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Milan Real Estate Industry Research Analysis

KEY DRIVERS OF REAL ESTATE INVESTMENT OPPORTUNITIES: AN ASSESSMENT OF THE MILAN ECONOMY (Milan Real Estate Industry Research Analysis)

Contents Page:

  • – Executive Summary
  • – Introduction
  • – Economic Trends Milan
  • – The Expo Impact
  • – Commercial Real Estate Investment Opportunities
  • – Comparative assessment
  • – References

Milan Real Estate Industry Research Analysis – Executive Summary:

  • This report will look to analyse investment drivers within the Milan market, how the EXPO contributed to investment growth, the commercial real estate market, and provide recommendations on the best investment opportunities.
  • Milan is a key part of the Italian economy and it estimates to generate 10% of the Italian economy, with the Lombardy region generating 20%.
  • Milan has very good infrastructure being an hour away from the three international airports.It is also well connected internally, having tram, bus, and metro which connected the whole city together. It is seen as the southern European hub.
  • Italy has struggled in recent years, but is still the 4th largest economy in Europe and is expected to experience positive growth in the next four years of over 1%.
  • Milan contributed over ¼ of investment volume in 2014 and over ½ in 2015.
  • The Expo attracted over 20 million visitors with over 25% coming from abroad. It is estimated that in cost €3bn in infrastructure, however, brought in over €6bn and generated value of +0.1% of total Italian GDP.
  • The Expo was a huge success for Milan, however the area has not got a definitive plan on what it will now be used for and worries are that it will go to waste.
  • Milan saw a 35% increase in office take-up between 2014 and 2015. Most of the current building available are Grade B and C making up 78% of the space. The prime rent currently is €480 which have been very stagnant between 2005 – 2015.
  • The office investment market has been very strong with a high increase in non-domestic investment reaching nearly €3,000 million of total investments. The biggest investment was made by the China Fosun Property through investing €345m in Palazzo Broggi.
  • Milan is one of the top retail destinations in Europe with prime high street rent of €833 per sqm. Shopping Centre retail rents are much lower at €71 per sqm. Prime high street yield is currently about 4.75% and shopping Centre is 6.5%.
  • Industrial sector had the least amount in the commercial sector at €0.3M. This, therefore, is the highest since 2007. Prime rents currently stand at €4.25 with a five-year growth rate of -1.5%. However, the increase in e-commerce experienced industrial prices, rising as more warehouse space is needed to accommodate storage facilities.
  • The first recommendation would be to invest in the office sector of Milan. This is due to the Expo space that could be put to use and the Grade A office is in need of development in Milan.
  • The second recommendation would be the necessity of investment in the industrial sector. It hasn’t seen growth in the past five years in terms of rents, however as ecommerce sales increase, industrial space will become more in demand which should see an increase in prices in the long term.

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