countries.”