Speaking at the third annual immonext conference, the ideas forum organised by idealista to reflect on the past, present and future of the real estate market, Alessandro Ghisolfi, analyst at Abitare Co e Scenari Immobiliari, spoke about new trends in the Italian rental market.
Share-living, co-living, coworking: these are the new trends in the rental market in Italy. In the last ten years in Italy the market has changed, with insufficient potential demand, young professionals looking for home for rent rather than to buy and the development of the sharing economy increasing the supply of real estate on the web. Short-term rentals have developed more and more with the AirBnb phenomenon and the buying and selling crisis has been largely overcome thanks to rentals.
Comparing leases and sales over the last 30 years, there were 700,000 lease contracts in 1990 and 1.8 million in 2018. Meanwhile, in 2008 the number of sales was over 800,000, whereas now they are closer to 600,000. Data supplied by the Italian Tax Office and ABI on the rental market record the types of contracts in cities with a high-pressure housing situation (having at least 50 thousand residents): ordinary leases, transitional long-term lets, transitional lets of less than three years, student rentals and agreed rents. The important takeaway from this is that, although ordinary long-term rental contracts still make up 44% of the total, in 2017 the share was 55%. This is an annual decrease of 11%, while there was an increase in the number of agreed rents and rents for students.
The Nomisma survey on people’s propensity to rent and purchase shows that among the different markets, for example, Cagliari has a higher demand for purchase than rentals, while in Bologna it’s the opposite. In some cities, therefore, the demand for rent is higher than the demand for home purchases. There is a greater balance in cities such as Florence and Naples.
Demand in the rental sector for university students has existed for decades: the supply of student residences in Europe is generally very low, except in Great Britain (27% of the total). In Italy, investors have only recently appeared, for example Hines, which invests heavily in Milan; as for the rest, the market is mainly in the hands of associations or religious bodies. However, it has gone from less than a billion invested in Europe in 2010 to about 10 billion invested in 2018. This segment is therefore becoming increasingly attractive for investors.
Who are the investors in the Italian rental sector? The role of funds and institutional investors remains central, but individuals may have a better chance if they find the right opportunities. The American company Greystone is the world's largest investor, with 6.6 billion dollars invested last year in student housing. In Europe there is The Student Hotel, a British company recently born from an idea of two young entrepreneurs who had trouble renting an apartment in London. They have thought of a system in which the tenant rents not only the house, but also the related services, paying low rents and bills thanks to the collaboration with other tenants in taking care of the communal areas: 62 euros per month for 15 square metres.
Co-living is the same formula, but for adults. It involves renting a small space that is paid in a limited way, cooperating with the neighbours to care for the common spaces. Some examples include Alta Plus in New York, with 46 floors and The Collective in London, made up of 500 micro-rooms with a maximum of 20 m2 (215 sq ft) in which you can rent a cinema, spa, gym and so on.