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Real Estate

Italian value-add RE investment opportunities outweighing core investments

Real estate professionals at Europe GRI 2023 discuss the trends and outlooks for the Italian RE market at present

2 MIN READ November 24, 2023

Written by Helen Richards

The Italian real estate market is complex and can be challenging to enter, especially for foreign investors. However, discussions at the recent Europe GRI 2023 suggested that this may be changing. The market is maturing, secondary cities are on the rise, and opportunities are increasingly catching the eye of international investors.

At the event’s regional ‘Italy’s Market Adjustments’ panel, discussions involved this market complexity, as well as the opportunities arising at present in the Italian market.

Transaction Volume and Opportunities 

Transaction volume in the Italian real estate market is currently low and leverage opportunities are limited, which is particularly posing challenges for value-add investors. Despite this, the market holds substantial potential for asset repositioning. This potential is most evident in the hospitality sector, where the need for strategic investments is becoming increasingly apparent.

Value-add investments are gaining traction, and opportunities are outweighing those for core investments at present. This shift reflects a growing belief in the long-term value of properties that can be improved and tailored to meet evolving market demands.

Participants at the panel agreed that the residential rental market in Italy is also expected to pick up pace and become more attractive in the near future, presenting potential growth opportunities for investors.

Partnering with local entities or experts is strongly recommended for international investors. (Image: GRI Club)

International Investors and Navigating Market Complexity

Foreign investors play a significant role in the Italian real estate market, accounting for approximately 80% of investments. Foreign investors bring valuable expertise and a global perspective, however the importance of local partners was highlighted during discussions.

The Italian real estate market is complex and fragmented, with varying regulations and transaction processes across different cities. This diversity can make it challenging for investors and developers to navigate the market successfully.

Partnering with the right local entities or experts is strongly recommended, especially for international investors, in order to mitigate risks associated with the country's fragmented market and diverse regulatory landscape.

Opportunities in Secondary Cities

While primary cities like Milan, Rome, and Florence have traditionally been the focus of real estate investment in Italy, secondary cities are increasingly gaining attention. These secondary cities offer a faster, more accessible, and investor-friendly environment.

In particular, secondary cities are well-suited for pure residential and operational residential assets. The lower competition in these areas can provide investors with more opportunities for value-add projects and repositioning, aligning with the current trend in investment preferences.

Discussions on the Italian market will continue at the upcoming ‘Economic Series: Italy’ Club Meeting on December 13 in Milan. Read more and register here.
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