The third quarter ends with the highest investment volume in the last two years
With transactions totaling approximately €6.4 billion, 2024 has already surpassed the result of the entire 2023
The largest single-asset deal in the history of the italian market has been finalised
According to the analysis by Dils Research Team, during the third quarter of 2024, the Italian market recorded the highest quarterly investment volume of the last two years, with a total of approximately €3 billion, double the result of the same quarter in 2023. Considering the first nine months of the year, around €6.4 billion has been invested so far: the YTD 2024 volume is therefore already higher than the entire 2023, which reached €6.2 billion.
The positive performance of Q3 appears to be mainly driven by the closing of the previously announced sale of a trophy asset with destination of use Retail and Office in Via Montenapoleone, Milan, which represented the largest single-asset transaction ever recorded in the Italian market (amounting to €1.3 billion). Following this operation, in terms of value, are two logistics portfolio transactions located in the markets of Milan, Rome, and Piacenza, which together exceed €400 million.
The Office sector remains a cornerstone of investors’ preferences, recording the best quarterly result of the last two years with around €670 million invested in Q3, contributing to a year-to-date total of over €1.5 billion, which is three times the amount recorded in the first nine months of 2023. The transactions finalised in Q3 were primarily focused on the Milan (three-quarters of the total volume) and Rome markets, mostly involving domestic capital. In both key markets, there were no changes in prime net yield, which remains at 4.0% in Milan and 4.5% in Rome.
During the third quarter, the occupier market in Milan recorded a take-up of approximately 100,000 sqm, an increase compared to the previous quarter (+18%) although not matching the same quarter in 2023 (-12%). A similar decline is also observed in the YTD total, amounting to 276,000 sqm. In Q3 2024, tenants’ strong interest in Grade A/A+ spaces, which meet the highest quality standards, was confirmed (80% of the total in Q3). As a result, prime rent reached €750/sqm/year during the second quarter, a figure confirmed in Q3. The market remains dynamic in terms of the number of transactions, which increased compared to the first nine months of 2023; however, a polarization persists across all submarkets, between medium-large Grade A/A+ spaces and smaller spaces, almost exclusively Grade B.
In the third quarter take-up in the Rome market reached 60,000 sqm, showing growth both compared to the previous quarter and Q3 2023, exceeding the five-year average for the same period by 67%. The year-to-date total, amounting to 128,000 sqm, is lower than the YTD 2023 figure (185,000 sqm), which had benefited from the finalisation of exceptionally large transactions. The chronic scarcity of high-quality stock continues to limit the market’s potential take-up, while also contributing to the rise in prime rent, which reached €600/sqm/year in Q3 2024, in line with previous forecasts.
The Logistics sector attracted an investment volume of approximately €640 million during Q3, showing significant growth compared to the previous two quarters and reaching a YTD total of over €1.1 billion, slightly higher than the same period in 2023. A major contribution to the quarterly volumes came from the sale of a portfolio worth over €300 million, acquired by an international core investor making its first transaction in the Italian market. The prime net yield remained stable during the third quarter, standing at 5.5%.
The logistics occupier market recorded a take-up of approximately 560,000 sqm in Q3, bringing the year-to-date total to around 1.7 million sqm, a decline compared to the same period in 2023 (-21%, an improvement from -25% in the first half). This reflects a period of adjustment for logistics space absorption, which, while not replicating the exceptional results of the past two years, confirms the new scale reached by the Italian market, now on track for its fifth consecutive year of over 2 million sqm in annual take-up. In terms of rents, there was an increase in prime rent in the Turin market, rising to €52/sqm/year, while the national prime rent remains stable at €67/sqm/year, observed in the Rome, Milan, and Bologna markets.
The Retail sector has emerged as the asset class that attracted the highest volume of investment in the first three quarters of 2023, with a total of nearly €1.6 billion, of which approximately €1.1 billion was invested in Q3 alone. As previously mentioned, the deal in Via Montenapoleone in Milan accounted for nearly all of the capital invested during Q3. Similarly, in previous quarters, other transactions exceeding €100 million each characterized the performance of the retail market. The vibrancy of the sector is also evidenced by other deals in both the high street and out-of-town segments, and the current pipeline of negotiations suggests an increase in activity for the sector in the coming quarters.
One of the most dynamic sectors in the Italian market continues to be Hospitality, which has attracted investments totaling over €1.2 billion since the beginning of the year (+150% compared to the same period in 2023), with around €440 million in the third quarter alone. Notably, Q3 recorded the two largest transactions of the year, involving a portfolio of premium properties located in Veneto and Tuscany, as well as a redevelopment in the heart of Rome’s historic centre aimed at opening a luxury five-star hotel by a prestigious international brand. This latter deal underscores the growing importance of the luxury sector in the capital, which has seen numerous new openings in recent quarters, with more to come in the near future.
During the third quarter of 2024, the Living sector showed increased activity compared to the previous quarter, reaching an investment volume of approximately €80 million (+35% compared to Q2). However, considering the capital invested in the first nine months, amounting to around €300 million, the sector still appears to be in contraction compared to 2023 (-47%), partly due to recent regulatory and legislative challenges that have particularly affected the Milan market. However, the significant pipeline of deals expected to close by the end of the year could contribute to increasing investments in the sector during Q4, which is currently characterised – especially for development operations – by a high degree of uncertainty.
In the Italian residential sales market, Q2 2024 (the latest quarterly data available) marks a reversal of trend with a 1.2% increase compared to the previous year, with 186,324 NTN (Normalized Transaction Numbers). Milan continues to show a contraction, with a decrease of 7.3% compared to Q2 2023, but the gap has narrowed compared to the previous quarter (-13.2%), confirming a gradual stabilisation. Small-sized properties remain the most in demand: over 65% of sales in the city involve properties smaller than 85 sqm, a figure significantly higher than the Italian average of 41%. The volume of new constructions sold remains stable at 12.6%, more than double the national average of 6.4%.
Rome is one of the three major cities with a positive performance. The capital records an annual growth of 3.4%, improving from the -6.9% in the previous quarter. Medium-large properties over 85 sqm, which account for nearly 50% of the total volume, drive the increase with an 8.4% rise compared to Q2 2023. The share of new homes, while lower than in Milan, is above the national average at 8.7%.
The Alternatives sector continues to represent an important solution for investment diversification and its connection to broader economic trends. During Q3, investments of nearly €100 million were recorded, primarily due to transactions in the Education and Telco sectors. Including Mixed-use assets, the total invested since the beginning of the year reaches approximately €740 million.
The past quarter confirmed a phase of increasing activity in the real estate investment sector, which benefited on the one hand from the improved financial environment, starting with the interest rate cuts by central banks that eased credit restrictions, and on the other hand, from the greater effectiveness of the repricing process, which allowed yields to stabilize and the return of core and core-plus investors, particularly in the logistics sector.
Institutional investors are thus reaffirming their confidence in the Italian market, preparing for a new wave of investments in line with national challenges such as the energy and digital transition. There is growing interest in increasingly strategic sectors, such as Logistics, Alternatives (including Data Centers and Infrastructure), and Living.