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Italy Real Estate Market View

Carlo Vanini • 20/10/2021
A regular update on the commercial real estate market in Italy.

Second half-year is not disappointing, the recovery is real and current economic data are better than expected with GDP forecasted at +6% by the year end. Fully vaccinated people surpassed 80% (on the total population over 12) and recent local political elections confirmed the weakening of the populist and anti-European parties. In a nutshell, factors that in the past slowed down the real estate market are now fading, being replaced by a renewed confidence in Italy driven by the strong reputation and credibility. 

A possible cloud in this relatively optimistic scenario is represented by fears of rising inflation and possible interest rates spike. Which is not yet considered a real threat by investors. Thus, how is this optimism spreading into the Italian real estate? Third quarterly volume invested increased 4% on the same period last year, standing at approximately €2.1 billion, +16% on the 2015-19 quarterly average. If the overall volume in the first nine months - circa €5 billion - is still in the range of 15% less compared to last year, pipeline is strong: at least 2 billion comprised in portfolio deals (the largest with Blackstone as a buyer) that could bring the year-end volume to circa €9 billion. 

Investors are still mainstream, targeting logistic, recording €1.7 billion year to date, above the yearly record level of the past two years and living, negatively affected by the difficulty in sourcing the product. Hospitality is on the rise again while retail is still lagging behind. 

The occupier market is recovering as well, with Corporate back on track looking for ‘a diverse’ space to meet hybrid requirements strengthened by the pandemic and consumer confidence is back, with people shopping physically and back to holidays thanks to the easing in travel restrictions. But a new guest is knocking at the door of the real estate industry: Sustainability. We were used to looking at sustainability through the lens of the buildings but now it is the finance industry that is challenged by it. Climate risk is a financial risk and must be factored when pricing the assets. We are witnessing a surge in green loans or sustainable related loans to finance real estate. These are loans with conditions tied to achieving specific sustainable development indicators that are in line with the ESG criteria. Future proof investments according to these sustainable factors will shape the future of the industry, far beyond the buildings.


09 September

‘The Summer is Magic’ was a pretty famous song from 1993 which comes on the radio every year during the summer holidays. But this year has been a particularly magic summer for Italy: triumph in the Eurovision Song Contest, Azzurri became European Football champions in July, Matteo Berrettini reached the Wimbledon final, 40 medals won in the Olympic games (record for Italy), 69 medals won in the Paralympic games (another record), European Volleyball champions and, for sure, I have forgotten something. In any case, as the Financial Times highlighted on 11 August, Italians beat expectations but “The biggest success - continues the article - is that the country now has a Government that works. In this instance, high expectations were met”. In this sense summer has been ‘magic’ also for other reasons:

  • The Italian economy scored a strong recovery during Q2 2021. Based on the last Quarterly National Accounts released at the end of August the national GDP, during the second quarter of 2021, increased by 2.7% to the previous quarter and by 17.3% in comparison with the second quarter of 2020 with the carryover annual GDP growth for 2021 equal to 4.7%.
  • The Tourism sector beat all the forecasts. Based on the research of CNA Turismo e Commercio, 23 million Italian tourists decided to spend their vacation in Italy (17 million in 2020 and 18 million in 2019). In addition, 6 million foreign tourists chose Italy as a travel destination (with an important decrease compared to the pre pandemic situation but, also in this case, above expectations). The prospect for the whole of 2021 is to reach the same levels of 2020, taking into consideration that the first 3 months of 2020 were almost ‘normal’.
  • The Vaccine campaign is proceeding at a good pace: circa 71% of the population received the first dose and circa 62% completing the cycle. The Government’s aim of vaccinating 80% of all Italians aged 12 or over by the end of September looks do-able. 
  • An Analysis of the pandemic numbers shows stability from the end of July, with circa 6,000 new cases per day and 50 deaths, substantially below the figures recorded in April, May and June but with a slight increase compared to the end of June and the beginning of July. In order to further reduce the number of cases the Government imposed, from 1 September, the use of the green pass (a certificate of vaccination) in restaurants, cinemas, trains and flights. 

Unfortunately, not only positive things are coming from the ‘Bel Paese’. Summer 2021 has been the hottest in the last two centuries in Italy, with a peak of 48.8 degrees in Sicily on 13 August, with a direct impact on the expansion of fires. A recent Coldiretti (the most important agricultural association) research based on the European Forest Fire Information System (EFFIS) data says that in Summer 2021 we had an increase of fires by 256% compared to the historical series of 2008 - 2020. At the beginning of August 2021, we have already reached the number of hectares burned (>150,000) in the entire of 2017 (a negative record year for the country) with an impact of over €1 billion of direct costs.

What are we expecting this Autumn? Schools are reopening in mid-September and the big discussion about mandatory green passes for teachers and students is the first test for Draghi’s Government together with the administrative elections in October which will test the coalition stability (in a Europe where France and Germany are facing uncertain elections).


03 August

It was an epic Sunday for Italy and for Italians everywhere.  

London has been the centre the nation’s attention with the first Italian, Matteo Berrettini, in the Wimbledon final match as well as the Euro 2020 Wembley final with the “Azzurri” against England.  

This came after the qualification (after 17 years) of the Italian basketball team at the Olympic games beating the favourite Serbia.  

Despite Berrettini’s final result (he lost against Novak Djokovic n.1 of the ranking), the Azzurri’s win can symbolize the end of one of the country’s worst periods.  

Italy was the first European country to go into total lockdown and more than 120,000 died during the pandemic.  

After the failure to qualify for the 2018 World Cup and these ‘dark’ 18 months, these successes feel like as “a sort of rebirth as was the victory of the 1982 World Cup after years of terrorism” as journalist Aldo Cazzullo said in an article published by Corriere Della Sera. 

The hug between Roberto Mancini, the Italian football manager, and Gianluca Vialli is the most emotional and unforgettable symbol of this success.  

It is a symbol because it represents the power of team work (Mancini and Vialli are friends and they played in the same football team during the 90’s) but also because, as Walter Veltroni (former Italian Prime Minister) said today, it is the sign of “the revolutionary beauty of happiness exploded in a July night in every home, every square of this beautiful country”.  

Happiness which was impossible to transform in hugs because of the pandemic.  

But what is the potential impact of this success on the Italian economy?  

After the 2006 world cup victory, the Italian GDP grew by 4.1% (at current values). 

Alessandro Terzulli, SACE Chief Economist, in an article published by the Sole24Ore states that “it is certain that the trust effect will be present in the short term and this will drive especially the made-in-Italy agrifood (…) not only in Italy but in all the countries where the made-in-Italy brand is appreciated”.  

In addition he says “the combined effect of the borders re-opening and the presence of tourists will boost internal consumptions”.  

Coldiretti (the most important agricultural association) is expecting a €12 billion direct impact on GDP with a potential +10% export increase, as it was in 2006.  

But as Alessandro Terzulli rightly says “the comparison with 2006 is not totally right because Germany in 2006 was the first export market for Italy and most part of the growth was thanks of the internal German consumption”.  

Probably English people will not feel quite the same positivity, but we are sure that this sporting success will contribute to create a positive environment for the future country recovery. 


18 June

Summer is knocking at the door. During the bank holiday (Festa della Repubblica 2 June) and the last weekend, temperatures were above 30 degrees in most parts of the country and perspective for the tourist sector is now positive. The success of the vaccine campaign (29 million Italians received the first dose and 14 million both doses) together with the reduced number of cases (in the last 2 weeks the weekly average number of cases moved from 2,268 to 1,726) is giving more confidence to tourists, who have started booking their vacation.  

At the end of last year, the summer reservations by Italian tourists were 44.7%; today they total 54.7%. Foreigners have also started to populate Italian summer destinations. In Venice the Biennale di Architettura and the Boat Show (6 June was the last day) marked the starting point of the recovery. The Venetian Hotel association stated that rooms “are currently 70-75% booked” considering that usually the best months for the city are September and October. Also, hotel occupancy rates along the Veneto coast are over 70% with some hotels already fully booked.  

In Florence, after 2 months of closure, the Uffizi Gallery registered 21,000 visits in the first 6 days of opening in May. Considering the entire month, the number of presences was over 100,000 with a 40% increase between the first to the fourth week of May. The results of a survey from Demoskopika* (on behalf of the Municipality of Siena and in collaboration with the Università di Sannio) estimates that 12.3 million tourists from abroad will reach the Bel Paese for vacations for 25 million nights (+15.3% compared to 2020). In total in Italy 39 million tourists are expected over the next 3 months, for a total of 166 million presences showing an 11.9% and 16.2% increase compared to 2020. These are all positive signals for a gradual recovery of the sector which will need a more structural plan for 2022 - 2023 in order to boost this restarting phase. 

02 June

The Bank of Italy’s Governor Ignazio Visco presented his concluding remarks on the publication of the Bank's Annual Report for 2020. In his speech he underlined how the COVID-19 pandemic had “an extremely severe impact at a human, social and economic level” with “global GDP down by 3.3% in 2020, the sharpest contraction since the Second World War”. On the other side, talking about  the future, Ignazio Visco is expecting a “robust recovery in the second half of the year” with a “GDP growth (….), according to the latest estimates, to exceed 4% on average in the two years 2021-22, after contracting by 6.6% in 2020”. He also underlined that “this scenario assumes further progress in vaccination campaigns and a decline in infections; it continues to depend on maintaining the interventions to support the economy” and in particular on the expansionary monetary policy and on the roll-out of the National Recovery and Resilience Plan (NRRP). With reference to the latter the “NRRP - Visco said - provides a strong stimulus to the digital and environmental transition of firms and general government and sets out a detailed programme of reforms to resolve some of Italy's structural weaknesses”. The NRRP is a formidable challenge but “it is vital that firms and households take it up with conviction and confidence: a future built on public subsidies and incentives is unthinkable” because “what is certain is that the stimulus, which is partly artificial, of today’s extraordinary and exceptional macroeconomic policies, will end”. At the end of his speech the Governor put attention on sustainable finance with a particular focus on ESG policies “Climate change - he said - is wide-ranging and poses risks to the economic and financial systems. The growing concern over these risks has intensified the interest in environmental, social and governance (ESG) factors within the financial sector. This has led to the rapid spread of sustainable finance, which takes into account such considerations in making investment decisions”. 

25 May

The Lazio region (together with other 4 regions) organised an AstraZeneca open weekend for people over 40 to book their first vaccine dose: it sold out in less than three hours. For Alessio d’Amato, healthcare councilor for the Regione Lazio “it has been an extraordinary success”. And now other regions are asking the Government Commissioner for unused doses. The aim of the open days is, precisely, to administer all doses of the AstraZeneca vaccine which have not been used due, mainly, to “the understandable but not justified, psychosis against this vaccine” as the President of the Sicily Region Nello Musumeci said. In Sicily for example, of the 473,000+ AstraZeneca doses available, only 288,000 have been administered.

Some regions started these open days in April: Basilicata organised a first open day the second week of April (for people between the ages of 60 and 79) as well as an ‘Astranight’ on 8 May for the first 750 people to sign up. With the help of these ‘special days’ the progress of the vaccine’s campaign is substantially in line with the Government forecasts: 

  • 28 Million doses have been administrated (46% of the population) 
  • 20 Million people received one dose (32% of the population) and 8 million received a second dose (15% of the population) 
  • In 7 days during the last fortnight the number of administrations surpassed 500,000 doses per day  

According to Premier Mario Draghi “the vaccination strategy has substantially improved the situation along with the respect of the rules, social distancing protocols and masks”. Over the last 7 days the number of new cases dropped to an average of 6,600 per day compared to 9,500 per day of the previous week. Number of deaths followed a similar trend, dropping to an average of 181 per day from 220 per day of the previous week. 


5 May

In his last speech to the lower house of Parliament Mario Draghi presented the €248 billion European Union funded Recovery Plan stating that “The National Plan of Recovery and Resilience (PNRR) makes investments possible that would have been impossible, unthinkable, until days ago (…) The whole plan is an investment for the future and for the new generations". The plan, he added, “will decide the fate and the credibility of the country”. The Recovery Plan’s financial support will be focused on three main objectives: 

  • Short term: the plan aims to ‘repair the economic and social damage’ caused by the pandemic. 
  • Medium - long term: the plan ‘wants to face some weaknesses that have plagued our economy and our society for decades’ with particular emphasis on the territorial gap (North / South), gender inequality, weak productivity growth, low investment in human and physical capital 
  • Across these two main objectives the plan wants ‘to boost a complete ecological transition’ 

40% of the financial resources will be dedicated to ‘green projects’, 27% to digital projects and 40% will address the historically under-performing southern part of the country with a strong attention to gender inclusion and support for young people. 

The plan is focused on investment projects and reforms with the latter considered ‘fundamental’ and instrumental to the implementation of the plan. Investments and reforms will be organized in 6 missions and the project of each mission aims to address three structural and horizontal nodes of the plans: 

  • South / North social - economic divide 
  • Gender inequality 
  • Generation gap 

The plan will have a strong impact on GDP, with a 3.6% increase compared to a base scenario without the plan implementation. A positive impact is expected on employment which will grow by 3.2% between 2024 and 2026. “The growth - Draghi said - could be speeded up if we are able to implement effective and focused reforms to improve the competitiveness of our economy”. The targets and the money allocated for each mission are: 

  • €50 billion to digitalisation, innovation, competitiveness and culture  
  • €70 billion to the ‘green revolution’ and ecological transition. In particular, it will be dedicated to sustainable agriculture, circular economy, energy transition, energy efficiency of the buildings, water and pollution 
  • €31 billion for the development of a modern and efficient infrastructure network
  • €32 billion will be allocated to research and education  
  • €22 billion will be dedicated to the active labour market policies and training 
  • €18.5 billion will be dedicated to the healthcare system 


20 April

Real estate numbers for Q1 2021 followed the same trend recorded at the end of 2020 with a 35% drop compared to the same period of 2020. With circa €1.2 billion of volume invested, the first quarter of 2021 has been the weakest from the start of the COVID-19 pandemic but also the weakest quarter since 2017; over the last three years volumes have ranged between €1.5 billion and €1.8 billion in 2020 (which benefited from an extraordinary 2019 pipeline). The uncertainty of the real impact of one-year of restrictive measures (although partially compensated by the extraordinary financial support from the Government) together with a small pipeline from 2020 (especially in the office sector) influenced the results.

Milan maintained its appeal attracting circa 40% of investment volume, meanwhile Rome suffered especially due to the lack of office transactions. In terms of asset classes industrial & logistics registered a further important growth compared to 2020 (+20%) together with Hospitality (+34%). Conversely offices registered a 30% drop, and retail, the most affected asset class by the pandemic, is continuing the downward trend started some years ago. More details:

  • Office sector, the most appealing asset class for the investors, recorded circa €350 million with a 30% drop compared to Q1 2020 (the lowest volume since 2017). A more prudent approach related to the occupier market dynamics (take up in Milan is down by 30% and Rome by 10% without considering a 16,000 sq m pre-let transaction in city centre) and a lack of core products in this first 3 months of the year impacted on the quarterly volumes.

  • Logistics sector had the best quarter since 2017 with over €300 million transacted recording a 20% YoY increase. The strong occupier demand (take up in Q1 has been 520,000 sq m +76%), a more diversified market (in terms of type of asset and location), the amount of equity allocated to the sector together with the scarcity of product, led investors to expand their strategies to include a more speculative approach as well as value add acquisitions. 

  • Hospitality sector registered a 34% increase compared to Q1 2020 with over €130 million transacted. The sectors medium term positive outlook and the perception that the hotels market is ready for asset repricing pushed investors to actively look at opportunities with a positive sentiment in terms of year end volumes.

  • Residential sector: this is the most dynamic and interesting asset class and it is now firmly established as an institutional investment target. Volumes are still low (circa €90 million) but are growing at a sustained rate. Developers and international Core / Core + investors are actively looking at the residential market with the aim of buying to develop and sell or to keep long term as PRS. Considering the preliminary contracts signed during the quarter we are expecting important volumes soon. 

  • Retail sector registered a further volume reduction reaching circa €50 million. The combination between the pandemic effect (shopping centres remain closed over the weekends), lack of tourism (with a particular impact on the high street retail), e-commerce boom and economic difficulties limited the interest of investors in retail which is today focused on supermarkets, DIY and sale & leaseback deals with interesting returns. 


9 April

The latest report released last week by ISTAT (the National Statistic Agency) shows how the coronavirus pandemic has emphasised the country’s demographic crisis, amplifying the trend in population decline in place since 2015; in fact during 2020, Italy’s population shrank the most in over 100 years.

The negative record level of births and the high number of deaths, exacerbated the natural negative demographic dynamic which has characterised the country in recent years. The deficit between births and deaths (342,000) is the worst since 1918 where the gap was of 648,000 units.

The number of births fell by 16,000 reaching 404,000 units (-3.8% compared to the previous year) reaching the lowest number since the country’s unification in 1871. On the other side the number of deaths was 746,000, the highest number after the second world war, with an increase of 15.6% compared to the average 2015 - 2019. The overall population fell by 384,000 units (-0.6%) compared to a year earlier: on the whole it is like losing a medium city like Florence.

Analysing the migratory balance, in 2020 it became negative for the first time since 1987, with emigrants surpassing immigrants by 42.000 units.  

Marriages, already in decline in 2019, fell by 47.5% in 2020 compared to a year earlier for a total of 96,687, with lockdown, ban on event organisation, restrictions on the number of people allowed to attend ceremonies as well as travel restrictions and the economic effects of the pandemic playing a central role. 

The updated COVID-19 numbers, as of 4 April, show that:  

  • Over 111,000 people have died in Italy with an average of 442 people in the last 7 days (vs 427 of the previous week). 
  • Over 3.6 million cases with an average of 20,000 new cases in the last 7 days (vs 22,000 for the previous week).
  • Over 11.2 million vaccines administrated (18.33 every 100 people) with 3.4 million people with both doses. 

Out of 53 countries ranked, Italy ranked 39th (losing 10 positions) in Bloomberg’s COVID-19 Resilience Ranking, which uses data to capture where the pandemic is being handled most effectively, with the least social and economic disruption - from mortality rates and testing to vaccine access and freedom of movement. 

25 March

The new financial decree (‘Decreto Sostegni’) presented on Monday 22 March by Mario Draghi in his first press conference as Prime Minister, provides €32 billion of additional financial aids. Mario Draghi said these economic measures “were the best we could do” using additional fiscal slippages but underlining that “at the moment these are partial answers” and promising that the philosophy behind the decree is “to go forward and compensate all as fast as possible”. The main measures included in this new decree are: 

  • Additional 13 weeks of furlough and ban of redundancies until the end of June (for small and medium companies until the end of October) 
  • €11 billion of outright grants for companies with up to €10 million turnover, professionals and VAT holders 
  • For Hospitality & Tourism €700 million has been allocated for the ‘snow sector’ and additional €900 million for thermal and leisure sector and seasonal workers 
  • €400 million has been allocated to the education sector (schools and universities)  
  • The healthcare sector will receive €5 billion of which €2.8 billion to buy vaccines and anti-COVID-19 drugs  
  • On the fiscal side a cancellation of tax debt from 2000 through to 2010 will be given to VAT holders who have lost over 30% of their turnover and for salaries below €30,000

The trend, in terms of number of new cases, continued at the same pace as the last couple of weeks (with an average of 22,000 new cases in the last 7 days) and now 10 Italian regions have high level risk (red) and 11 a moderate level of risk (orange). The number of deaths is the most worrying, with an average of 382 against 308 of 7 days ago. On the vaccine campaign the stop of the AstraZeneca vaccine at the beginning of last week had a small impact on the number administered, which has been circa 150,000 per day with a peak of circa 164,000 on 20 March, equal to 129.6 administrations every 1,000 inhabitants (ahead of Spain, Germany and France but really behind the UK). As of 23 March 7.7 million doses have been administered equal to 81% of the doses delivered. 


10 March

Luna Rossa Prada Pirelli won the Prada Cup, beating the UK team Ineos and will be the challenger of the 36th America’s Cup match against the New Zealand team. This is probably the only positive news in the last couple of weeks distracting us from the COVID-19 pandemic which, unfortunately, has worsened.  

Just a year ago (on 8 March 2020) Italy’s Government ordered the full lockdown of the Lombardy Region to fight the spread of COVID-19. The same restrictions were extended to the entire country the day after, confining 60 million people to their homes. One year later we still have thousands of new daily cases and hundreds of deaths each week. With an average of 19,000 new cases in the last 7 days (with a peak of 24,000 on 5 March) against 15,000 in the previous 7 days, the pressure on hospitals is increasing, with the positivity rates moving from 5.6% to 6.6%.  

This trend leads most of the Italian regions to increase the alert - with some regions moving to orange and red - with an improved attention from the Technical Scientific Committee (CTS) which highlighted the need for more restrictive measures to stop the growth of epidemiologic curve. In its latest report, the CTS highlighted the need to close schools when the number of people infected exceeded 250 on 100,000. In addition, it seems that the Government is planning to bring the curfew forward (now set at 10pm), to close some commercial activities in those areas where the new Covid variants (English and Brazilian) are more present and to have a full lockdown during the weekend to avoid gathering crowds as was the case during the last weekends.  

If the number of Covid cases is worrying, the speed of the vaccine campaign is not helping morale. To date circa 5.3 million people have been vaccinated (of which 1.6 million with both doses) representing circa 8.53 doses every 100 people (UK 32.99, Turkey 11.57, Germany 8.45). After a positive start of the vaccine campaign at the of December, the reduced number of delivered doses slowed down the pace of distribution creating huge political debate and criticism around the EU vaccine strategy that bet on procuring an array of different vaccines - some of which still haven’t been approved or are available - and has been slow in comparison with efforts in the UK and U.S. 

This frustration with the slow deliveries of vaccine coupled with early signs of a new wave of infections driven by new variants, has led Italy to take action under the new EU policy - passed after AstraZeneca cut projected deliveries - that allows any member country to stop exports of vaccines to nations outside the bloc. The decision stopped the delivery of 250,000 doses to Australia, which is recording a handful of daily cases, creating some friction between Australia and EU but underlines the strong desire to secure vaccines as pharmaceutical companies struggle to meet production targets and suffer delivery delays. 

24 February

We can summarise Mario Draghi’s maiden speech to the upper house of parliament with 3 words: political, pragmatic and emotional. The first thought as Prime Minister is the ‘National Responsibility’, the last one is the invitation to all political parties to renounce their own flags in the name of their ‘love for Italy’ which is the only way to dissolve the differences for the good of the nation. “We have the responsibility to start a New Reconstruction” Super Mario said “(…) our mission as Italians is to deliver a better and fairer country to our children and our grandchildren”. In his one hour speech the new Prime Minister touched on different points emphasising the importance of a broad political support to face the ongoing crisis: the economic miracle can be repeated thanks to the “full support of the Parliament” he said “(…) based on the spirit of sacrifice with which women and men faced last year, with the aim to rise again and come back stronger”.

The priority of the new government is to fight the coronavirus pandemic ‘with all means’ and with the vaccination to be carried out in every available public and private space involving the army, protezione civile and volunteer service. The Prime Minister also stressed Italy's role ‘as a founding member of the European Union, and as a protagonist of the Atlantic Alliance’ and the importance of being part of the European Union. "Supporting this government means recognising the irreversibility of the choice of the Euro" he added. In relation to the €200 million of the Recovery Plan the objective is to use the money to enact major reforms "These resources will have to be spent with an aim to improve the growth potential of our economy" Draghi said. The healthcare system (with a reshaping of ‘local healthcare’), educational and school system (redesigning the annual schooling system and investing in the ‘cultural transition’), the future of the environment (‘to protect the future of the environment some growth models will have to change’), gender equality (‘rebalancing of the wage gap and welfare system, beyond the choice between family and work’), the need of the fiscal and justice system reform were some of the other key themes of his speech. To leave the effect of the pandemic behind, to reach these objectives we must be united as country “Today unity is not an option, it is a duty. But it is a duty driven by what I am sure unites all of us - love for Italy”. 


10 February

At the end of the movie about his life ‘Mi chiamo Francesco Totti’ the legendary former captain of the AS Roma football club and one of the most talented Italian football players said, “the harder the challenges are, the lighter you have to go”. When Mario Draghi (who is a fan of AS Roma and described Totti as a philosopher of football) was asked to form a new government by the Italian President Sergio Mattarella, these words came to my mind thinking about his capacity to manage this extremely difficult task. In his first press conference after the meeting with President Mattarella, he underlined how ‘the consciousness of the emergency needs answers that are up to the challenge. It is an extremely difficult moment’ he said, “Defeating the pandemic, completing the vaccination campaign, offering answers to the daily problems of people, relaunching the country, are the challenges ahead of us”. In a context where the pandemic has further weakened the Italian economy (which hasn’t been brilliant in terms of real growth during the last 20 years) which shrank by 8.8% last year with a public debt rising to 160% of GDP, Super Mario (his famous nickname) is Italy’s “last hope” as one journalist said. 

The first problem which Mario Draghi must face is finding political support to have a majority in parliament. As Miles Johnson said in the FT weekend edition “Rome’s rancorous politics will be a minefield for the former ECB president”. If the consultations with the leaders of Italy’s political parties fail, the election will be the next step which, in this uncertain situation and with the recovery plan to be discussed with the EU, will be something close to a disaster for the country.  

The use of the Recovery Fund money will be the second challenge Mr Draghi will have to face. He has always been in favour of using public debt to help the economy while supported by structural reforms and productive investments. Fixing Italy’s economy will be Super Mario’s third challenge, probably the most complicated one considering that political and technocrat governments have not able to get decent results in the last 30 years. 

Thanks to Mr Draghi’s reputation, initial feedback from the investors is positive with the gap between yields on 10-year Italian bonds and their German equivalents falling to the tightest level in nearly 5 years, at 1.05 percentage points, as well as the Italian stock market with the FTSE MIB up by 2.1%.


26 January

With the number of cases reducing with an average of 12,350 in the last 7 days (against 15,838 in the previous week) the front pages of the newspapers covered two main themes: the political instability with the current Government under pressure and the delivery delay of the COVID-19 vaccines.

The pressure on the current Prime Minister Giuseppe Conte came from the Italia Viva party, a small governmental coalition member (led by former premier Matteo Renzi), which withdrew from the governing coalition (through the withdrawal of its ministers) challenging how the Recovery Plan money (over €200 billion) will be spent to revive the Italian economy and in particular the sectors where the money will be directed.  

The Prime Minister survived a confidence vote in the country’s Senate but fell short of an outright majority. It seems that the solution to this crisis is a long way away, and this week will be another key week for the vote on the Minister of Justice’s report. This political uncertainty is also putting pressure on Italian assets as the benchmark FTSE MIB index dropped 1.5% in the last 7 days. The probability of an early election has increased in the last few days due to Conte’s difficulty in finding parliamentary support for his Government.  

The Prime Minister faced another important issue related to the COVID-19 vaccines campaign: the delay in deliveries and then an unexpected reduction in the number of doses being sent from vaccine manufacturers to EU countries. If a reduction of 60% in vaccine production is confirmed, Italy will receive 3.8 million doses of vaccine instead of 8 million as set out in the plans approved by the Italian Parliament and based on the contractual commitment signed by the pharmaceutical companies and the EU.  

This is creating tensions between EU governments and the COVID-19 vaccine producers with legal actions threatened by Italy. In a Facebook post Premier Conte said that “the delays are serious contractual violations, which cause huge damage to Italy and other European countries with direct effects on the lives and health of people, and on our economic and social fabric already severely tested by a year of pandemic”. Italy has so far vaccinated 1.3 million people, more than Spain which has administered 1.2 million doses but significantly behind the UK, which has vaccinated 5.8 million people so far. In terms of vaccines administered per 100 residents Italy is ahead of Germany, Switzerland and Portugal but behind Denmark, Spain and Ireland. 


14 January

The Christmas holidays are over, and Italy spent most of this period in lockdown with all the regions in Red Zones. The COVID-19 situation has not changed with the second wave still present and the number of cases, even though far from the peak of the end of October, constantly over 15,000 per day with a positive ratio of circa 15%. The most important news is related to the start of the massive vaccine campaign which, after initial difficulties in some regions, is today up to speed. With over 918,000 doses delivered, Italy had over 589,000 doses of vaccine administered representing the highest number in Europe (Our World in Data 10 January 2021) and the second highest ratio (0.98 doses administered per 100 people) after Denmark.  

On the economic side the country’s situation is still difficult with the majority of shops closed over the Christmas break. The 2021 Financial Law (‘Legge di Bilancio’) approved at the end of the year confirms the need to act against the current crisis supporting the healthcare sector, companies and families with particular attention to young people and women. The law is also called ‘Bonus Law’ because of the amount of grants, incentives and bonuses to support the most disparate sectors.

The planned investment is over €50 billion in the next 15 years with additional financial resources (over €200 billion) granted by the Recovery Plan agreed in December by the EU. The Recovery Plan, and in particular the use and the destination of the financial resources (considered as a unique opportunity to revitalise and in some way transform the Italian Economy), boosted, at the beginning of January, the internal political discussion and then the instability of the Government. As the WSJ wrote on 9 January “In the depths of the pandemic, one sign of normality is returning Italy to political instability”. In fact, the Government is trying to avoid a crisis after the Italia Viva party, a small coalition member (led by former premier Matteo Renzi), is increasing pressure on a range of issues especially on how to reconstruct Italy’s economy after the pandemic. Discussions among the coalition are ongoing in order to avoid the collapse of Government, and a reshuffle is expected in some of the ministries with the so called ‘Conte Ter’ Government. 

In September, participating in the NPL conference organized by Banca Ifis, I said that the real estate market was expected to be hit by a hurricane but numbers say that the hurricane is in reality a storm: volumes have been impacted but less than expected back in March/April. The Italian real estate market closed 2020 with over €8.6 billion transacted, a circa 30% decrease compared to 2019, at the same level of 2018 and above the 10y average (€7.6 billion).  

The impact of the pandemic increased each quarter with the gap between 2020 and 2019 moving from 20% in Q1 to 41% in Q4 (where just €2.8 billion have been transacted against something between €3.2 billion and €4.9 billion between 2017 and 2019). In terms of asset classes:  

  • alternatives have been winners in the crisis with 70% increase in volumes
  • logistics have been resilient with volumes at the same level of 2019 
  • offices (which performed quite well in the first 3 quarters) have been impacted in Q4 with just €1.22 billion and a decrease of 25% on an annual basis 
  • retail and hospitality, the most impacted asset classes by the COVID-19 pandemic, closed the year with a reduction, respectively, of 22% (continuing a reduction trend already in place in 2019 and in 2018) and of 74% (but in line with 2017 and 2018 numbers)


9 December

Italy is approaching the Christmas holidays and, despite the decline in the number of cases after last month’s peak (over 40,000 new cases on 13 November compared with circa 19,000 on 6 December), there is concern about a potential third wave of coronvirus and the easing of restrictions over the next period. “We have to avoid a third wave in January which could be severe,” said Italy’s Prime Minister Giuseppe Conte introducing the new measures. “We can’t let our guard down”. 

To avoid a potential resurgence of contagion the Italian Government has decided to further limit all movement around Christmas. In fact, the new decree banned travel between the Italian regions from 21 December to 6 January, aiming to limit the mass exodus across the country for traditional family reunions to celebrate Christmas. Travel to second homes is also banned during this period and people coming from abroad will be required to quarantine.  

December is not only the ‘Christmas month’ but also the last month of the most active period of the year for real estate deals: in the last 5 years, during the last quarter, we tracked deals for a value between €3 billion and €5 billion. This year we are expecting a less active Q4 compared to the past, due to the market uncertainty which limited the number of new deals on the market between Q2 and Q3 2020. The result is that we are expecting the total volume of transactions to be in the range of €8 billion with a 30% YoY decrease but in line with 2018 numbers and above the 10y average. Despite that, the real estate market is alive, and we have had some important transactions which reached closing giving additional positive recovery signals.  

At the end of November, Ardian, the French world-leading private investment house, has been very active both in acquisition and sale. On one side, after signing a preliminary agreement in June 2020, it finalised the acquisition of a portfolio of circa €300 million from MPS Bank comprising 28 office and mixed use buildings located in 9 regions across Italy and, on the other side, completed the sale for over €120 million of the PWC HQ in Rome to the German Fund manager Deka. But not only have offices been the target of investors: Partners Group, the Swiss private markets investment manager, together with its operating partner InvestiRE SGR, completed the acquisition for €250 million of 11 residential properties across major urban centres with the majority located within the centre of Milan, in Rome and Turin with a value creation plan which includes unit-by-unit renovations, a full refurbishment of common areas, and selective re-development projects in order to create the first PRS portfolio in Italy. 


25 November

Expo 2015 reinforced the Milan ‘brand’ around the world, transforming the city into a magnet for capital and people. Today Milan is the most active real estate market in Italy and, despite the impact of COVID-19, at Q3 2020 office investment volumes were above 2019 levels, representing 73% of volume invested in the sector.  

In this context Milan is still evolving and COVID-19 has just slowed down the urban regeneration projects which were on track before the pandemic: if in 2010 there were just 2 important projects in the city, today there are more than 10 projects located from the city centre to the periphery.  

One of the most important is the redevelopment of the former Porta Romana railway yard which will host the Olympic Village for the 2026 Milano - Cortina Winter Olympic Games. The tender process for the sale of the area has been recently awarded for over €180 million to a real estate fund backed by 3 investors already present in the area: COVIVIO (the French / Italian Reit which is developing the Symbiosis Business district), Prada (the fashion brand which established Fondazione Prada) and COIMA (the Italian asset management company which bought the Boehringer Hq in Via Lorenzini).  

The redevelopment project comprises 164,000 sq m of building area, with green areas and public spaces comprising circa 50% of the entire railway yard. The Olympic Village, developed by COIMA, will later be transformed into approximately 1,000 beds of student housing; COVIVIO will develop office functions and services, while Prada, already present in the area, will construct a laboratory and office to extend its activities. 

At the end of October another important regeneration project, in the North East part of Milan, made a big step ahead: Hines, in partnership with Cale Street, a real estate investment and finance firm backed by the Kuwait Investment Office, completed the signing of a framework agreement with Milanosesto S.p.A for the acquisition and development of the first lot of the MilanoSesto Master Plan for a total future investment of over €500 million to develop 260,000 sq m. The master plan for MilanoSesto, designed by Foster + Partners, will transform a 1.6 million sq m area into a dynamic and sustainable urban destination with new residential areas, best-in-class office environments, retail and hospitality.  

In addition, another large urban park for Milan will be created, spread over 111 acres, set to be one of the largest in the Lombardy Region. The project will be adjacent to the future City of Health and Research, a crucial public hub for clinical and scientific excellence formed by new branches of the Besta Neurological Institute and the Tumor Institute. In a recent interview Pierfrancesco Maran, the chief planning officer of Milan, said that the Olympic Games are “a hub in particular if we will be able to manage as we did for Expo 2015: not as an end point but as a new start”.  

Overall interest in big redevelopment projects is still strong; the number of new building permits (645 in 2015) will be in the range of 900 in 2020 (against 1066 in 2019). 


11 November

The velocity and scale of the spread of COVID-19 in Italy (over a 4% daily increase in new cases from 23 October, reaching over 39,000 newly infected by 8 November) has prompted the Italian Government to launch new and more strict measures starting from Friday 6 November, with the aim to control the spread of the virus in the country. Italy is the most recent European nation to announce new restrictions after the UK, France, Belgium and Spain. 

New restrictions took a different approach compared to previously. This time by analysing the data from each region, which are now classified in three different zones based on the potential risk (red, orange and yellow). In addition to the national guidelines (such as the national curfew between 10.00 and 17.00, or public transport occupancy reduced to 50%) each region will be launching stronger measures in relation to the local risk.

Lombardy is one of four regions (together with Piedmont, Calabria and Valle D’Aosta) the Italian Government has classified as ‘red zones’ (utmost gravity scenario) needing a ‘full’ lockdown because of high infection rates and what capacity the hospital is at. In the ‘red zones’ bars, restaurants (delivery is possible until 22.00), shops, gyms, swimming pools, cinemas and beauty centres are closed to the public and shopping centres will not open over the weekend. Non-essential travel, from and within the region or municipalities are banned as well as all activities in sports centres.

Primary and pre-schools will remain open, with secondary schools following lessons online. The ‘orange zones’ (high risk level), which now includes just two regions (Puglia and Sicilia) have lighter restrictions, however bars and restaurants remain shut and non-essential travel from and within the region and municipalities is forbidden. The remaining regions are considered ‘yellow zones’ (areas with a lower risk) and have to follow the national rules: bars and restaurants can open until 18.00, online lessons only for universities and high schools. Every day the Rt index and the solidity of the healthcare system will be checked by the Central Government in order to move the regions to a different zone should the situation worsen.

From an economic perspective on 25 October the Government approved the €5 billion ‘Decreto Ristori’ to support workers most affected by the latest restrictions. The new decree increased the outright grants to bars, restaurants and discos with a maximum contribution of €150,000. Furlough is extended for an additional 6 weeks and a ban on redundancies until February 2021. The second instalment of the Municipality Tax has been cancelled for all the activities closed or with a reduced opening time. 


27 October

The surge in coronavirus infections (19,000 new cases on 23 October with an increased positivity rate at 10.5% and 21,000 on 24 October) forced the Government to adopt new restrictions to try to contain the spread of the virus. The 18 October DPCM (Decree of the Prime Minister) closed high attendance areas from 21.00 to avoid large gatherings; restaurants and bars must close at midnight and from 18.00 people not seated at a table (max 6 people per table) cannot be served, while supermarkets also cannot sell alcohol after this time.  

Some regional and municipal governments adopted additional restrictions: Lombardy, Campania and Lazio (the 3 most affected regions by the surge of infections) have adopted a curfew from 23.00 to 5.00 and Piedmont will follow suit from 26 October. In the other regions the same measure is under discussion. Schools are also impacted by further restrictions: in Lombardy, Campania, Calabria and Puglia secondary schools will be closing from the 26 October to 13 November with classes continuing online. In other Regions 75% of secondary school students will be remote learning. Moreover, in Lombardy, Campania and Piedmont shopping centres will remain closed over the weekends (with the exception of the hypermarket and shops selling essential goods).  

With the sharp rise in cases (+80% in 7 days with a positivity ratio moving from 12% to 16%) on Sunday the central Government approved more rigid measures which will be adopted from Monday 26 October until the 24 November. All ‘non-essential activities’ will be stopped (from conferences to amateur sports), restaurants and bars must close at 18.00 (remaining open over the weekends and providing take away service until midnight), gyms, swimming pools, theatres and cinemas will be closed, travel on both public and private transport is not recommended unless for essential working, emergency and healthy reasons. 

In this turbulent and evolving situation the Italian real estate investment market marked another important moment: the iconic Palazzo Poste in Piazza Cordusio in Milan owned by Blackstone went in exclusivity to a club deal of private investors managed by Mediobanca for over €245 million with and yield below 3% net setting a new record for the market. The deal will be closed in 2021 but is the last of a number of ‘sizable’ deals over €200 million signed in 2020. Despite the impact of COVID-19, 8 deals over €200 million have already been recorded: the same number we had in 2019, 2017 and 2007. Office core deals represented more than 50% of the total, again underlining on one hand, how investors are following defensive strategies and, on the other the interest on the office sector despite the impact of home working. This interest is also confirmed by the new pan European €2 billion real estate open ended fund launched by Generali with a core + investment strategy in major European cities. 


15 October

The confidence that Italy can continue to keep the virus under control is, today, less positive than 14 days ago. Since Wednesday there has been a significant increase in the number of daily cases - from 2,677 on 6 October to 5,724 on 10 October - following, at a slower pace, the trend of other major European countries. 

This rate of new cases has not been recorded since the end of March (5,974 cases) but then a lower number of the population was being tested. Taking these facts into consideration, the Italian Government is evaluating new restrictive measures with the aim to control the rise in cases and avoid reaching the levels of other European countries. As a first measure, the Government approved a new decree last week whereby people are obliged to wear masks everywhere (also in the office). Additional measures are under discussion and will be approved soon. The areas in front of public places will be considered ‘red zones’ from 9pm, bars and restaurants must close at midnight, parties in private or public places will probably be forbidden as will contact sports. Additionally, the Government is discussing the possibility of asking companies to increase smart working for up to 70% (at present it is 50%) of its workforce. 

Despite this increased level of uncertainty, the country’s latest economic performance has exceeded expectations: in August Italy’s industrial production reached last year’s level and outperformed other major eurozone economies. Moreover, output rose by 7.7% compared with the previous month - France recorded +1.3%, UK +0.3% - and it was the fourth consecutive month in which output grew by more than 7%.  

Numbers in the real estate market are less positive but, also in this case, better than expected. Investors are looking at defensive investment strategies, with a strong interest for core and core + opportunities, especially in the office and logistics sectors which attracted 65% of the total investment volumes. 

In Q3 2020, €2 billion was invested in the Italian market, with a total volume of circa €6 billion invested since the beginning of the year. Despite recording a decrease of 20% compared to 2019, so far volume for 2020 is above 2018 figures. The office market attracted circa 50% of the investments growing by 10% compared to the same period of last year. Logistics volumes doubled reaching the highest level in the last 4 years with yields below 5% net. Hospitality and retail registered €1.8 billion with an important decrease compared 2019 numbers due to the strongest impact of the uncertainty on the consumers and on the tourists. The ‘living sector’ is the rising star of the market, attracting over 5% of the total volumes invested in the first 9 months of 2020. 


30 September

70% of Italians, last weekend, voted to reduce the size of Parliament though the approval of a constitutional amendment which will cut the number of members of the upper and lower houses (“Senato della Repubblica” and “Camera dei Deputati”). If this victory seems to reinforce the power of the populist anti-establishment party Movimento 5 Stelle, the Regional elections held during the same weekend saw 3 Regions (Toscana, Puglia and Campania) won over by the Partito Democratico and 3 Regions (Veneto, Liguria and Marche) won over by the Right wing coalition (lead by the Matteo Salvin’s Lega) with Movimento 5 Stelle losing numbers of votes across the country.  

On a national level Movimento 5 Stelle should currently be at 8.9%, half compared to the results of the 2019 European Election and 24 basis points less compared to the 2018 political elections. The results of the vote reinforced the current governmental coalition composed by the Partito Democratico and Movimento 5 Stelle, reducing the probability of anticipated elections. The limited success of the right wing in this political tournament (with its populist approach against European policies and with a huge debate with the government around the potential ESM aid) is seen, by investors, as a further reduction of future uncertainty, especially regarding the possibility of Italy leaving the Eurozone. In this context financial markets reacted positively: 

  • 10y Bond Yields reached 0.873%v the lowest level since October 2019
  • The spread with the German bonds decreased to 133 Bps the lowest level in the last 7 months

Less positive was the Stock Exchange Index, FTSE MIB, which lost circa 4% in one week due to the fear of a second European lockdown. On this subject new cases in Italy are rising but at a much slower pace compared to the other countries; the Financial Times Weekend issue underlined how the high level vigilance keeps COVID-19 under control in Italy “while few want to tempt fate ahead of winter - FT says - there is confidence that Italy’s efforts can continue to keep the virus under control”.  


16 September

Signs of recovery since May are continuing to favour different sectors of the economy, from industrial production to exports. In July employment returned to growth, in August business confidence continued to increase while the consumer confidence slightly improved from 100.1 to 100.8. Italians are cautiously coming back to some form of ‘normality’ and this is also reflected in upward trends in shopping centre footfall since May, which in August reached 85% from last year (supported by a sales season that was postponed to August). 

The Government has extended the emergency measures until mid-October, and next week, with the schools reopening, will be an important test for the country. Despite the SARS-Cov-2 pandemic slowly and progressively worsening (first week of September data), the number of new cases of infection remains overall quite lower than in other European countries. 

The investment market hasn’t stopped, and some sellers have resumed talks with the buyers they lined up before the lockdown. After two weeks of the summer break, we recorded some deals completed for almost €700 million. More than 50% consists of a 5 stars hotel portfolio deal, sealed at the end of 2019 and acquired by the French-Italian Covivio. A prime Milan office (Via Turati 12), some logistics and small residential deals complete the post summer activity, confirming them as the most sought-after asset classes in this market momentum.

By far the most relevant property news is the launch of the sale of a Milan trophy office currently owned by Blackstone: the former Italian Post Headquarters, Piazza Cordusio, an example of an iconic asset repositioning.  


3 September

This week Italy will return to full ‘normal’ activity, with the majority of the workforce returning from their holidays. This week will also be the test to understand what will happen with workers still working remotely and others back in the office. A recent survey published by Morgan Stanley showed that around half of all European workers have returned their normal jobs, with France and Germany leading the rate of return with 58%, and Italy and the UK following with 47% and 49% respectively.  

The overall perception is that in Italy the situation is not clear-cut with companies either pushing smart working at the highest level and companies trying to drive workers back to the office. In a recent interview ING’s Italy Country Manager stated that “ING wants to be the first bank to give the maximum flexibility to all employees related to the possibility to choose where and when to work and stressing the focus on the results and not on the time spent in the office”. A good number of Italian multinational companies are following the same path: TIM (the main Italian telecommunication company) announced that it will strive for ‘agile’ work, Leonardo (leader in Aerospace, Defense and Security fields) is looking in the same direction, Enel and Eni (the two international energy companies) are maintaining smart working at the current level until the end of the year. 

On the other hand, Milan’s Mayor Beppe Sala interviewed in July said that “it’s time to come back to work” highlighting that “there is a part of the city, which is blocked due to smart working, which cannot be considered the normality. If we consider this extreme situation as normality, we need to completely re-think the cities and to re-think cities will take time”. The Municipality of Milan is the biggest employer of the city with over 15,000 employees: Mayor Sala’s “back to the office” plan should keep 3,500 people among public workers, teachers, local police etc. working from home. 

In this context it is clear that the general decision to push people back to the workplace or to continue to work remotely will depend on the number of new Covid cases registered during first weeks of September. Due to the increase of COVID-19 cases (1,365 new cases at 30 August 2020 with 20.9 new cases every 100,000 people; like Germany and UK and 4 times less than France and 10 times less than Spain) Italy has recently introduced mandatory coronavirus tests at airports for people returning from vacations in Spain, Greece and Croatia. It has also started to test ferry passengers returning to the mainland from Sardinia, where there have been numerous cases. Italy also recently shut down nightclubs and required masks to be worn after 6 pm in outdoor public areas where crowds may form.


19 August


August is the typical holiday period for Italian families and this year, due to the Covid situation, this Italian characteristic is even more extreme. National statistics say that over 21 million of Italians are on vacation during the middle of August which has been less affected, compared to the other months, by the lack of foreign tourists. The number of those on vacation in August is -11% compared to the same period in 2019; better than July (-23%) and June (-54%) according to Coldiretti (the most important agricultural association) analysis. 93% of Italians decided to spend the holidays in Italy and 25% decided to stay close to home. Another study from Federalberghi (the most important association of tourist and hospitality companies in Italy) is more pessimistic, recording 51% tourist drop in July (-76.4% foreigners and -24.5% Italians) with a potential impact on the tourist / hospitality companies’ turnover of more than -50% compared to 2019.  

The areas of Italy less affected are the ones attracting domestic tourism and, on the other side, the most affected are the art cities (Venice with - 90% visitors is the most impacted) which are usually the target of foreign tourism. Federalberghi is expecting a 295 million drop in tourists (-70% compared to 2018) with a turnover decrease for the tourist sector of about €16.3 billion (-69%). Taking into consideration that the tourist sector is representing circa 13% of the Italian GDP, the potential impact on the job market is severe with already 110,000 seasonal jobs lost in June and an additional 140,000 at risk during the summer period. Investors and operators do not seem to be scared by the situation and interest in the Italian hospitality sector remains strong: on 13 August, sbe, the leading international hospitality group that develops, manages and operates award-winning brands, announced the expansion of the iconic Delano brand to Europe with the new 68 Rooms Delano Porto Cervo in Costa Smeralda, expected to open by June 2023. 

In this context, with people less keen to follow the anti-Covid rules, since 6 August, Italy registered more than 400 new cases per day (except for 2 days) with a peak of 629 on 15 August. The numbers are less impressive compared to other European countries (especially France and Spain), but the Italian Central Government started to take new restrictive measures: starting on 17 August clubs remain closed, and it will be mandatory to wear facemasks from 6pm until 6am even in the outdoor areas of restaurants, bars and places open to the public (the so called ‘Movida’).   


5 August

The end of July has been really hot for Italy and not only in respect of the summer temperatures, which passed 35 degrees in most parts of the country. 

The front pages of the Italian newspapers covered:

  • EU Recovery fund approval with a financial support for the country of €80 billion in subsidies and €120 billion in loans. 

  • 12.6% GDP’s drop (considered by the Italian Minister Roberto Gualtieri “Less severe than expectations” also compared with the rest of Europe).

  • A new wave of migrants with a potential impact on coronavirus cases. 

  • Banca Intesa's successful completion of the hostile takeover of UBI Banca (creating the largest Italian bank the 4th European bank in terms of capitalisation and the 7th European Bank in term of Revenues). 

  • Some positive signs from retail sales, with just 1.8% decrease June 20 vs June 19 for modern distribution and from the tourism sector where the last ENIT (national tourism agency) bulletin shows that online booking for the central week of August (“Ferragosto”) are almost sold out, with 79% of the availabilities already sold.   

In this sparkling context where small positive news tried to overcome the negatives, the real estate sector recorded the hottest month in 2020 with a number of important transactions; French investors lead the scene followed by a German investor completing the most important single asset logistic acquisition ever done in Italy. More specifically BNP Paribas, on behalf of different investors, closed 3 office transactions in Milan for total investment volumes of over €400 million. All assets are core / core plus offices located in the city centre or in a semi peripherical location of Milan underlining how the city’s office market is still the centre of the interest of the foreign investor. To reinforce this concept Amundi, on behalf of the Nexus fund, bought a mixed used asset in Via Dante, CBD Milan, from Hines for a price above €100 million. The logistics sector, not affected by COVID-19, has been rocked by an unusual large transaction by Italian standards: DWS has acquired a newly built Grade A logistics facility, Trecate Centre, in the Novara Province in Greater Milan, on behalf of one of its German open ended retail funds investing in real estate from Logistics Capital Partners, for a price over €200 million at a record yield. In addition, Round Hill Capital bought 35,000 sq m logistic asset in Caorso and Cromwell Properties acquired a DHL portfolio on behalf of the Korean Investors IGIS for a value of over €50 million showing, again, the resilience of the Italian logistic market.  


22 July

The new instrument to support the Italian economy called ‘Decreto Rilancio’ is now law. On 16 July the Italian Senate approved the DL 34/2020 which provides financial aid for over €55 billion to compensate for the economic impact of the COVID-19 pandemic on companies, independent and salaried workers families. The main measures are related to: 

  • 110% tax refund (‘Ecobonus’) for refurbishing residential units (in particular for improving the energy efficiency). 
  • Tax Credit for government social housing. 
  • Tax Credit related to rents on commercial properties. 
  • 50% of Municipality Tax (‘IMU’) exemption for Hotels, B&B, Camping and all the tourist assets. 
  • 4 weeks furlough extension.
  • Specific measures supporting textile, fashion, fair, agricultural, tourism (with the ‘Holiday Bonus’) and logistic / transport sectors.  

Meanwhile Italy is busy in the EU’s discussions for additional financial aid to boost internal spending without particular restrictions and without worrying about the current debt level. In particular at EU level, members are discussing: 

  • Seven-year budget, due to run from next year to 2027, with Brussels proposing more than €1 trillion in spending.
  • A special coronavirus-recovery fund, with €750 billion fire power of which €500 billion in grants to member states and €250 billion in loans.  

On these points, timing seems critical. Delaying too long could impact countries’ crisis spending. Projects in the EU budget - from infrastructural to environmental - won’t begin next year unless a deal will be signed soon. On another side, the real estate sector continues to perform above expectations. Despite H1 2020 numbers, 24% below the volumes of the previous year, investors are still keen in deploying capital in the country. A couple of interesting deals have been signed just after the closing of the second quarter 2020:  

  • The Korean investor JBAM finalised the acquisition of 49% stake in Pegasus fund (the remaining 51% was bought by Vittoria Assicurazioni one month ago) owning il Quinto Building in San Donato for circa €90 million (asset €195 million).  
  • The neighborhood Shopping Centre Primavera in Rome (11,000 sq m for a total of 40 Units) has been sold to a retail operator (Conad) for circa 6% yield representing one of the first 2020 shopping centre transactions in the Italian market. 


8 July

In the June issue of the famous magazine ‘Monocle’ Gianni Riotta columnist for La Stampa closed his article about Italy titled ‘Rise Again’ by saying: 

“…after the pandemic we will have to shape up, getting rid of our debt not because some zealot says so but because we will never be able to invest in the future generation. (…) the choice is there: progress or perish. I bet that Italians will make the right choice at the very last moment. Do not ask me why, I just feel it”  

and this feeling, that Italy can rise again, is also mirrored in the continuous commitment by international investors in the Italian real estate market. After over €200 million invested by Deka in Milan, €350 million invested by Allianz in Milan and Rome and the giant transaction between UBI Bank and COIMA (backed by international capital), another important milestone for the Italian market has been signed in Milan, which is becoming, again, the territory of international alliances.  

Australian developer LendLease and Canadian Pension Fund PSP Investment entered into a partnership agreement to proceed with a large urban redevelopment project worth €2.5 billion. The first stage of the agreement takes the form of launching a real estate fund, managed by Ream Sgr, of which Lendlease and PSP will be 50% shareholders. Two buildings under construction, Spark One and Spark Two, located in the northern area and close to the Rogoredo railway station will also be contributed to the same fund. Additionally, PSP will also become a partner for 50% of the entire Santa Giulia project - still to be developed - where sustainability (the whole project has carbon zero targets), social impact initiatives and long-term vision are combined. As part of the transaction, LendLease sold the two buildings under construction to the LendLease MSG 1 (Italy) fund through the 100% subsidiary InTown (50% of Risanamento was purchased by the Australians last February), which is worth approximately €250 million. Lease contracts have been signed with Saipem for Spark One and part of Spark Two, while marketing has just been restarted for the remaining vacant spaces.  

In terms of market numbers H1 2020 showed a decline in take-up both in Milan and Rome. If in Milan the impact has been moderate with just 30% decrease compared to the same period of the previous year (but reaching the lowest take up level in the last 5 years, equal to circa 157,000 sq m), Rome received the biggest impact down by over 70% with just 44,000 sq m leased since the beginning of the year. On the capital markets side, transactions reached €3.7 billion, 26% less than the previous year, but aligned with 2016 and 2018 volumes. The market has been dominated by office transactions with over €1.8 billion (just above 2019 figures) with a focus on Milan with over €1.3 billion, just 12% below 2019 volumes. Rome, on the other side, has been particularly weak with just €220 million transacted. Despite the current situation, retail performed quite well thanks to an important transaction closed in Q1: H1 2020 volumes are just below €1 billion, twice 2019 figures, with both high street and modern retail deals closed during the Q2. Industrial and logistics performances are aligned with 2019 figures with transaction volumes north of €300 million and a strong investor commitment for the second part of the year. Hospitality had a strong impact on the transaction volume reaching the lowest level in the last 4 years but on the other side alternatives are raising the interest with volumes three times the 2019 and 2018 levels


25 June

The current Italian post-Covid situation doesn’t scare long term core investors who have been particularly active over the last 3 months. 

Allianz bought a core office building in Rome for over €200 million - it’s second deal in two months - following the €140 million Sale and Lease Back in Via Armorari, Milan. 

In addition, the Italian Pension Fund of the Doctor (ENPAM) through its asset manager DeA Capital SGR completed €86 million core acquisition of Mellerio Velasca buildings in CBD Milan from Kryalos SGR and a second core transaction in Rome will be closed in the coming days. Prime core assets are still attracting strong interest from investors which are focused on location, innovation, sustainability and tenant-use aspects. This approach is confirmed by Cushman & Wakefield’s Survey ‘Italian Real Estate Market - An Insight into Investors' Sentiment’, when we surveyed over 140 investors during May. Core office, logistics and residential opportunities have emerged as the most resilient asset classes, being the main focus for the majority of investors.  

Italy has been judged as an extremely stable market without rapid pricing adjustments which help the medium/long-term investor view. In addition, most part of the investors are seeing a yield spread in logistic and residential sectors compared to the rest of Europe and the office sector is still being driven by quality, which is currently scarce. Key takeaways of the survey are as follows: 

1. Investors are actively looking at the market trying to move into a more active investment phase and to place a significant volume of equity (82% respondents are still active on the market and capable of submitting LOIs). 

2. Mismatch demand vs supply: there are approx. €20 billion of equity ready to be deployed in 2020 and 6 billion of assets to be sold. 

3. Asset management activities focused on keeping the portfolio intact are investors main priority. 

4. New investment strategy learns from the past to be more focused, with 74% of investors modifying their tactics by changing their projected equity allocation in terms of: 

  • Asset class:
    • Increase: Residential 61%; Logistics 73% 
    • Stability: Office 55% 
    • Decline: Retail 80-90%; Hotels 43%
  • Risk Profile: 
    • Core/Core plus: increase 50%

5. Re-pricing is expected across all sectors. If 70% of the investors are ready for a yield increase by year end, the scale varies among the different asset classes with office, residential and logistics more resilient, with prime yields expected to increase up to 25 bps.

6. Debt financing conditions for real estate are more difficult for 90% of investors.

7. Leasing market is back to normal on a different timescale according to the different asset classes but the rental trend is slowing down across all sectors, with the exception of logistics. 


18 June

The economic numbers are starting to come in from official sources and the truth is clear: the effects of two months of lockdown will be so deep that the climb back will be more than challenging. In the latest June bulletin, the National Institute of Statistics (ISTAT) predicts that the Italian national economy will contract by >8% in 2020 with a partial recovery in 2021 with 4.6% growth. During the first quarter Italian GDP dropped by 5.3% and the preliminary data for April from the Confcommercio - Censis Report shows a decrease of 20 - 25% (UK official statistical data said -20.4%).  

At the end of May, during the last annual meeting, Ignazio Visco, the Governor for the Bank of Italy, quoting from John Maynard Keynes’s book 'How to Pay for the War', said that the guarantee for a quick outcome is a plan that allows for endurance 'a plan conceived in a spirit of social justice, a plan which uses a time of general sacrifice, not as an excuse for postponing desirable reforms, but as an opportunity for moving further than we have moved hitherto towards reducing in equalities' in other words, the Governor highlighted the need for an important economic reform to gain the best results from European aid.  

Reforms have also been suggested by the commission run by Vittorio Colao (former Vodafone CEO) which is supporting the Italian Cabinet in designing the future of the country, speeding up the country’s development and improving the economic, environmental and social sustainability. In this context the Italian real estate sector has been shaken by €1 billion transaction involving the fourth Italian banking group, UBI Banca, and Italy’s leading real estate investment, development and management company, COIMA SGR.  

UBI Banca will concentrate its HQ in Milan agreeing a 15-year lease for ‘Gioia 22’, the building in Milan’s Porta Nuova district designed by the architectural firm Pelli Clarke Pelli Architects, simultaneously acquiring 100% of the shares of the Porta Nuova Gioia fund, which owns the Gioia 22 building, from a leading global institutional investor. At the same time UBI Banca has sold 7 properties in Milan to vehicles managed by COIMA on behalf of primary global and national institutional investors. 


11 June

As the Government begins to ease lockdown restrictions, how is the social life of the high street starting?  

Are consumers returning to the physical stores for their shopping?  

Public transport will be hard hit by decreased commuting and with a fear of contagion, people will be more likely to walk to their local high street. This may suit some high streets and shopping areas more than others. Analytic data on the high street is difficult to obtain, so on site visits are the best way to test the field and we ‘tested’ a couple of different types of high street. In Milan, Corso Vittorio Emanuele - the most prime mass market high street in Italy - as you walk down the street, the feeling you get is that you are in August (when traditionally most Italians are on holiday).  

The ‘normal’ frenzy of the street is missing, just like all the tourists as well as the 3 million commuters that travel in and out of the city every day. Outside a few mass markets stores a queue of people stand patiently in line waiting their turn to enter. Once inside you find a different world (compared to only 3 months ago): merchandise is maintained in an orderly manner; shop assistants greet you offering to help find what you are looking for and in general customers seem to be enjoying their shopping rather than wanting to leave the chaos as soon as possible.  

It seems that the new trend in mass market is reengaging with the customer - a tailor made experience. Retailers are still trying to collect the first turnover figures and where a store, pre-Covid, averaged a turnover of €12,000 per day in the first weeks the numbers have been €2,000 per day (- 80%). Florence, Via Tornabuoni - the top luxury fashion prime high street in Tuscany - is quiet however, the Uffizi Museum has just reopened to the public with access to 450 visitors together (50% less compared to pre Covid). As you walk by you hear German, English, and Italian speakers queuing outside. Exiting an important high luxury fashion brand store, a customer comes out with 4 big shopping bags - the revenge spending effect? Notwithstanding this, especially the luxury brands are suffering the effect of restricted foreign travel and many have asked for temporary rent reductions which most landlords seem to have granted - the main objective is ‘keep the lights on’.  

In this context, investors are still in the ‘wait & see’ stage, yet keen to invest even in high street retail, albeit with more selectivity. An expected drop in rental levels will probably impact on yields, although no transactions have been completed in Q2. Location and sustainability of rent will drive the investment and new KPI’s underlining leases will be the real hurdle for the near future. Even on the high street market, tenants and landlords will necessarily become partners rather than just counterparties. Data transparency will be fundamental for the success of the investment. 

3 June

After 4 May (end of lockdown), 18 May (reopening date) and from the 3 June it will be possible to travel across regions. This date also represents the ‘kick off’ for summer weekends and for holidays (6 million Italians are expected to go on holiday in June). The tourism sector represents circa 13% of Italy's GDP and 6% of total employment. Foreign tourists account for circa 50% of the total tourism flow, spending over €44 billion in 2019.  

Between March and July Italy lost 40 million foreign visitors (representing circa 18% of the total annual flow) and it is difficult to expect a full recovery by the year end. The current discussion is about the ‘corona - free’ corridors, which don’t currently include Italy, and borders closed between Italy and other countries will create further limitations on entering the country.  

30% of hotels are expected to remain closed for the entire season; business hotels (4 and 5 stars in the major business cities) are suffering due to the travel restrictions (US travelers, representing 7.4% of total arrivals are absent) and are mostly closed. Despite this real estate investors confirmed their interest in a hotel asset which had a record year in 2019 with >€3.3 billion invested. The Italian hospitality market is still fragmented with a lot of privately-owned hotels where international hotel chains represent a small part of the market.  

New development projects and hotel operator selections are still underway and interest from operators has not diminished.  

In this context investors are looking for opportunities, taking into consideration that an important transformation and consolidation process was started before COVID-19, and we are expecting an acceleration post COVID-19 with interesting opportunities for hotel acquisition in the near future. 


28 May

On 18 May almost all retail reopened, following several weeks where only essential retail stayed open (supermarkets, pharmacies, tobacco shops, DIY, electronics). The central government issued general guidelines, giving the Italian regions the ability to put in place further restrictions, meaning that the context may be different across the country.  

The shopping experience has been radically affected, nevertheless the first week ended with a limited decrease in footfall. Most visitors went for focused shopping, so the slowdown in footfall was expected. At the moment, the trend varies depending on the type of site. Prime shopping centres (that normally work on larger catchment areas where customers expect a complete shopping experience), leisure centres (where cinemas and gyms are still closed), office districts located in city centres and high streets of tourist cities are the most affected.

On the other hand, neighbourhood shopping centres (with a strong focus on the primary catchment area), shopping centres with a strong component of grocery/supermarket, high streets of secondary cities and retail parks (thanks to several good performing stores: DIY, home & furniture goods, sporting goods) showed better resilience. After the first week, shopping centre footfall is already around 70-80% of 2019 levels and almost 90-95% of stores have already reopened, with some exceptions especially in F&B - one of the most affected industries due to the restrictive rules, fewer seats and additional mandatory cleaning activities.

On the financial side, to support the economic recovery, Italy has raised a record of over €22 billion with a bond sale (BTP Italia inflation linked). Institutional investors bought €8.3 billion of bonds, which mature in May 2025, showing how Central Bank stimulus and a potential EU recovery fund have increased investor confidence. 


21 May

The Italian real estate market seems now to be reacting to the impact of COVID-19. The investment market was stirred by a €500 million deal closed by Vittoria Assicurazioni, an Italian insurance company, which bought a majority stake in a real estate fund owning ‘Il Quinto’ building in San Donato (Milan) from York Capital. Two additional buildings in Rome and Monza, as well as this iconic asset home to the ENI offices, were also transacted. At the same time, York capital bought 4 residential developments in Rome, Parma and Milan from Vittoria Assicurazioni, which completed the entire transaction. Additionally, at the beginning of the week, Corum AM acquired an €8 million office building in Rome from Tristan Capital Partners. 

The office leasing sector is also showing signs of dynamism: in Milan 4,000 sq m in a centrally located asset owned by Bain Capital has been leased to a fashion brand at a rent aligned to pre-Covid level.  

Italy is trying to return to some sort of normality: although many offices are now open, most of the working population continues to work from home. Following social distancing measures, from 18 May bars, restaurants as well as hotels and hairdressers were allowed to reopen. From Monday, 25 May, gyms and swimming pools will reopen and from 3 June, travel between regions as well as travel within the EU and Schengen Area will be allowed.  

On the economic and financial side, the ‘Decreto Rilancio’ has been approved for a total of €55 billion for support. The main measures covered include the extension of the furlough period for an additional 9 weeks (€10 billion) and, for the real estate sector: 

  • tax credit for energy and large-scale building improvements 
  • credit covering 60% of the cost of the rent for shops, industrial warehouses, hotels and for non-residential lease contracts - if the turnover of the company has been reduced by at least 50% compared to the previous year. 

14 May

On Monday 11 May about 4.5m people returned to work; families were able to go to parks, factories and construction sites are finally alive: a progressive reopening after 8 weeks of lockdown has started.  

Between 11 and 18 May all the other shops will reopen except for bars and restaurants scheduled for 1 June. Normality will take much longer to achieve and the reality is that a lot of companies are still recommending that employees work remotely, due to the fact that only 20/30% of the workers are allowed in the office because of the social distancing rules.  

The COVID-19 numbers (new infections and deaths) have been falling for more than a month but from Monday the attention is focused on the economic impact of the pandemic. The International Monetary Fund is expecting that Italy’s GDP will drop by circa 9% in 2020. UniCredit, the most important Italian bank forecasts a 15% fall. To partially compensate this fall, a new €55 billion financial law (so called ‘Decreto Rilancio’) is under discussion and will be approved this week. In addition, this week the access to the ESM has been approved to the limit of 2% of the GDP (Italy can borrow circa €35 billion to repay in 10 years at 0.1% of interest rate) to support the healthcare system.  

The real estate market is still in a ‘wait and see’ position: office leasing negotiations that started before COVID-19 are proceeding slowly (circa 50% of the transactions are still alive compared to the beginning of the pandemic) as the office investment transactions (80% are ongoing). Retail, the most affected asset class, is still blocked and asset managers are working hard to fix issues with tenants, trying, at the same time, to understand what outcomes reopening will bring.  


7 May

The Morandi Bridge, a strategic motorway connection in Genoa, collapsed in August 2018, killing 43 people. Despite skepticism regarding the duration of the reconstruction (Italy, unfortunately, is not famous for the efficiency of the bureaucracy machine). On Tuesday, 28 April, less than two years from the tragedy, the last section of the main structure of the new bridge was put in place, bringing the construction to the last phase of completion.  

This achievement has been considered by the Prime Minister as a new light “giving hope to all of Italy”, a symbol of Italian strength and capacity. This symbol, this hope, is particularly important considering the 4 May is the reopening date for the country after more than two months of total lockdown.  

In the meantime, Italian cities have started working to find solutions to manage key issues of Phase 2: first and foremost, transportation. Due to social distancing the use of public transportation will be limited to 25%/30% of full capacity, creating a lot of concern related to increase in traffic and pollution. In order to improve sustainable mobility, Milan is starting to increase bike paths; by September an additional 23 km will open and a further 12 km are expected by year end connecting peripherical areas with the city centre.  

Two important facts happened in Milan this week which will explain, better than 100 words, the Italian real estate current market situation:  

  • A positive is that Hines has completed the acquisition, agreed before the COVID-19 pandemic, of 150,000 sq m land in the Ex Trotto area (the former horse racing track) which will be transformed into a major residential-led mixed-use scheme. 

  • On the negative side Unibail-Rodamco-Westfield has announced that the project for the construction of the largest and biggest shopping centre in Italy, planned to be built up in Segrate, Milan, and already named as 'Westfield Milan' has been officially suspended. 

30 April  

Italy’s re-start won’t be a ‘free for all’ but a progressive reopening: manufacturing and construction will restart on 4 May, all the shops and museums will open on the 18 May: bars, restaurants and hairdressers from 1 June.  

Travel will be authorised within the same region but movement between different regions will only be allowed for serious reasons (work or health). During this week, when the Italian Government officially confirmed the date (4 May), Italy avoided a potential downgrade of its credit rating by S&P.  

On Friday last week S&P confirmed a BBB Rating despite forecasting Italian debt’s level to 150% of the GDP level by the end of the year, due to the increase of bond sales needed to face the COVID-19 Emergency.  

The ECB’s ‘bazooka’ for a massive assets purchase program stopped the additional public borrowing and put a stop to an increase in spread. In the meantime, another step ahead regarding the negotiation among the 27 EU Members was represented by the mandate to the European Commission to study a detailed proposal about the ‘recovery fund’ financed by EU bonds, which gave additional help to the country to keep the cost of debt under control. The Italian Government is also looking at additional financial aid for over €55 billion of which €13 billion to finance furlough (with 7.1 million beneficiaries) which will be approved by the end of this week.  


23 April

Two topics made the front page of the Italian newspapers this week. The first is this week’s virtual meeting of EU leaders to discuss the form of the European support to face the crisis (ESM without conditions, 'Corona Bond' or other form of support). On this point the Italian politicians are not aligned and there is a lot of debate among different parties, opposition to the EU in Italy has never been higher. The second is related to Phase 2 which is expected to start progressively from 3 May; the guidelines are under discussions.   

Bookshops, laundries, stationers, children’s clothes stores have already reopened in some regions and IT manufacturers workers are back at work. Different solutions are under discussion for the lockdown full exit plan, but some points are already clear: schools will open in September (Italian school year ends in June) and there won’t be other exceptions to the current lockdown measures before 3 May (as requested by some regions).

On the real estate side, market sentiment became more stable compared to the previous week but the ‘wait and see’ approach is common among investors, landlords, corporates and, in general, real estate players. Some investors, mainly opportunistic, started to ask for new opportunities with higher returns. On the other hand vendors are still reluctant to put new assets on the market before understanding how tenants’ requests will impact prices and yields. 


April 16

In the last video message Italy's president, Sergio Mattarella, on the occasion of a ‘very different’ Easter said that "we also see the concrete possibility of overcoming this emergency [….] The sacrifices we have been making for more than a month are producing the desired results and we cannot stop right now".

The day before the Italian Prime Minister extended the country lockdown until the 3 May starting, at the same time, to scope out Phase 2 and hiring the former global Vodafone CEO Vittorio Colao to lead the governmental task force which is going to define when and how the activities will reopen. 

Looking at the factsheet, first quarter market data had not reflected the full impact of COVID-19, with investment volumes in the range of €1.7 billion, aligned with the same period of 2018 and 2019 volumes, despite some deals having been slowed down. On the occupier market, take-up in Milan stood at 100,000 sq m, quite robust while Rome slowed down at 25,000 sq m.

In the first week of April, further deals have been stopped with investors becoming more cautious, mainly for value-add deals. Banks are found to be very selective, increasing the cost of financing (and lower LTV) and some of the lenders are on hold. In addition, no new assets have been proposed on the market with most selling processes on hold. 


9 April

Italy is in its sixth week of lockdown and it seems it is approaching the turning point: the trend of infections is slowing down, but the lockdown has been extended to the 13 April.

The Government started talks about ‘Phase 2’ concerning the gradual re-opening of activities which is expected to begin in May, subject to the level of infections. In the meantime, a new financial law is under discussion for additional €30 billion of new incentives.   

Corporate occupiers are starting to question about how they should change their office layout to allow employees to come back to the office.

It may still be too early to assess long-term space requirements: however, some assumptions can be made using a post-crisis scenario.

It is likely that employee’s safety, social distances, and smart working will be the key drivers for office space demand in the short term.

This may be reflected in an acceleration of tenants’ ‘Wellbeing’ policies and towards a greater use of technology and ‘activity based’ working.   

It could also create more demand for space if space per capita increases. Landlords should take note of new corporate requirements and think about how spaces could change in order to retain tenants and manage space to meet new requirements.  

Requirements for temporary logistics space is rising, as the surge in online retail has increased tenants’ needs for flexibility. This is more evident in the grocery sector which has experienced unprecedented demand for home delivery.  

Investors are moving cautiously, paying attention to both the Italian Government and the ECB and their moves to support the economy. Some transactions are proceeding but with difficulties in purchaser due diligence activities.  

Financing is starting to be an issue and investors that are less dependent on debt are taking advantage of lack of competition. They are approaching deals in a more opportunistic way or trying to create a robust pipeline.

Quarterly preliminary data shows investment volumes are in line with the same quarter of last year due to deals started at the end of 2019 and agreed before COVID-19. We are expecting a very low Q2 due to a total stop of new assets put on the market in the last 4 weeks. 


2 April

One month of gradual individual lockdown and shut down of almost all activities (excluding the essential ones) including construction sites in Italy, has led real estate players to review their strategies.  

Investors are reacting in different ways. Some have already started to put on hold their decision-making processes and some others are considering withdrawing or asking for discounts on advanced negotiations. There are investors that have confirmed their investment strategy, taking some advantage from potential lower competition.  

In turn, banks have started to be more prudent in financing new deals with lower LTV and higher costs, stopping most of the value-add and more opportunistic deals. Overall activity slowed down in Q1, with core investors more resilient and some opportunistic buyers looking for rescue deals. 

On the occupier side, retail, leisure and hospitality are most affected by the imposed restrictions and this is resulting in requests for rental renegotiations and/or temporary suspension. No sectors are excluded apart from logistics, at least so far. A small share of office tenants have asked for rent reviews or suspensions - mainly flexible workplace operators - but this share could increase as corporates assess their business exposure to the consequences of the outbreak. 

Office take up could be potentially affected by major risks of slow-down in the medium term: pre-lease agreements could be reviewed in the light of completion delays. 

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