Investments in the office sector in Italy reached €2.5 bn in H1 2022, with 39 transactions (+189% year-on-year), or 40% of the total real estate market, according to JLL.
Despite rising rents and diminishing yields, take-up increased by 30% in Milan and Rome.
Milan continues to lead in investment volumes with €1.3 bn (54% of the total) and 24 deals, while the occupier market saw 148 deals and a total take-up of 252,000 m2 (+39% y/y).
The demand for office space was concentrated in areas of less than 500 m2 (41% of transactions), on buildings with a high level of quality, particularly Grade A (74%), and on central areas (38%).
In Rome, eight transactions worth €740 mln were completed, while area take up grew 18% to 82,500 m2 from 79 transactions.
Luca Vaj, head of office Capital Markets at JLL Italia, said: ‘The macroeconomic and geopolitical context is pushing investors towards a more prudent approach in terms of pricing and investment strategies. However, from a medium- to long-term perspective, the growing presence in Italy of institutional owners with an international matrix and greater flexibility to market adjustments, seems to give greater comfort to holding volumes also in the future.’
Eros Chiodoni, head of office Agency Leasing at JLL, added: ‘On the occupier side, tenants are expected to pay more and more attention to the sustainability of rents and to the ESG performance of properties. From an absorption point of view, we had an excellent result in the first half of the year for Milan, which achieved a higher take-up than in the same period of 2019. The historic centre and the Porta Nuova CBD are confirmed as the areas of greatest interest, with rising rents.’
Massimo Livi, head of transactional business, Rome, commented: ‘Even Rome showed a positive figure in the first half of the year, with higher expectations for the second part of the year. Demand in the capital is mainly for the centre, in the face of a shortage of supply, while in the Eur area it is directed towards Grade A properties, which represent the majority of the absorbed area.’
Net prime yields in Q2 2022 were stable in both Milan (3.05%) and Rome (3.50%) compared to the previous quarter, but down on Q2 2021, while prime rents grew to €650/m2 in Milan and €520/m2 in Rome.
