Italian investors set to beef up real estate allocations

Italian institutional investors are expected to increase their allocations to real estate from 6.9% to 7.6% over the next three years, according to a survey by INREV, the association for the non-listed real estate sector. This will lift the overall value of the Italian real estate allocation from EUR 38.5 bn to EUR 49.5 bn.

At present direct investment, totalling approximately EUR 25 bn, is still the largest component of the real estate sector, but in future, roughly 50% of the total allocation to real estate is expected to be invested indirectly. This would see non-listed real estate funds increasing their assets under management by almost EUR 11 bn to EUR 24.7 bn.

Non-listed real estate funds currently have assets under management of EUR 10.1 bn, including non-listed real estate
funds and funds of funds. Other real estate, such as shares of listed property companies, infrastructure and
securitised debt represents just EUR 0.5 bn.

Insurance companies form the largest investor group in Italy, accounting for around 62.2% of the total. Private pension funds form the second largest category with 34.7% followed by banks with 2.4% and pre-existing pension funds with 0.8%.

Offices and retail form the key sectors of investment while hotels and health care represent just a small percentage of allocations. Domestic real estate accounts for the vast majority of assets under management: less than 1% of non-listed allocations are outside Italy.