There is considerable unexploited potential in Italy’s less traditional sectors, such as hospitality logistics and life science parks, according to Giacomo Morri of the SDA Bocconi School of Management.
He said that although Italy is tourism-oriented, the hotel stock is not modern enough and old hotels that are not responding to the modern traveller’s needs need to be revamped and there is room for improvement at the management level as the penetration of international hospitality chains is low.
Similarly, e-commerce penetration in Italy is one of the lowest in Europe which means there is room for additional logistics demand. “At the same time, supply is quite limited and most of the property is relatively old,” Morri told Real Asset Insight’s Richard Betts.
And he said that he is “warm” on science parks and anything research related because such property is not affected by the ‘smart working’ effect. “You may work on an Excel spreadsheet from your home but it’s difficult to do chemistry experiments from your home. So you need these facilities to run that kind of businesses.”
When discussing Italian retail assets high streets and shopping centres should be considered separately, Morri said.
“High Street retail is working very well in major cities like Rome, Milan, Venice, Florence, where there is a quite high stream of tourism and huge demand for luxury brands.”
But while some shopping centres are doing well if they are in good locations, are the right size and have a good tenant mix between traditional shopping and entertainment, those without these features and developed a few years ago to old designs may not attract people anymore.
“People don’t go to shopping centres only to buy things. They often go there to spend time so those shopping centres not answering these kinds of needs are declining while vacancy rates and, of course, yield rates, are booming.”
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