In the first five months of 2015, 77% of the investment volume is secured by international players, who show renewed confidence in the market. Equity Funds, Sovereign Wealth Funds and other institutional investors from the US, Middle East and AsiaPacific have overthrown the European investors from their dominant position in the market targeting iconic assets and large portfolios. Strong demand and improved pricing expectations underpins the supply of product in the market, which may come from banks, distressed sellers and funds close to expiry.

^{Source: Savills European Research, RCA}

Besides portfolios, prime offices in Milan CBD are the most sought after product followed by prime regional shopping centres. Investors can benefit from further yield compression as prime achievable yields are 100-200bps above the previous cycle peak.

There is increasing availability of financing and margins are coming down, mainly due to lower spreads on the government debt. The supply of product in the market is driven by renewed investor interest and improved pricing expectations in the prime segment.

Supply of investment product may come from distressed sellers, banks, and funds close to expiry. There are a number of listed and unlisted Italian funds that are close to expiry, which can bring more assets on the market. In addition many cross border open-ended funds that invested in Italy between 2003 and 2007 are good potential sources of investment.

^{Source: RCA}

From the €4.32bn invested in the Italian commercial real estate market since January 15 (until May), over €3.3bn was international capital, which corresponds to about 77% of the total, setting a new historic record. Cross border investors are driving the momentum as international capital is moving beyond the core European markets in search for better returns. The renewed confidence of international investors in the market has already been marked since 2013. Activity was initially driven by opportunistic and equity funds (EF), but there are increasingly more entries in the market by institutional investors and sovereign wealth funds (SWF) from overseas.

So far this year EF (25%) and SWF (28%) are sharing over half of the transaction volume, while the rising share of listed companies and Italian property companies (17%) shows the gradual return of Italian investors in the investment scene. National investors are yet to become more active in the market as the weight of capital in property is still about one third (2014) of the historic record of €4.5bn in 2008.