Italian Retail Snapshot | Q4 2022
An in-depth analysis of the Italian Retail Market in 2022, complete with macro-economics short analysis and tailored future scenarios.
- Francesca Fantuzzi
- Carlo Cocuzzo
- Claudia Solarino
- The Italian economy shows some resilience
The Italian economy held up surprisingly well in 2022, ranking above other key eurozone countries (France and Germany). GDP growth posted a +0.5% in Q3 2022, mainly driven by domestic demand. Net exports on the other hand were a negative driver. Carry-over annual GDP growth now stands at +3.9%.
- Retail warehousing remains appealing to investors
From the capital markets perspective, the retail sector is still in recovering mode since the covid-19 pandemic lows. Investment activity may be a bit softer in the first half of 2023, with Investors looking for assets with strong fundamentals and good defensive qualities.
- Retail leasing market shows some degree of resilience
Retail rents are expected to remain stable in most European countries in 2023, albeit pockets of solid growth may appear, depending on the affordability of rents. Solid growth is expected to return in 2024.
The European retail market enters the current slowdown from a position of strength. Although retail investment volumes for 2022 grew by 15% year on year to €37.2 billion (+15%YoY), the slowdown observed during the third quarter accelerated in the final quarter of 2022 as various transactions have been halted.
The Italian retail sector is still recovering from the post-pandemic lows. In 2022 investment flows amounted to €0.8 billion (-44% YoY). Of these, around 24% were in-town transactions while the remaining 76% were out-of-town. Prime net yields moved out across all retail submarkets starting from Q4 2022. Prime rents remained stable in most European countries, but notable growth in rents have been observed in Italy.