COVID-19: The Italian Perspective

While the Covid-19 pandemic is quickly spreading all over the world, Cushman & Wakefield continues to be close to its Customers, by providing information and analysis concerning all that’s happening in real estate markets. Our European Newsletter devoted to this issue contains interesting thoughts about the Italian market we now want to delve into, through the voice of our experienced professionals in the field.

However, before letting them speak, here’s a few hints to guide you in reading. Let’s start with Raffaella Pinto that, in her note, “Resuming our growth, In a sustainable way”, after a recap of the present situation, offers some insights about what the main areas of interest for investors and users in the future of our sector could be. This because, once this emergency will be over, it’s highly likely that things will change, permanently. The nature of the economic measures that will follow will be critical for the process of laying the foundations for a restart, but we should also consider this forced stop to our operations an opportunity to reflect on the future direction of our sector.

All real estate sectors have been hit by the pandemic, in different ways and with a different degree of intensity. We want to highlight in particular the retail market, that was already experiencing great changes, and the hospitality sector, a sector that was growing greatly as a result of a record year for real estate investments in 2019.

In the note “Retailers and operators ready to change”, Thomas Casolo and Carmen Chieregato talk about retail, and in particular of how retailers are dealing with the temporary closure of their businesses and how dialogue with their Properties and the aid they are expecting from the Government are, at least in part, helping them to face this difficult moment. In the note “Retail investments: a road that is still winding”, Andrea Orsa and Eleonora Galloni observe that investors, after a promising beginning of the year, especially because of the investment opportunities in the bigger shopping malls, have suspended and/or ended their operations. The high street sector has slowed down, but operations on well-placed assets will continue.

Real estate investments in the hotel industry will slow down, after the excellent performance of 2019 but, despite this, Dario Leone tells us in “Investments on hold, opportunities to transform the hotel industry offer” that this moment can also represent, for the sector, an opportunity to speed up the market’s transformation on the offer’s side. Hotel operators are, indeed, still keeping a positive outlook on future developments, concerning new structures as well as those already existing, a sign that their “long term view” is still a positive one.

Facing the “Challenges and opportunities” in the logistics sector, Alessandro Mancini and Marzio Granata highlight how the logistics and industry sector, despite some slowdowns, displays a higher degree of resilience, with those sectors tied to activities that are of strategic importance to the State, such as the food industry and Data Centers, remaining especially strong. Long term perspectives are positive, also taking into account the return to Italy of a share of industrial production. The greater solidity of the “real” component of the sector has been confirmed by investment activities, as Carlo Walder tells us, that confirm how operations are still moving forward, notwithstanding the slowdowns caused by the “physical” issues caused by the pandemic. Some operators, in particular those involved in e-commerce, GDO and pharmaceuticals, are going to ask for more spaces, with new opportunities resulting from this, for investors and developers alike.

In 2019, the office sector, in Milan and Rome, closed the year with record volumes of absorption and a limited Degree A level of offer. We therefore think that those markets will be more resilient when facing this crisis, compared to the previous economic recessions. In the note “Smart-working will change the workplace”, Alessandro Serena and Cesare Lombardi underline how the office sector is also being thought over by operators: Corporates are asking themselves what will the economic impact on their businesses be and, as a result, what consequences will it have on occupied spaces. Properties are playing for time, waiting to understand how to answer to the request of new stimuli. We could be looking at an increase in availability in the medium term that, alongside demand, could slow down the leasing spree. On the investment front, in the note “Office investments: more caution” Sara Ravagnani tells how investors will be more careful than they were over the course of the previous months, but their interest will remain, whether as core subjects or opportunistic ones.

In “Workplace: what transformation?” Lamberto Agostini observes how a period of forced home-bound work is allowing us to overcome inertia and accept what has been, for a long time, a normal manner of working, at least for some. Today’s managers have noticed the advantages in productivity, health and well-being, while businesses will be able to experience higher savings margins on their expenses. In the future, offices will become, above all, places to meet, share and socialize.

Finally, Carlo Vanini comes full circle with more nuanced remarks in “A difficult year, but the fundamentals remain” where he demonstrates how the market is rapidly moving towards a new cycle in which the real estate sector will keep being favoured over other asset classes, with a premium on shares and treasury bonds. But it will be a different market.