Real Asset Insight #6 June 2020

‘The serious health emergency that has struck
Italy will strengthen real estate investment
activity from those with longer-term horizons.’
Mario Abbadessa, HInes Italy
Italy investment volumes 2013-2020 (€m)
15,000
12,000
9,000
6,000
3,000
0
2013
OFFICES
The office sector has been the main attraction for
foreign capital. In Q1 this year, offices accounted
for 77% of all investments in Milan and 79% in
Rome. The market is now on hold because of a
triple layer of uncertainty: over the outlook for the
epidemic, the economy and changing demand
for office space.
As more people work from home, at least some
of the time, companies’ requirements on size
and location may change but the focus will be
on modern, efficient, sustainable and flexible
offices. There is likely to be a recovery in the
office market at the beginning of 2021, but not for
second-tier, low-quality buildings.
‘We predict the market will change significantly,
with more value-add operations in the next few
months to create the flexible products needed for
tomorrow’s offices,’ says Roberti.
RETAIL & LOGISTICS
There was a 50% increase in investments in the
industrial and logistics sector in 2019 compared
to 2018. The crisis has highlighted the importance
of the sector to the economy and long-term
prospects are positive. It is no coincidence that
Amazon has opened seven distribution centres
in Italy this year, from Sicily in the south to Rovigo
and Parma in the north.
Q1 Q2 Q3 Q4 5-year average
2014
2015
2016
2017
2018
2019
2020
Source: Colliers International
The sector recorded a 16.5% fall in transactions in
Q1, according to figures from Osservatorio Omi,
and has since been hit further by the restrictive
measures put in place by the authorities.
However, it still accounted for 55% of all
commercial transactions in Italy.
E-commerce is set to become a strong driver for
the Italian logistics sector. Italy has been lagging
the rest of Europe, with only 38% of sales online,
compared to 79% in the UK. During lockdown,
however, Italians discovered the joys of internet
shopping and sales increased by 300%.
Many believe the change in consumer habits
witnessed during the pandemic will become
permanent and online shopping will rise steadily.
Supermarkets and convenience stores will
continue to do well, but shopping centres will
experience more difficulties.
HOSPITALITY
The hotel sector was the first to be hit by the
lockdown and the halt to international travel has
had a particularly hard impact on Italy, which
relies on tourism and had 429 million stays last
year. The forecast is for hotels to lose 40-45% of
revenues this year, with much of the remaining
profits generated by domestic travellers.
The timing of the recovery will depend on the reopening
of borders and the return of international
flights, but the expectation is that it will take time.
‘We will have to wait until 2022 to return to the
positive levels of 2019,’ says Marco Comensoli,
head of hotels & leisure Italy, at Colliers
International. ‘Foreign investors are looking at
Italy with great interest, including B-cities like
Bologna and Turin as well as the resorts, but they
are skipping this year and the next and targeting
development projects that will come on stream in
a couple of years.’
Many deals are already happening off-market,
and there will be substantial variations between
cities he adds: ‘Places like Venice, which rely
on international tourists, will be the hardest hit,
while Milan, which has a big business travel
component, will bounce back the quickest.’
36 Real Asset Insight | Issue 2 July 2020