Coima: Italy attracting more foreign institutional capital
The Italian market is seen as attractive by international institutional investors as risk perceptions have reduced and the real estate risk premium has stabilised, Coima said in its quarterly market update.
“I’ve been on the road in the last few months talking to investors who are interested in Europe and they rate Italy highly”, said Manfredi Catella, Chief Executive, Coima. “The stars are aligning: we expect capital inflows to accelerate significantly this year and liquidity to improve.”
Two factors make Italy particularly attractive, according to Coima: one is market timing, as real estate prices have come down 20-30% but they have now reached the bottom. The second is the scarcity of good quality stock across asset classes, which is “a crucial derisking element”.
In Q1 this year investment activity has been strong, with total volumes up 130% at €2.8 billion.
There are opportunities in all asset classes, but residential is the most obvious as Italy has the highest supply/demand imbalance in Europe.
“Over the last 15 years households grew by 2.1 million but only 1.1 million resi units were built”, Catella said. “The institutional BTR market is virtually non-existent in Italy, so that’s definitely a growth area.”
Italy also has the lowest provision of student housing in Europe, with PBSA available for less than 5% of current students while numbers continue to increase, especially from abroad as Italian universities offer more courses in English.
The Italian office market is also undersupplied: 90% of Milan office stock is more than 20 years old, while over 70% of demand is for Grade A assets. Vacancy rates for grade A office stock are 3.5% in Milan and 1.6% in Rome, while rents in Milan’s CBD are up 29% on 2019, pre-Covid levels.
“The leasing market is very strong, but focused on high quality, ESG-compliant assets”, said Gabriele Bonfiglioli, Chief Investment Officer, Coima. “Tenants are competing for the best assets, and this is driving rents up.”
Coima also unveiled its 2024 annual results, which coincide with the 50th anniversary of the company. Consolidated operating revenues at Coima Holding level are expected to be €72.3 million (+14% y/y), while stabilised AUM are €13.2 billion.
Catella also signalled that Coima is now looking to move into real estate opportunities outside of Italy for the first time.
“To date COIMA has focused entirely on Italy, in particular Milan, which accounts for around 60% of our assets under management, but also increasingly Rome”, Catella said. “Over the next three years, Italy will of course continue to be our primary focus as we bring forward our urban regeneration programmes and brown-to-green strategies. However, we are now also for the first time actively looking beyond Italy and are developing two new pan-European strategies.”
The new pan-European strategies will not be specific to a single asset class but will include a focus on forestation and the brown-to-green transition in major European cities. More details will be outlined later this year.
