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Investment activity in Italy increases

by Andrea Waitrovich

Investment volume in the Italian property markets was €1.8 billion ($1.99 billion) during the first quarter of 2017, up by 9 percent, compared with the same period of 2016, according to Colliers International. For the third year in a row, investment activity recorded a good start to the year.

The best results were observed in the logistic sector, with €145 million ($161 million) of transactions, a 382 percent increase, followed by the hotels with €170 million ($188 million), an 89 percent increase, and offices with €905 million ($1 billion), a 14 percent increase. Office remains the preferred asset class by investors, of which €462 million ($512 million) were invested in Milan and €128 million ($142 million) in Rome.

The occupational market continued to be active during the first quarter 2017, particularly in Milan, which recorded the highest level of take up ever registered in the first quarter of a year in the last decade, according to Cushman & Wakefield.

Milan maintained its leadership in the country, favored by the higher quality of stock, the perception of lower risk and greater number of opportunities that meet investors’ requirements. Interest in the Rome market remains high as well. Core investment assets are the most attractive for investors; however, due to limited availability of quality products, there is an increasing demand for value-added opportunities in core locations.

Occupiers confirm their orientation toward high-quality and iconic properties. CBD and Periphery have been the most active submarkets, registering the largest transactions of the quarter, with the IT/communication sector playing a significant role. In today’s market, the pipeline is improving; however, due to the current lack of class A availability, a number of assets are being pre-leased before being officially on the market. In Rome, occupational figures were in line with the previous year, although the market continues to be characterized by small-size transactions, especially in the Centre and CBD areas. Quality is a driver for demand and there has been a marginal increase in class A green take up. Pipeline remains tied to landlords securing a tenant before beginning construction.

Cushman & Wakefield expects the office sector to continue to drive investments throughout the year, with the distance between prime and secondary yields increasing further. Core investors are the main players and opportunistic investors will continue to look at the Italian market with interest.

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