Funds and Reits at 4,750 billion

European Reits account for 33.55% of the total assets of Old Continent vehicles, while funds as a whole (listed and unlisted) continue to lead the market, accounting for over 66% of total volumes.

In terms of European real estate funds' investments, offices, which have improved slightly, remain the preferred asset class with a weight of 42.7 per cent of the total assets under management; the 'other' category follows in second place with around 19 per cent. Retail, slipping to third place (17 per cent), residential declining slightly to 14.6 per cent. Logistics also declined to seven percentage points. Residential and logistics real estate consolidated their market share and accounted for almost 22 per cent of the total assets managed by European real estate funds.

"In Europe, this year will be remembered as the turning point marking the end of the negative trading cycle, the loss of asset value and the reduction in invested capital that characterised the last two years," the Report states. This stabilisation phase has reassured investors and since the second quarter of this year, Europe's major markets have regained appeal and dynamism.
The total volume of European investments, by the end of the year, could oscillate between EUR 160 and 175 billion, with a decisive upturn in the capital market oscillating in the range between eight and 18% (in 2023, a volume of EUR 148 billion had been reached).

Considering the total of the 28 EU countries, the average turnover generated at the end of 2024 should be close to EUR 1,125 billion, which means a positive year-on-year change of 2.3 per cent. Narrowing the perspective to the real estate market of the top five European nations (including Great Britain), the figure is still positive, although in terms of percentage increase it remains slightly lower: 2024 is expected to end with a turnover of almost 930 billion euro, a positive change of 2.1 per cent compared to the previous 12 months, thus also surpassing the total value recorded in 2022 (926,500 million euro).
Even better are the expectations for 2025 in all five major European markets, where the market will return to more solid growth. Next year's sales are expected to grow by 3.2 percentage points to approximately EUR 960 billion. The so-called repricing phase that characterised the last two years of the global (mainly European) real estate markets is now coming to an end. The estimated year-on-year percentage changes by the end of 2024 of the Old Continent's Big Five all return a positive sign, according to the Report.

Italy is in the lead (5.7 per cent) at EUR 155.75 billion, followed by Spain and Great Britain (respectively with changes of 4.2 and 3.7 percentage points and turnovers of EUR 117.2 and 150 billion). Although Germany remains at the top of Europe in terms of total turnover (EUR 318 billion), it is last in terms of change (1.9 per cent). France will continue to struggle (2.3 per cent), in penultimate position by growth, but in second place by change.
Investment activity over the past year has seen major players shift their focus to green primes (products with lower environmental impact characterised by rising rents and compliance with ESG requirements), which allow higher returns.

In the five most industrialised countries, an average change in residential prices of 0.3 per cent is estimated for the end of the year; a result driven downwards by the negative performance of France and Germany. In fact, the largest negative changes in sales prices in the residential segment concern the markets of France (-3.5 per cent) and Germany (-2.8 per cent).

The forecast for 2025 for the Eu5 countries is a substantial price increase of 3 per cent. Next year's turnover is expected to grow by 3.2 percentage points to about EUR 960 billion.

The upward trend in prices is linked to the increase in real estate transactions: among the five main countries of the Old Continent, France and Spain will end the year with a positive growth in residential prices of 3% or more; the remaining countries, while remaining in the positive camp, will remain below two per cent. In Spain, Italy and England, house prices will end the year on an upward trend, and although there will be some downturns in transactions, this will not prevent the market from marking a new upturn in values, mainly driven by the major metropolitan areas.

Going into more detail on the residential sector, in the five most industrialised countries an average change in residential sector prices of 0.3 per cent is estimated for the end of the year: a result driven downwards by the negative performance of France and Germany. In fact, the largest negative changes in sales prices in the residential segment concern markets in France (-3.5 per cent) and Germany (-2.8 per cent). The forecast for 2025 for the Eu5 countries is for a substantial price increase of three per cent.

As far as the tertiary real estate markets of the main Emea countries are concerned, the estimate of the Report by Scenari Immobiliari is that 2024 will close with prices rising slightly (2.6 per cent) compared to 2023, showing that the negative phase of the last two years now seems to be behind us, despite the economic turmoil and the decline intake-up. The forecasts for 2025 are positive, in which the recovery of the tertiary sector could lead to an increase in turnover of 3.7 per cent. Also this year, in the five countries with the most important real estate markets in terms of trade and investment volumes, the logistics sector is the most lively. By the end of the year the general average price trend is estimated to rise by 2.7 per cent, while in 2025 growth will stop at 2.6 per cent.

Italy's positive trend continues: 2024 could close with a turnover of EUR 147.3 billion, an expansion of 3.4% compared to the previous twelve months, the highest among the five European countries. "The main reasons for this growth are to be found in the reduction in the cost of money, the increased confidence shown by investors and the shortage of supply of newly built properties (especially in the residential sector), which keeps price tension high. Our country ranks first in terms of annual percentage increase, while in terms of value it is surpassed only by Germany and France, thanks to the higher number of transactions carried out," explains the Report. Forecasts for 2025 not only remain positive (+5.7%), but almost double in terms of growth for a total volume of €155.75 billion, which puts us in first place for growth among the top five European real estate markets.

In 2024, residential will account for approximately 83% of Italian turnover with EUR 122 billion and a positive change of 4.3% year-on-year. Offices are still in the negative field, losing 1.8%, but the sector is expected to recover strongly in 2025: an increase of 3.7% should bring turnover to EUR 5.6 billion (expanding, but still below 2022 volumes).

In our country, the growth in trade is around 1.4 per cent, with a number of purchases and sales of about 720,000. Estimates for 2025 assume a further increase of 5.6 per cent and 760 thousand transactions. Compared to 2020, this is an increase of 36 per cent. However, more than 90 per cent of the purchases and sales concern used houses, which pushes up the quotations for new or better quality homes that do not require upgrading. Quotations are expected to grow by 3.1% nationwide, but in large cities the variations will be more significant: in Milan +6.9%, Rome +6%, Venice +6.5%. The positive series of second homes for tourist use also continues, driven both by the demand for investments for short-term rentals and by the requests of those who transform their holiday home into a primary residence.

Italian real estate funds continue to grow and at the end of 2024 their weight on the rest of European vehicles in terms of Nav will be close to 13 per cent. Real estate assets held directly by the 665 active funds as of 31 December 2024 are expected to reach EUR 138 billion, an increase of 5.3% over 2022.

Estimates of the Nav at the end of 2024, based on managers' indications and half-yearly figures, assume that the threshold of EUR 121 billion will be reached, an increase of 6.1% over the previous twelve months. The asset allocation of Italian managed assets has seen a slight change in the weight of the various sectors: residential and hospitality are growing, offices and logistics are stable. Forecasts for 2025 are for an increase in Nav to EUR 127 billion (+5%) and in assets by 5.1% and the number of vehicles could reach 680.

"The asset allocation of Italy's managed assets," emphasised Francesca Zirnstein, general manager of Scenari Immobiliari, "has seen a slight change in the weight of the various sectors: residential and hospitality are growing, offices and logistics are stable. Further development prospects for the segment in 2025 assume, based on the indications gathered among the asset management companies participating in our working group, a greater diversification of portfolios and an increase in assets under management. Currently, assets amount to EUR 138 billion held by 60 Sgr and 665 real estate funds'. Currently, the top 25 Sgr by number of real estate funds under management own 640 vehicles, more than 95 per cent of the total.

Investments in Italy in recent years have been on an upward trend. The 2020 results (EUR 8.2 billion) were followed by a capital market of more than EUR 10 billion in 2021; the upward trend continued in 2022 with a volume of EUR 12 billion; 2023 marked a marked change of pace with investments slowing down sharply, about half of the previous year's total volume.

"The current year is expected to close with an upward trend once again: end-of-year estimates assume that the €8.4 billion threshold will be reached," the Report reads. The first half of 2024 had closed with an investment volume close to €4 billion, a clear recovery compared to the same period last year and +33% compared to the first half of 2023, a figure that reflects a recovery in investment activity already underway. Indeed, growth strengthened in the second quarter of 2024, which at EUR 1.8 billion saw an even stronger increase in investment volumes, plus 42% compared to the same period last year."
2025 will see a marked improvement with volumes growing by more than seven percentage points to nine billion. The Italian market remains attractive and the international component of capital continues to dominate the overall investment volume. Milan remains in the lead, but Rome continues to polarise capital, although regional markets are becoming more dynamic.

Offices, with a growing demand for A-quality and environmentally sustainable spaces, are once again concentrating a quarter of total investments with EUR 2.1 billion. The accommodation market is also on the rise, with approximately EUR 1.9 billion and an increasingly significant presence of international chains and investments in urban five-star hotels and resorts in the south. In the accommodation sector, the revival of tourism combined with rising room prices is stimulating investment in the sector.

Still important is the growth of the logistics sector, especially in the centre south. Investors are active, although yields are falling. Volumes, down by more than 30 per cent over the previous 12 months, fell to over EUR 1.1 billion. The "other" category brings together healthcare, data centres and telephone exchanges record expanding investment volumes, and by the end of the year they are expected to be close to EUR 800 million in fundraising.The weight of investments in the commercial sector is appreciating, even if the appeal of retail in suburban areas is decreasing, while large-scale retail remains stable overall. By the end of the year, total volume absorption is expected to amount to approximately EUR 1.9 billion.
Alternative asset classes (especially residential and student housing), although characterised by dynamism, are declining slightly. Build-to-rent is confirmed as a winning strategy that fills the shortage of housing adapted to the new housing needs.

Rome is home to 6.5 million square metres of managed assets, representing 15.4% of the total. In the capital, interest in the office and residential segments is confirmed, redrawing their proportions. The residential sector accounts for almost a quarter of the total surface area of real estate funds' assets. The number of assets is close to 1,200, five times the figure for Milan.
The most attractive areas for the approximately 2,800 assets under management (up on the previous twelve months) are those near railway stations and historically recognisable areas. Offices in the capital account for more than 20% and 47.1% of the city's total nationwide: properties with a maximum surface area of 5,000 square metres are located in central areas. The office sector is by far the largest market share in the capital's managed assets, but 42% (in line with the previous twelve months) is comparable to the prime sector.