Outlook 2024: Italy to attract more investments in 2024

Italian assets will have more of a presence in international investors’ portfolios this year, delegates heard at Real Asset Media’s European Outlook 2024 – Focus on Italy briefing, which took place in Milan last week and was hosted by CMS.

“Investment volumes almost halved to €6.2 billion in 2023, but there was a rebound in activity towards the end of the year”, said Simone Roberti, Head of Research Italy, Colliers. “Q4 alone accounted for €2.7 billion, compared to €1 billion in Q1”.

Milan and surrounding areas continue to be a magnet for investments, accounting for €2.9 billion, twice the amount that Rome, the capital, and other central regions managed to attract.

“Milan has international standing among Eurozone investors, the perception is that it’s an interesting market”, said Roberti. “It’s not just the economic and business capital of Italy but it’s also a city that can offer modern, high-quality offices, while Rome has the problem of having to convert period buildings, which are often listed”.

Only 38% of investments in the real estate sector in Milan have been done by Italian capital, with 62% done by foreign investors, mostly from the EU and the UK (26%) and the US (20%). In Rome domestic capital accounts for nearly half of all transactions (47%), European and UK investors account for 29% and US presence is negligible (2%).

Rome, however, has the upper hand when it comes to the hospitality sector. International tourists have flocked back to Italy after the pandemic and investors have followed suit. Most of the foreign investment in hotels has focused on the capital, which last year attracted €500 million.

Among asset classes logistics is continuing its winning streak. “Investment volumes have reduced but demand is strong and take-up actually increased by 2% last year”, said Roberti. “Industrial & Logistics was number one in 2023 and is still seen as the most promising sector by investors, helped by the fact that it’s become more affordable”.

The residential sector is regarded as the most interesting in Europe, but Italy lags behind. “There is a lot of talk about what needs to be done but not many projects being realised”, said Roberti. Build to rent is still in its infancy.

Student housing is the exception, as strong demand and lack of supply have convinced investors, both domestic and foreign, to deliver new projects and try to narrow the gap.

Looking ahead, prospects for the Italian market seem brighter in 2024. According to INREV, Italy is number 6 in Europe’s top ten preferred destinations and has shot up this year, going well above the 5-year average after a lacklustre 2023.

“There is definitely a growing interest in Italian assets, especially in the logistics sector”, said Roberti. “Italy will have more of a presence in international investors’ portfolios”.