H1 results and real estate market outlook for 2021
July 9, 2021
In the first half of 2021 the Office real estate market continued to see growing dynamism with new developments, investments and significant deals closed by end users motivated to create a new identity for their headquarters, in efficient, modern buildings offering comfortable, high-quality spaces.

Milan saw record Office take-up of 127,000 sqm in Q2 2021 (up 100% compared to the same period in 2020 and higher even than take-up in Q2 2019, one of the best quarters ever), leading to a total of approx. 210,000 sqm since the beginning of the year.

Several significant transactions have been closed over the period, mainly in the CBD and Centre submarkets (39% of overall total take-up).

The performance of the Rome Office leasing market was also very positive, recording a take-up of 48,000 sqm in the second quarter (+200% compared to Q2 2020) bringing the H1 2021 total to approx. 72,300 sqm. In terms of the locations preferred by occupiers, take-up in the capital city concentrated on the Centre submarket in H1 2021, followed by the EUR area.

The record results achieved in terms of Office sector take-up, with a transacted area of over 130,000 sqm in Milan and Rome, has reconfirmed GVA Redilco’s leadership in the sector and a positive trend for the second half of the year is also expected, accompanied by a sustained increase in demand for office spaces. This is mainly oriented towards Grade A/A+ product in prestigious and attractive locations, with the highest quality standards and international energy efficiency certifications, suitable for hosting new innovative formats characterizing the internal design and the management of the spaces.

The Logistics real estate market continues to grow, with exceptional take-up of approx. 1,300,000 sqm, representing a 56% increase compared to the first half of 2020. The outlook to year end is particularly positive with total take-up expected to be higher than, or at least equal to, the levels recorded in 2020 (approx. 2.3 million sqm), the best year ever for the sector.

Excellent performance was also seen from the GVA Redilco team, which transacted about one third of total market take-up, confirming its leadership position in the Logistics sector as well.

The rental trend illustrates an underlying stability in almost all the prime locations following increases in 2020.

From the point of view of investments, the volume for all asset classes in the second quarter in Italy stood at around € 2 billion, a slight increase compared to Q2 2020 and a result that brings the total for first semester to around € 3.3 billion, of which GVA Redilco participated for € 1.1 billion. Furthermore an in-depth analysis of the deals in progress reveals that preliminary agreements have been signed - therefore not yet included in the volume totals recorded - for approx. € 1 billion, which suggests a very strong recovery in investment growth.

The Office sector remains investors’ preferred asset class, catalyzing approx. € 800 million, a quarter of the total invested over the semester.

Also of significance is the market share gained by the ‘alternatives’ sector (data center, telco, healthcare and mixed), which reached € 860 million in first half of the year, equal to 26% of the total invested and a triple-digit increase compared to the previous year, highlighing the growing interest in this segment.

Investments in the Residential-Living sector are also growing and attracted approx. € 385 million in investments (12% of the total), up 25% compared to H1 2020.

The Retail market underwent a further contraction in the investment volume recorded, with transactions for € 176 million, but the sector finally saw letting activity resume, in particular for High Street assets in Milan and Rome, taking a bet on the hoped-for recovery in consumption.

A new record was achieved for the Logistics sector in Italy: the investment volume at the end of H1 2021 exceeded € 635 million, an increase of 92% on the same period in 2020 and up 167% compared to H1 2019.

This sector, which catalysed approx. 20% of the total invested in Italy, has proven itself to be solid, mature and really dynamic. The growth of investor interest in this asset class will lead to a further contraction in net yields, compared to the current 4.7%.

Based on the momentum of the current trend and pipeline transactions, an equally positive second half of the year is expected, including new records for take-up, rents and yields and a target invested volume that could reach € 2 billion.