2024 is underway, and real estate market experts are outlining their forecasts for the coming months, reflecting on the events of 2023. Despite macroeconomic challenges, there are moderately positive signs for various real estate sectors in Italy for 2024. Here’s what experts predict for the Italian real estate market in the year ahead and which sectors to keep an eye on.
Residential Property Market in Italy
The residential property market in Italy witnessed a contraction in purchases and sales in 2023 compared to the previous year, with approximately 680,000 transactions. This trend is expected to continue into 2024, potentially dropping to 650,000 transactions, while prices may rise by up to 2%. Factors such as high interest rates and cautious lending practices by banks could lead to reductions in prices, particularly for larger properties requiring substantial financing. However, smaller properties that require less capital investment are not expected to see significant declines. New construction is likely to focus on major cities, while prices may fall for renovation projects requiring extensive work. Investments in residential real estate, particularly in short-term rentals, are expected to remain robust, with good prospects for tourist resorts.
Italian Real Estate Investment in 2024
Institutional investors are eyeing various sectors in 2024, with a focus on zero-emission and ESG-compliant projects. Residential rental properties present attractive opportunities, especially with the need for modern, user-friendly accommodations. The logistics sector is also promising, given the high demand for modern, sustainable facilities. Real estate debt, particularly real estate bonds, offers strong risk-adjusted returns, making it an attractive investment option in uncertain market conditions.
Luxury Real Estate in Italy: Expectations for 2024
The luxury property market in Italy is expected to remain stable in 2024. While there was a slight decline in transactions in 2023, average prices remained resilient. The market is influenced by economic factors, with uncertainties affecting transaction volumes. However, stability is expected, with prices likely to see only slight increases unless inflation spikes.
Consequences of Interest Rate Movements
Interest rate pressures are anticipated to continue into 2024, impacting real estate yields. While some sectors may experience corrections, others remain resilient, particularly in prime locations. Core real estate assets are expected to weather the storm, offering attractive returns once prices stabilize.
2024 Forecast for the Construction Sector in Italy
The construction sector in Italy faces challenges, with uncertainties surrounding tax incentives and rising interest rates. However, opportunities may arise from infrastructure investments outlined in the National Recovery and Resilience Plan. A decrease in ECB rates could also stimulate private investments, potentially revitalizing the sector in the latter half of 2024.