Real Asset Insight #6 June 2020

Insight & Strategy – Italy
Milan/Rome investment volume
by sector Q1 2020
North West
€692m
North East
€46m
■ Office
■ Retail
■ Industrial &
logistics
■ Hospitality
■ Mixed
7%
4%
6% 1%5% 79%
MILAN
€414m
77%
Centre
€236m
■ Other
19%
2%
South & Islands
€38m
ROME
€152m
Source: Colliers International
Italy investment volume by region Q1 2020
In June the InterContinental Hotels Group
announced it was returning to Italy with a
new luxury property in Rome’s via Veneto,
which is set to open in 2022. IHG partnered
with Oaktree Capital Management, the US
group which has just taken an 82% stake
in Castello, a Milan-based real estate fund
manager.
Comensoli expects more announcements
by big hotel chains. The crisis is likely to
accelerate the ongoing consolidation of
what is still a fragmented market in Italy,
with 35,000 mainly family-run hotels with
an average of 40 rooms.
RESIDENTIAL & ALTERNATIVES
The importance of residential has been
highlighted by the lockdown, and the
pandemic has worsened the country’s
economic crisis and accelerated the
slowdown of the residential market.
Transactions fell by 15.5% in Q1, according
to Osservatorio Omi, and Q2 data are
expected to show a steeper decline.
As fewer people can afford to buy, the
rental market will grow and there could
be an opportunity for PRS investments.
However, Italian red tape and regulations,
which strongly favour the tenant over the
landlord, make the sector less attractive to
international investors.
Student housing has attracted a lot of
investment recently because of the huge
gap between demand and supply. Italy has
many prestigious universities but one of the
lowest levels of provision of purpose-built
student accommodation, according to data
from Bonard.
The asset class will suffer in the short term
because of the impact of the pandemic
on student mobility, but its prospects are
still bright. Demand will pick up again
because there is a shortage of purposebuilt,
professionally-run accommodation
and students have to fall back on the
private sector, which offers few guarantees
or transparency on contracts.
Dutch company The Student Hotel
continues to invest in its ‘urban campus’
concepts that encompass co-living and coworking,
and has completed new projects
in Bologna and Rome and soon in Turin.
The sector that has suffered the most
in recent months has been healthcare,
with care homes bearing the brunt of the
spread of Covid-19. However, medium-term
prospects are positive because of lack of
provision and of demographics – Italy has
the oldest population in Europe.
‘We’ll see institutions come in, specialist
investors joining up with local operators to
create much-needed professional, wellmanaged
product,’ says Roberti. ‘There will
be more sale and leaseback deals.’
The message from Italy seems to be that
2020 may well be a year to forget, but that
looking ahead prospects are bright. As
Roberti emphasises: ‘2021 will be a very
important year for Italy.’ l
Issue 2 July 2020 | Real Asset Insight 37