The improvement in the retail investments volume continues in Q1, up 13% on the previous quarter and more than three times the volume for the same period the previous year.
Consumer confidence in March grew slightly compared with the previous month, remaining at levels which were higher than in 2011.
Development activity is improving and, although no significant completions were recorded in the first quarter of 2016, during the year estimates of new projects now under construction stand at approximately 331,000 sqm GLA.
Retailer demand continues to be strong and 2016 will be characterised by a significant number of new entries into the Italian market. New supply is creating spaces for new retailers to enter the market.
Rents grow for high street and prime shopping centre premises.
Almost 1.8 billion Euro were invested in Q1 2016, a decline of 6.7% on the same quarter of the previous year.
Quarterly volume confirms 36% more than the quarterly average for the past four years.
At approximately 1.3 bn Euro, foreign capital is still the major driver of Italian CRE investment volume in Q1 16.
European investors lead the quarterly foreign capital (51%), with German on the top of the list.
The office sector, with 46% of total quarterly volume, is still the investors’ preferred asset class while retail follows whit 32%, thus improving its market share compared to previous quarters; the mixed use properties sector (mainly non-core investments to be re-positioned) fell at 6% .
The beginning of 2016 has been marked by an increased cautiousness among investors compared to the end of 2015 but the interest in the Italian real estate is confirmed sound.
In Q1 2016 take-up reached 58,500 sq m, a 71% fall on the previous quarter and 19% below the same period last year.
The sluggish start to 2016 is a normal effect of the strong acceleration seen in the last quarter of the year. Indeed, potential demand for the coming months continues to be sustained, with active demand for at least 250,000 sq m to be satisfied by year end.
Development activity for 2016 is stable, with 76,000 sq m in the pipeline to be completed by year end. Of this 45% is speculative.
The low cost of capital continues to encourage the trend for tenants/owner-occupiers to buy office spaces, with three acquisitions during the quarter.
The volume of investments in the Milan office sector slowed during the first quarter of the year, reaching € 438 m, after the last quarter’s record level. Foreign investors are once again the most active in the market.
Take-up reached almost 72,000 sq m in Q1 2016, a strong increase (41%) on Q4 of the previous year and more than three times the volume for 2015. Such a dynamic start to the occupier market had not been seen since 2011.
A pre-let to an important telecommunications company in the EUR area accounted for around 70% of quarterly take-up.
Once again the most dynamic sector is IT and telecommunications, accounting for 75% of sqm rented.
Development activity increased slightly, with completion of almost 163,000 sq m under construction / refurbishment expected between 2016 and 2017. Only 23% related to speculative projects. Potential pipeline continued to be strong due to space rationalisation by the big corporates already present in the Roman market.
The Rome office investment market accelerated significantly - thanks also to those transactions which were started in 2015 but have only now been completed - for an investment volume of € 400 m, more than double the whole 2015 volume.
Take-up sharply increased (+22%) in Q1 16 compared to the previous quarter; this led the volume absorbed in Q1 2016 at approximately 333,500 sq m, four times higher than the volume recorded in the same period of 2014 and 2015.
Lombardy is still the most attractive region for logistics players, accounting almost 49% of total take-up volume; Emilia Romagna follows with 21%.
Logistics investment volume declined in the first quarter compared to the previous one, with an estimated volume of about € 30 m; investors’ interest continues to be strong but the lack of product is affecting the overall activity.
Speculative developments continue to be negligible and the activity is limited to the built to suit development.
Growing demand from retailers who are adapting their supply chain to the increasing multichannel distribution integration (e-commerce and physical store).