In Q2 2016 the retail investment volume totals € 175 million, below levels for the previous quarter, as a result of long negotiating times.
The trend in investments continues to grow with respect to the first half of last year. With € 700 million invested in H1 2016, this is an increase of about 20% on the same period of the previous year.
The pipeline of deals under negotiation remains strong, with at least € 2 billion on the market. The outlook is uncertain, however, as a result of a general deterioration in investor sentiment in late June.
The sales trend observed in the CBRE sample of galleries in May sees the first significant slowdown after more than 24 months of continuous growth, as a result of a combination of adverse weather conditions and a slight deterioration in consumer confidence.
However, half-yearly sales data are positive and growth stands at between 1 and 2% on the same period of the previous year.
Development activity continues to improve with a significant completion during the quarter. The New stock estimate for 2016 still stands at 387,000 sq m of GLA, mainly comprising shopping centres.
Take-up in Q2 2016 totals 108,730 sqm, a 96% increase on the first quarter and of 94% compared to last year.
In the first half, the Milan office market shows some positive results with take-up growing by 28% on the same period in 2015 and up 24% in comparison with the average calculated over the previous 10 years.
A property’s quality, use of ‘smart working’ and research into the best locations are the elements guiding tenants’ choices in Q2 2016. These feature large lettings to primary tenants from the IT, industrial and finance sectors.
The most dynamic areas for development are still the CityLife district, where the cornerstone was layed of Libeskind Tower and Porta Nuova BD where a new skyscraper is to be developed, headquarters to a major insurance company, completing the city skyline.
Investments improve in the office sector in Q2 totalling € 683 million, as a result of the sale of major corporate HQs. The proportion of domestic capital grows in the quarter, to 30%.
Take-up in Q2 reaches a total of 36 units, an increase on the 23 units in the year’s first quarter. Take-up volume, on the other hand, stands at around 44,700 sqm, down from the previous quarter, influenced by a single, large lease.
The figure for the first half of the year is more than double that of the same period in 2015.
Quarterly take-up is driven by one transaction in the EUR district, involving a major Italian company with public participation and representing about 44% of the total.
With around 143,000 sqm under construction/refurbishment with delivery expected between 2016 and 2017, of which just 22% is speculative, the pipeline is down slightly from the previous quarter, reflecting two recorded completions: a refurbishment in the Parco de’ Medici area and a small new project in the city’s semi-centre.
Investments in Q2 fall, to € 25 million. Prime yields are stable at 4% net.
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.