The real estate market in post-pandemic Italy is recovering. While 2020 was considered by analysts to be the darkest year for the residential sector, 2021 is beginning to show signs of recovery. In Europe and Italy, growth prospects are different: on the one hand we are witnessing a market that experts define as a “speculative bubble”, while on the other they are certain that with the recent approval of the PNRR, together with green investments and the reforms that will accompany the plan, the real estate sector will make a leap forward. While waiting for the Recovery funds, Italy is witnessing a recent phenomenon imported from the United States: the multifamily asset class.

REAL ESTATE IN EUROPE

The European commercial real estate market has been severely affected by the pandemic, as a fall by more than 30% in 2020 investments is expected, resulting in a total shortfall of around EUR 29 billion. In 2021, however, experts agree that there will be a reversal of the trend and that brick-and-mortar will rise by 21%. According to a 2020 report published by the UBS Global Real Estate Bubble Index, overall growth estimates in the Eurozone will be lower when compared to the US market. This is explained by the fall in US mortgage rates, which have historically been low, supporting US property prices and giving confidence to citizens. The study then analysed the market in a number of large European cities that have high valuations and are approaching a sort of speculative bubble. In Germany, for example, prices have risen for eleven consecutive years, while in France they have risen for six, and from this picture it emerges that cities such as Munich and Frankfurt are at the top of the list, followed by Paris. Looking outside the EU we find London, which is bucking the trend with a residential market experiencing a gradual decline in prices.

IN ITALY

In Italy, prices have fallen in real terms and have only stabilised in recent years. It is precisely the Italian residential market that could benefit from the economic policies put in place to fight the covid crisis – a few days ago the European Commission accepted the investment and reform plan proposed by Draghi government – in terms of both sales and energy requalification, which could be the driving assets for the sector’s recovery.

MULTIFAMILY ASSET CLASS

In a context of gradual recovery of the real estate market, economic players and institutional investors are trying to carve out their own space within the sales and rental market through tailor-made building developments, focusing on urban contexts with a high rate of urban regeneration where demand from students and workers away from home is very high. In Italy, there is a growing interest in the multifamily real estate asset class. This segment, an interesting form of investment with low volatility and low risk well established in the United States, in Italy is still in an embryonic phase but already in 2019 we were witnessing an increase in residential leases that will push demand towards multifamily housing. The Italian market, unlike the US market, is very different. While in the US the residential offers are proposed by countless players, in Italy the market is mainly made up of private owners and is consequently very fragmented. This fragmentation makes it difficult for new investors to come up with their own ideas, on the one hand, and, on the other, diversified residential solutions tailored to new needs and demands.