Investment volumes in Italy reached €5 bn in the first six months of 2017, 43% higher than the year-earlier period which saw just €3.5 bn of deals, Colliers Italy has revealed.
According to the research, the first three months of the year - when €3.1 bn of investment was recorded - marked the highest first quarter in a decade. The €3 bn threshold was exceeded just three times in the past, in the fourth quarter of 2006, 2015 and 2016.
Milan remained investors' preferred location with over €1 bn of deals, while the north of the country reached €2 bn overall. Investment volumes in Central Italy reached less than €1 bn as Rome, in spite of seeing growth over the years 2014-2015, attracted only 15% of the total volume.
Foreign capital accounted for 74% of the total deal flow, of which €1.2 bn was represented by disposals.
Following the start of yield compression in 2014, net initial prime yields remained stable in the second quarter of 2017, but Colliers noted that the spread between an office building in Milan and the 10-year Italian treasury bonds now stands at 129 basis points, keeping interest in real estate high.
Office supremacy
Almost half of all deals concerned offices, with €2.4 bn or 48% concentrating on the sector. Milan (43%) and Rome (30%) took the lion's share of deals, but the number in smaller cities (27%) has risen. Core offices remained the preferred asset type, with foreign investors accounting for around 75% of transactions, slightly above the Italian average for total investment (all assets).
Retail investments represented 24% of all deals, reaching €1.2 bn, which was about twice the amount compared to the same period of last year. According to the Colliers data, the three main types of buyers in this segment include core investors focused on shopping centres and prime high street assets, opportunistic investors looking to reposition the assets they buy, and value-add investors who tackle more complex real estate conversions. Some 80% of all retail deals were executed by foreign investors.
10% of all deals were in hotels, in line with the last few years, while logistics investments were down on 2016.
