PWC Real Estate 2018

Real Estate
Market Overview
Italy 2018
www.pwc.com/it
2 | Italian Real Estate Market Overview
1. untr r file 5
2. Residential rt a es 9
3. In est ents in nstructi n 13
4. ransacti n rends 17
5. Italian In est ent rends 27
5.1 lternati e sset lasses 36
5.2 Real state unds 38
5.3 Italian ar et 40
6. ilan 45
6.1 Residential 50
6.2 In est ent rends 54
6.3 Office sect r 56
6.4 tel sect r 60
7. R e 63
6.1 Residential 66
6.2 In est ent rends 70
6.3 Office sect r 72
6.4 tel sect r 74
8. Internati nal trends 77
9. l ssar 90
10. ntacts 91
3
1.
Country
Profile
5
Italian
Country Residential In est ents ransacti n In est ent Internati nal
r file rt a es in nstructi n rends rends ilan R e trends l ssar ntacts
Country Profile
2000 2010 2017

e Italian ec n is ran ed as t e n ta incenti es uld e e tended t
t ird lar est ec n in t e ur area er ere as a derate dr in acti it in
ca ita
and t e ei t lar est in t e rld s c nstructi n and ser ices and
ulati n 56.92 59.19
a r inent c untr it is a f undin ife e ectanc 80 82 83
res ecti el ile industr e cludin
e er f t e t e ur ne ears c nstructi n re ained sta le
and t e O
e c ntri uti n f f rei n trade re ained
e c untr la s a si nificant r le In increased n ne ati e e rts ere sta le ile t ere
in t e re i nal and l al ec n a uarterl asis deceleratin a little as a sustained increase in i rts
and it s a leadin c untr in rld trade c ared it t e inter nt s use ld c nsu ti n re ained sta le
e rts and t uris after risin s ar l in t e first uarter
ati nal de and e cludin st c
Recentl it as suffered s ar l c ntri uted t r t e ain In t e first nine nt s f t e ear in ati n
fr t e financial crisis f c ntri uti n t ec n ic acti it as t e as easured t e t el e nt c an e
and t e su se uent ur ean str n rec er in in est ent ic in t e ar ni ed inde f c nsu er
s erei n de t crisis ad fallen at t e e innin f t e ear rices I reac ed its i est le els
since In ati n fell sli tl in
is decline as attri uta le t t e decisi n e te er reac in fr in
fir s t rin f r ard a rti n f t eir u ust and c ntinues t e l re ectin
lanned in est ent t t e end f a sli t decelerati n in t e rices f ener
nin t uncertaint a ut et er e istin c dities and ser ices
Italian main economic drivers
Economic Growth Tourism Population Migration
Ital as rec ered fr Ital is t e c untr it e Italian ulati n is urin Ital recei ed
t e inancial crisis ut it is t e rd i est nu er f e ected t r t le al i i rants
r in sl l c ared t erni t sta s in t e in ainl due t
t er c ara le c untries i i rati n e s urces esti ate t e
nu er f ille al i i rants
It s e ected t r at an It is e ected t suffer fr at
a era e f er ear ulati n a ein as it
er t e ne t ears st de el ed nati ns Internati nal i rati n ill
e e in future ulati n
de ra ics f r Ital
6.4% 6.4% 6.4% 6.4%
5.3% 5.3% 5.3% 5.3% 5.2% 5.2% 5.2% 5.2%
3.1% 3.1% 3.1% 3.1%

2.3% 2.1%
2.3% 2.1%
2.3% 2.1%
2.3% 2.1% 2.1% 2.0%
2.1% 2.0% 2.1%
1.9% 1.9% 1.9% 1.9% 1.7% 1.7% 1.7% 1.7%
0.7% 0.7% 0.7% 0.7%
0.0%
00% 00% -0.1%
-0,2% 00% -0.1%
-0,2% 00% -0.1%
-0,2% -0,2% -0.1%
uris Population i rati n

Italian
r ss alue added industr estinati n f e rts ds

1.4% 4% 2% 5%
ertilit rate
irt s er an 4%
21% 9%
5%
5%
- 0.1% 10%
10%
00%
Annual population
19% 10%
r t 66%
14%
301.3 17%
rea s Trade, transport, accomm., food services European Union

t usands Industry including energy Asia
Public adm., defence, education, health Northern America
Real estate Other
205.9
fe c e fic e ce Middle East
Finance and insurance
Construction
Other services
ulati n ensit e le Information, communication
er s f land area c e f e fi
urce anal sis n Italian ati nal tatistical Institute I I and rld an data
Public Debt Inflation Exports Unemployment
Ital as a er i le el f Ital as a si ilar trend t Recent ears a e seen a e une l ent rate
u lic de t It ill re uire t e e er t e rec er in e rts ic in in Ital is
si nificant eff rt and annual rate f rice c an e a e een a e dri er f a e t e ur area states
litical ill t ac ie e nl as een l er Italian r t a era e f
dest reducti ns
ersistentl l in ati n e current acc unt It is r ected t re ain
uld a e it re difficult reac ed a ea f in a e er t e
t ac ie e t e dele era in ut t e sur lus ill f recast ri n
necessar narr er t e ediu
7.4% 7.4% 7.4% 7.4%
5.2% 5.2% 5.2%

4.0% 4.0% 4.0% 4.0%
2.1% 2.0%
2.1% 2.0%
2.1% 2.0%
2.1% 2.0% ne l ent rate
1.7% 1.7% 1.7% 1.7%
1.2% 1.2% 1.2%
1.3% 1.2%
1.3% 1.3% 1.3% t t tal la ur f rce
% 0.7% 0.7%
0.0% 0.0% 0.0% 0.0%
% -0.1% -0.1% -0.1% -0.1% -0.1%
u lic e t In ati n rts
-3.5% -3.5% -3.5% -3.5%
-5.0% -5.0% -5.0% -5.0%

ar ar ar urce anal sis n rld an data -5.5% -5.5% -5.5% -5.5%
7
2.
Residential
Mortgages
9
Italian
Residential Mortgages
Volume trend in Italy 07 – H1 18 as a unt su lied an s t use lds

60
e cas a
unt su lied an s t use lds fr + 22%
CAGR %
acc rdin t as een rec erin since 50
17vs13
alt u it as n t returned t its ist rical ea as t e 40
start f rec er f r mortgages to households t e nu er
€ (millions)
30
f rt a es si ned t urc ase a use in as 24,70
i er c ared t ile rec rded a su stantial 20
increase f 70.6% over 2014. 10

In rt a es f r uses are u er e
0
r t rate durin t e first alf f re rts an increase f 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
c ared t t e sa e eri d f t e re i us ear

ese trends are i rtant si ns t at s a rene ed rt a e re uest ur se
interest f t e financin industr in t e real estate sect r 100 2%
alt u an i rtant s are is re resented transfer l ans 90
surr e and l an refinancin 80
e an f Ital r ides data n ne rt a es transfer 70 49%
l ans and refinancin startin fr t e t ird uarter f 60
In t e first si nt s f 49.5% of the new 50

3%
supply actually covered new mortgage contracts f r 40 5%
t e ac uisiti n f t e first use t e sec nd use r 30
a c nstructi n restructurin erati n ile transfers 20 41%
surr e l ans acc unted f t e ar et and 10
refinancin acc unted f r nl 0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
en c arin t e first si f it t e sa e eri d f First house Second House Restructuring and Construction Transfer Refinancin
t e re i us ear t ere is a sli t increase in transfer f l ans
ic in re resented less t an f t e ar et rt a e re uest a unt
In t e s are f t tal urc ases t at included a
100
rt a e ained int t ree ercenta e ints ere 10%
90
rec ered in reac in and e ceedin in 15%
80
t e rt and entral areas e incidence e ceeds in
70
t e s ut as it a r ac es t e Islands ere t e increases
60
32%
are e er re r n unced t an in t e t er areas
50
c ared t ercenta e ints in t e ut and
40
ercenta e ints in t e Islands 30
e enter rec rds t e i est s are f rt a e l ans at 20 36%
f e urc ases indi iduals n t e t er and t e 10
Islands a e t e l est incidence at ust er f t e sales 0 7%
O er t e ast ears rt a es in t e ran e f 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
€ 50,001 and €150,000 acc unt f r a rti n f re < = € 50,000 € 50,001 - € 100,000 € 100,001 - € 150,000 € 150,001 - € 200,000 > € 200,000
than 60% of the total loans granted each year ese

rt a e re uest an t alue
rt a es are usuall f r a Loan-to-Value in the range 71-
80% f ll ed t e ran e 100 4%
1%
90
era e rt a e a unt 80 35%
70
145
60
140 50 18%
40
12%
135
(thousands)
30
20 15%
130
128
10 9%
125 0 7%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
120 < = 30% 31-40% 41-50% 51-60% 61-70% 71-80% 81-90% >90%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1
2018 urce anal sis n data
Italian
Italian aff rda ilit inde Italian Affordability Index urc ase a e at t e a era e rice f
re i n t e ar et
e affordability index is calculated e furt er a a fr er c n e s t e
Liguria 7.5% ased n t e f ll in aria les le el f ease r difficult f r an a era e
Italian fa il t urc ase a e
Lazio 7.7%
1. Interest rate ic re ects t e trend e rec er f dis sa le inc e ic
Tuscany 9.8% f a aila le credit and netar lic started in ained entu last ear
2. Housing prices ic e ress t e t t e end f t e dis sa le inc e
Campania 10.3%
situati n f t e usin ar et f t e a era e Italian use ld as ust
Sardinia 11.0%
3. Disposable income ic e resses er ic as a 1.4% increase
de el ed a c untr is and its erall c ared t t e re i us ear ints
Lombardy 12.1% le el f c etiti eness i er t an t e ini u end f and
n cl se t t e re crisis a i u le els
Aosta Valley 12.7%
n ff rda ilit Inde eans t at e i er fre uenc trend s s t at in
Italy 13.4% t e a era e Italian use ld is a le t t e earl nt s f t e aff rda ilit
urc ase a e at t e a era e rice f inde I s ed a furt er i r e ent
Marche 15.0%
t e ar et in arc t is ear t e inde t uc ed t e
Veneto 15.2% n ff rda ilit Inde eans t at t e alue f a alue tent f a int
a era e Italian use ld is n t a le t i er t an ece er f t e re i us ear
Emilia Romagna 15.2%
Apulia 15.9%
Umbria 16.2%
ff rda ilit inde f r Italian use lds use ld inc e and usin rices
Friuli V. G. 16.3%
inde ase
14% 135
Piedmont 16.4%
12% 130
Sicily 16.8% 10% 125
120
Abruzzo 18.2% 8%
115
6%
Basilicata 18.3% 110
4%
105
Calabria 18.5%
2% 100
Molise 19.5% 0% 95
04 05 06 07 08 09 10 11 12 13 14 15 16 17 04 05 06 07 08 09 10 11 12 13 14 15 16 17
House Price Disposable Price
The affordability index is calculated as follows:

a ent interest ears use rice
ff rda ilit inde ase
Inc e
ff rda ilit inde ff rda ilit inde ase
e in t e e uati n is t e a i u ercenta e f earl inc e
t at s uld e used t ser ice a rt a e
ears are fi ed at and is
urce anal sis n Italian IR data

11
3.
Investments
in Construction
13
Italian
Investments in Construction
Investments in Construction Residential In est ents
e I I Inde re ardin uildin c nstructi ns underlines 140
t at t ere as a slight decrease of 0.1% during 2017 30%
c ared t it t e ne ati e d na ics f u lic

120
r s ea il affectin n t e result c ared t
last ear In in est ents in ne residential uses 70%
ere n ic as l er t an and 100
Residential - New Buildings
i er t an urin t e sa e ear t e in est ents Residential - Refurbishment
f r u radin t e usin st c a e een esti ated
at n e in est ents in ri ate n n residential 80 10%
uildin s a unted t n c ared t

ile t se in u lic n n residential uildin s a unted t
60 54%
n in real ter s e er t tal in est ents in 37%
are still l er t an in est ents in In fact
in est ents in residential durin t e sa e eri d re istered 40
Residential
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
a decrease f al st ainl fr a decrease in Non Residential
ne residential New house Total house Extraordinary Non Residential - Pubblic
mantenance
Forecasting construction investments 2018 expected to increase t an s t t e first siti e si n

re istered in in uildin er its f r ne es
r in est ents in t e c nstructi n sect r net f c nfir ed in t e first alf f is
r ert transfer c sts a e een esti ated at €123.4bn sect r is e ected t increase in in real
at nati nal le el ic is a decrease of 0.1% in real ter s c ared t el t e c nstructi n sect r
terms in current alues c ared t rec er it uld e essential t e tend t e easure it
cc rdin t t e f recasts c uld re resent a deducti n f t u es f ener class
t e ear f rec er c nstructi n in est ents c uld r intr duced t e ta ilit a e irin n
increase by 2.4% in real terms an s t t e e tensi n ece er st
f u lic incenti es a furt er in est ent f n is r nine ears n bank loans to undertake new
e ected f ic in t e usin sect r ne investments in real estate are decreasing and in t e first
and ren ati ns in t e ri ate n n residential and nine nt s f t e dis urse ents f ne rt a es
n in t e u lic sect r e f recasts redict an f r residential in est ents s e reducti n in
increase f c ared t f r in est ents in l ans seen in t e residential sect r as er str n fr
u lic r s f r e tra rdinar aintenance r n ranted in t ust n in as
n residential r erties and f r ri ate n n f r t e n n residential sect r in t e t ird uarter f
residential in est ents Investments in new homes are rec rded a after a s ar fall in f
nstructi n in est ents f r uildin s c an e in uantit it res ect t t e re i us ear
0.5
-0.1
-1.0 -0.7
-3.1
-3.8 -3.8
-6.8
-7.6 -7.5
-9.5
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
urce anal sis n data

Italian
15
4.
Transaction
Trends
17
Italian
Transaction Trends
Stock and transaction ransacti n trend

(NNT) overview
110%
( 2004 – 2017 )
100%
r t e nu er f
transacti ns f r t e ain assets classes 90%
residential ffice retail and industrial -12.2% +7.6%
80% CAGR CAGR
f ll ed t e sa e eneral trend ea in -6% 13vs11 17vs13
ar und and t en drasticall CAGR
70% 09vs04
declinin until t e ar et started t rec er
ar und 60%
ince all asset classes a e s ed
si nificant r t alt u ell el t e 50%
re crisis ea
40%
Residential is t e ain asset class 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
acc untin f r circa f t tal
transacti ns and st c r n n residential Residential Office Retail Industrial
asset classes retail is ri ar acc untin

f r f t tal transacti ns and f
st c f ll ed industrial it f
c an e f t e Italian real estate ar et
transacti ns and st c
2004-2006 2006-2010 2010-2015 2015-2017
7% 37.6m 40%
2%
1% Stock 2013 30%
Residential 20%
Office
Retail
Industrial 10%
90% 0%
-10%
7% 38.1m -20%
2%
2% Stock 2017
-30%
Residential -40%
Office
Retail
Industrial
Var. % NNT - Residential Var. % NNT - Non Residential
89%
5% 445.8k
2%
2% NNT 2013
Residential
Office
Retail
Industrial
91%
5% 592.9k
2%
2% NNT 2017
Residential
Office
Retail
Industrial
91%
Italian
Historical residential transaction trend
r t e residential real estate

ar et as finall a le t ut an end t t e
l n and s ar dr t at started in
rec rdin su stantial c nsistent r t and
i li tin clear si ns f rec er
e nu er f residential transacti ns
c leted indi iduals reac ed
a r i atel 543k in 2017.
e siti e turnar und re istered in as
ainl in uenced l er re istrati n c sts
t at ca e int effect n anuar f r
rt a es and cadastral d cu ents ic
are a lica le t t e transfer f real r ert
rticle f l s ar n 2015
saw a growth of +6.5%, while 2016 saw a
substantial jump of +18.8%.
nce a ain c ntinued t e siti e trend f
t e last fe ears al eit it a s fter increase
f It is still t earl t sa if t is is
a c cle t at ill reac t e ea transacti n
lu e f r a te rar situati n
ist rical nu er f residential transacti ns
Cycle I Cycle II Cycle III Cycle III 2013 - 2017

1985-1992 1992-1996 1996-2006 2006-2013
First phase: Growth Second phase: Crisis
+80%
Var. 06vs96
-54%
Var. 13vs06
2006 Peak: 2017:
869k transactions 543k transactions
+35%
Var. 17vs13

19
Italian
NNT H1 2018 - Residential ar s area
In t ere ere 280,970 residential

transactions, 13,000 more than the same
North East
period of 2017 (an increase of 5.0%). Urban areas: +7.3%
e r t in t e nu er f residential Non urban areas: +8%
transacti ns rec rded in ut aced
t e r t seen in t e re i us uarter
c ared t and t e a s lute
nu er f transacti ns are reac in le els
re i usl rec rded ef re t e dr in
cc rdin t ist rical trend seas nall
Center
ad usted it f ur uarter in a era e North West Urban areas: +0.5%
t e usin ar et as een rec erin Urban areas: +3% Non urban areas: +5.5%
al st uninterru ted since Non urban areas: +5.6%
lt u t e Islands rec rded t e l est
nu er f residential transacti ns in
at t is territ r as s n
a str n increase at er t e sa e
uarter in
e rt ern territ ries re at it
circa es s ld in t e rt est
and a r i atel in t e rt ast
South
In t e enter t e r t as cl se t Urban areas: +6.9%
it re t an urc ased es Non urban areas: +3.2%
and finall in t e ut transacti ns r se
e ceedin units
istin uis in t e residential ar et Islands
et een r ince ca itals and t e rest f Urban areas: +6.6%
t eir r inces durin t ere as a Non urban areas: +6.9%
different increase in transacti ns et een t e
t areas it in t e r ince ca itals
and in t e rest f t eir r inces
280,970 are f di ensi nal class

Residential
NNT H1 2018
7% 8% 14% 9% 10%
9% 21%
10%
267,970
13%
21% Milan Bologna Rome

Residential 27% 40%
41%
NNT H1 2017 28%
42%
+ 5.0% Up to 50 sqm
Between 50 and 85 sqm
ar Between 85 and 115 sqm
s 145 sqm and above

Italian
ar s ain cities
In 4.5m residential sqm were

sold in the 8 main cities of Italy a ut
Milan
12,170 NNT f t e nati nal t tal an increase of
Turin +5.3%
8,833 NNT 1.7% compared to H1 2017 and si ilar t
+7.9% Bologna t e ser ed r t f r t e entire c untr
2,796 NNT
+0.1% e a era e si e f residences s ld
is l er in ilan and urin el
s ile lar est a era e surface area
rec rded is in aler it er s
Genoa
3,562 NNT
e distri uti n f t e transacti ns in
+1.7% t e ain cities residence t e s s
Florence
2,686 NNT t at in transacti ns re ardin
+3.6% residences between 50 and 115 sqm
Rome
15,612 NNT accounted for 65.6% of the total.
-2.7% In Milan, houses up to 50 sqm
purchased in H1 2018 were almost 21%
Naples
3,993 NNT of the total in Milan aler l rence
+14.5% and a les s ed t e lar est s are f
uses er s a n t e t er
ain cities
Palermo
2,809 NNT
+6.1%
16%
9% 7% 15% 9% 5% 8% 11% 10% 16%
8%
13% 14%
16%
24%
Palermo Turin Genoa 39% Florence Naples
22% 24%
38% 30%
46% 28%
34% 28%
28%
Up to 50 sqm
145 sqm and above

21
Italian
Residential Purchase Prices
e anal sis f t e ariati n f rices and transacti ns in t e residential

real estate ar et since s s t at t e transaction volume for
t e residential ar et as suffered a reduction since ereas
t e house prices kept growing e en if sl in d n until urin
alt u t e transacti n lu e alternated ad se esters t
sli tl acce ta le nes rices re ained stati nar
urin t e st alf f due t a str n c ntracti n f urc ases
t e lu e reduced ne f urt c ared t t at f and as a
c nse uence rices suffered a dee decrease ne ati e eri d f ll ed
until en t e trend s itc ed t siti e f r at c ncerns t e
transacti ns In t e siti e trend f transacti ns c ntinued ile
rices nl sli tl decreased and f ll ed a si ilar trend The
average discount on sales prices applied to the initial vendor on
residential products has decreased to 10.4% from 12.5% in
ile t e ti e needed f r ne tiati ns as decreased t 7.3 months.
ar Residential urc ase rices
110
105
100
95
90
85
80
75
2010 2011 2012 2013 2014 2015 2016 2017 H1-2018
Total Houses New Houses Existing Houses
ar f urc ase rices and residential

Var. % NNT Var. % Price 18.6%
8.3%
7.3% 6.5%
6.1%
4.9% 5.0%
3.7% 3.0% 3.5%
0.0% 1.3% 0.4% 0.1% 0.8%
-0.5% -0.8% 0.4% 0.4%

-2.2% -2.8% -2.6%
-4.4%
-5.7%
-7.0%
-9.2%
-10.9%
-15.4%
-25.8%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
urce anal sis n an f Ital data

Italian
ar f urc ase rices and residential
Lower
over 30% 20 to 30% 10 to 20% 5 to 10% less Equal or higher Average Months occurring from
than 5% discount the put up for sale to the
purchase date
Geographic distribution
North West 1.0% 8.6% 33.1% 36.9% 15.9% 4.7% 10.6% 7.0
r an areas 6.3
n t r an areas 7.8
North East 2.2% 3.4% 23.2% 48.3% 19.3% 3.7% 9.2% 7.8
r an areas 6.4
n t r an areas 8.1
Center 3.2% 5.4% 39.4% 34.7% 10.9% 6.6% 11.3% 7.4
r an areas 6.4
n t r an areas 8.3
South and Islands 2.1% 9.3% 24.6% 43.9% 12.0& 8.1% 10.4% 7.4
r an areas 6.6
n t r an areas 7.7
H1 2018 2.0% 6.8% 31.2% 40.0% 14.7% 5.5% 10.4% 7.3
2017 7.5
2016 8.7
urce anal sis n an f Ital data
23
Italian
NNT H1 2018 – Non Residential sl d n f t e ne ati e trend f transacti ns as

rec rded durin ic finall started turnin
r t e non residential asset classes in H1 2018, the siti e in and stl c ntinued er t e ne t
retail sector recorded 14,350 transactions with +7.2% ears alt u it ariati ns de endin n t e asset
growth er t e sa e eri d t e re i us ear ainl class indeed suffered a fall f t e industrial asset
su rted an increase in transacti ns in t e n rt e class ic as r l n ed durin al st all t e uarters
industrial sect r l istics and anufacturin rec rded f t e ear e ce t f r t e t ird ne r at c ncerns
5,558 transactions and s ed t e sec nd str n est t e ffice ar et a sli t siti e trend as re istered
r t it +4.3% fr t e de and f r facilities in t e resultin in s ar r t in nt e site t e retail
n rt e office sect r reac ed 4,788 transactions ar ets a e uic ened in articular durin t e central
ic as nl 1.2% higher t an Office uarters t en slac ened later urin transacti ns
transacti ns are c ncentrated in t e n rt ut t e i est c nsistentl increased acr ss all asset classes er ear
r t as rec rded in t e center ef re furt er c nfir in t e ar et rec er
e ra re rts t e series f yearly percentage In t e nu er f transacti ns f r all n n residential
variations of the number of transactions uarter asset classes c ntinued t r eac uarter e ce t f r
since it in non residential se ents clear retail ic s ed a sli t reducti n in sales

Italian
ar s area
North North North

2,879 NNT 7,005 NNT 3,773 NNT
+1.4% +12.2% +6.8%
Center Center Center

954 NNT 3,125 NNT 884 NNT
+13.3% +2.0% +0.2%
South South South

955 NNT 4,20 NNT 901 NNT
+5.2% +3.3% +1.0%
4,788 NNT 14,350 NNT 5,558 NNT

+1.2% +7.2% +4.3%
2004-2006 2006-2010 2010-2015 2015-2017

90%
70%
50%
30%
10%
-10%
-30%
-50%
Office Retail Industrial

25
5.
Italian
Investment
Trends
27
Italian
Italian Investment Trends
Historical investment trend of commercial Real Estate in Italy

€ 3.2 bn
In est ents in H1 2018 reac ed a le el f €3.2bn a ut l er tal in est ents
t an t e sa e eri d in t e est ear e er f r Italian real estate in H1 2018
in est ent since t e rec rd le el f n in
e indi idual sect r it t e lar est s are f in est ents is t e
Office sect r n ic re resent
transacti ns sli tl i er t an retail sect r it
f t e t tal lu es f
n in ested - 44%
Industrial in est ents reac ed er n a decrease f c ared
t t e sa e eri d f ic e er as due t t e sale f a
In est ents
an ur ean rtf li c nsistin f r erties l cated in Ital s
rei n in est rs ere nce a ain t e a rit it f in est ents
ein cr ss rder ri inated red inantl in est rs fr
and rance
ffice sect r it t e
estic in est ents ere ainl c ncentrated in t e
f ca ital l er c ared t last ear
65%
are f f rei n
in est ents
ist rical in est ent trend
12,000
4%
10%
10,000 + 35%
- 25% CAGR
CAGR 17vs12
12vs07
8,000
11%
39%
6,000 2017
4,000
14%
2,000
22%
2006 2007 2006 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
H1 H2
Office c
e
In est ents trend asset class O e e
5000
6%
4000
13%
33%
3000
2000
H1-2018
16%
1000
1%
0 31%
2010 2011 2012 2013 2014 2015 2016 2017 H1-2018
Office Retail Industrial and l istic urist i ed Ot er
urce anal sis

Italian
et ields in Ital asset class

ressi n f ri e ields
5.5%
c ntinues f r ffices and l i
4.9%
stics i treet and in
3.9% enter re ain sta le c ared
3.4%
3.0% t t e re i us uarter
Office ri e R e Office ri e ilan i treet ri e in enter ri e ri e istic
Transaction and deal analysis
e ta le re rted erein s s f r eac asset class t e top transactions in ter s f alue since t
Key data main Asset Price Seller Purchaser Location

transaction
ilan rl rtf li R e 750 ilan rl car ellini ristan a ital artners R e
r u r a ital eid s
rtaf li Intesa an a l rtf li 488 Intesa an a l ste ita ari us l cati ns
ari us l cati ns
i asset rtf li ari us l cati ns 300 reli s R rdian Real state ilan R e ari
r na arte ilan 272 dis n ea a ital R R ilan
ia a as dis n ilan 220 Rea R ines R Rea R ilan
Office
ia nte R sa ilan 220 rre R I Real ssets ilan
nad rtf li ari us l cati ns 300 nad r u att lica ssicura i ni ari us l cati ns
rtf li ari us l cati ns 250 llean a ari as R I R ari us l cati ns
lu ur de art ent st re R e ilan 150 erin r u O Real state artners R e ilan
ia della i a ilan 130 I iliare aurentiana r uities ilan
In esc Real state
ia ntena le ne ilan 120 nd I i ru a ara ilan
Retail i asset rtf li ari us l cati ns 120 eni ta ili R l al In est ent l na adua icen a
artners une isa ara
a e ia re is
e t le Outlets ic lun astel uelf 330 IR e ture r ert enture ic lun astel uelf
e efane in enter Ri ini 244 redit uisse sset ni n In est ent Rimini
ana e ent
a inci in enter iu icin 208 i inc ln Real state iu icin
r u i c
in centers rtf li ari us l cati ns 200 lac st ne artners r u ar i nselice
in i ita ecc ia R a
enter rindisi elilli
in centers rtf li ari us l cati ns 187 ur c ercial r erties I II l na ant a
ar ana I la
era ille Retail ar l na 108 Ori n a ital ana ers Real state l na
LLP
ic r rtf li ari us l cati ns 600 lac st ne ic r ina In est ent ari us l cati ns
Corporation CIC
i e asset rtf li rt f Ital 100 r l is e arl le r u ilan l na enice
Turin
ur asset rtf li ari us l cati ns 76 ea a ital R r al s R O ean a eri
na isa rtf li rt f Ital 75 I I a ele lac st ne nticelli d On ia
Industrial illanteri a li
l istics ree asset rtf li rt f Ital 75 reli s l na astel an
Giovanni
ree asset rtf li ard 66 lac st ne ard
na tel rtf li ari us l cati ns 259 na tels Res rts ta tels ni l ai ari us l cati ns
tel celsi r t Re is l rence 190 tar d tels Res rts ul R l rence
u a ardinia res rt astellaneta 120 reen lu alentin illa e erenissi a r astellaneta
O I fin
ldr andi illa r ese R e 62 ratelli Ossani us r u R e
tel tel ilan 60 ea a ital Real state ilan
tel R e 51 r al s R att lica ssicura i ne ilan
urce anal sis

29
Italian
Office sector H1 2018 - Investments attractin a r in nu er f c r rate tenants

R e s ar et currentl as a r su l f ri e
Office investment volumes in the first six months r ducts etiti n f r t e li ited a unt f
of 2018 reached €1.2bn c ared t t e sa e c re r ducts t in ilan and R e as led t a
eri d f t e re i us ear In t e first art f c ressi n f ri e ields ic a e reac ed t eir
t e in est ent lu e as su rted a lar e deal l est int ese c ressed ields c uld re ain at
in l in t e sale f r erties a R an de el er t is le el in t e ediu l n ter
f r ar und e f recast re ain rudent ea il de endin n t e
e lu e f in est ents as als decrease due t t e uncertain litical situati n e en t u t e ar et is
lac f r duct in line it internati nal standards due ali e and d na ic In est ent strate ies are e ected
t r de el ent and re ualificati n acti it in recent t c ntinue t s ift t ards f rede el ent f e istin
ears ilan c ntinues t a e t e r le f a ate a cit uildin s in ri e l cati ns and an increase in interest f r
ca a le f c etin it t er ur ean ar ets and ri e r erties in sec ndar l cati ns
In est ents l cati n et ields

€ 1.2bn
12%
tal In est ents
Office
ec ndar
d
in H1 2018
5.0%
- 40%
23%
Office ri e
R e
65% 3.9% ar
s
Office ri e
312 €/sqm/y
ilan
3.4%
Milan Rome Other markets
R e era e
ri e Rent
In est ent trend
5,000
570 €/sqm/y
+ 42%
4,000
CAGR ilan era e
17vs12
ri e Rent
3,000
2,000
1,000
0
2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
urce anal sis

Italian
Retail sector H1 2018 - Supply f r e ansi ns and ne entries in t e Italian ar et

e and is r in e en in alternati e l cati ns t
In the first half of the year, four projects have been ilan and R e suc as enice l rence a les
completed for a total GLA of 45k sqm ree f t ese l na and er na
ere ne enin s a s in center in i ass a retail e er ilan re ains t e ain l cati n f r retailers
ar in rescia and ura s in all in R e and ne t enter t e Italian ar et it t e ai f enin ne
e tensi n erra alle Retail ar first secti n f ase a s i st res f ll ed R e
In 2018 the positive trends of quality development urin t e first alf f ne internati nal rands
activity is continuing in terms of new openings and a e c sen ilan as t eir first destinati n in Ital suc
extensions In t e current ear t e t tal ne retail st c as atras lli ee i e u s and a a a a ia i
is esti ated at circa s aintainin t e sa e as ade its de ut in Ital in t e rese all ile
lu e f in centers re ain t e referred Isa el arrant c se c rt ur len esi ner Outlet in
asset class f ll ed retail ar s ic are e ected enta ia e enice
t s an increase in de el ent acti it in ri e rents f r i street c ntinue t r t an s t
e de and f r retail s aces c ntinues t e i t t e siti e increase f t uris
lu es f e istin and under c nstructi n ne st c retail s in Ital

1.200.000
Completions Under construction
800.000
+ 85%
CAGR 17vs15
400.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019/20
Recentl ne rands and

c nce ts a e entered t e
ar et i e r ne s
first ur ean a s i st re in
45k sqm
ilan tar uc s and le in f ne de el ents
t e center f ilan
in H1 2018
300k sqm
ected f ne
de el ents in
urce anal sis

31
Italian
Retail sector H1 2018 - Investments urin t e sec nd uarter entr Retail in est ents t l
icilia all as s ld f r a alue
In re t an €2.41bn ere in ested ar und and a a s i 5%
in t e retail sect r des ite ein l er st re in t e center f ari f r circa 8%
t an t e rec rd result f In est ents are sl in d n 1%
e er in est ents ere c ared t t e re i us ears ainl
i er t an t e ear a era e due t t e ne ati e erce ti n f an
In H1 2018 retail in est ents decreased f rei n in est rs ainl ericans 19%
c ared t t e sa e eri d f t e ecause f ne ati e e eriences in
re i us ear fr n in t e first alf t eir n d estic ar ets rei n 66%
of 2017 to €1.0bn due artl t ca ital re ain d inant in t e retail
dela s in t e c nclusi n f s e deals asset class In additi n t t e t reat
cl se t an a ree ent re resented nline sales and
ere c ntinues t e str n interest in litical uncertaint in s e ar ets
in centers ic acc unted f r suc as ilan t ere is als t e future
f t e retail lu e f r t e first alf c etiti n f de el ents in i eline Shopping center
High Street
with circa €670m f ll ed i street ic as a ne ati e effect n t e
FOC
ic acc unted f r it f erce ti n f in est rs Supermarket
in est ents en it t ese ne ati e si ns in t e Retail park
One f t e st si nificant deals f r last uarter se eral dela ed deals a e
t es in centers se ent as t e een cl sed and t e ar et see s t
ac uisiti n f a rtf li includin f ur a e started a ain e utl f rt e
s in centers f r a t tal alue f t ird uarter and f r t e rest f t e ear
ar und re ains siti e
In est ent trend

3000
2500
€2.4bn
2000
tal In est ents
1500 in 2017
€1.0bn
1000
500
tal In est ents

0
2007 20078 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 in H1 2018
H1 H2
Retail net ields

Q1 18 Q2 18
6.8%
6.0% 5.9%
4.9%
4.5%
ri ar and sec ndar ields
3.0% re ained sta le in all t e
sect rs f t e retail ar et
after a sli t rise in t e ields
f sec ndar s in center
and retail ar s
High Street High Street Shopping SC Good Retail Park Retail Park
Prime Secondary Center Prime Secondary Prime Good Secondary urce anal sis
Italian
Industrial and logistic sector e r in trend f e c erce a e u trend s

H1 2018 - Investments is dri in t e c an e in l istics
r duct and l cati n t is is als H1 2018
e le el f ta e u in t e first alf f re ected in t e c ices f in est rs

2017
as e ceeded s ic is Instituti nal in est rs c ntinue t
d n n t e a unt re rted in c nfir t eir interest in t e l istic 2016
t e sa e eri d f t e re i us ear e sect r re isterin a lu e f n
sl d n in a s r ti n is ainl due t in t e first alf e lu e in ested 2015
t e rec rd lu e rec rded in durin t e ear decreased

2014
e st attracti e area in ter s f c ared t t e sa e eri d f
ta e u is still ard re i n ainl ic as in uenced t e ac uisiti n 2013
c re and reater ilan areas re resentin f ic r r erties l cated nl in
f t e t tal ta e u in t e first alf Ital ic c ntri uted al st alf f 2012
e t er st d na ic areas are enet t is result

2010
re i n R e and l na e str n de and f r ducts t e
e referred si e are s all s aces less i a unt f deals in i eline and t e
2009
t an s ainl t eet t e last ile i le el f interest f ne in est rs
c era e needs f ll ed t e a era e t enter in t e ar et a e led t a 2008
si e included in t e ran e et een and c ntracti n f ri e ields t Total
Q1
s als due t t e lac f a aila ilit e str n interest f in est rs ad led 2007
Q2
f lar e scale r erties t at are acant t lac f a aila le r duct a c ntinue Q3
2006 Q4
In t e first alf f s and c ntracti n f acanc rate reac in
ec erce erat rs ere t e ile rents are r in n t ust 0 1.000 2.000
st d na ic users f ll ed retailers in ri e l cati ns ut e er ere in
and c urier ser ices t e c untr
ird art istic er ice r ider Inte rated l istic
In est ents trend

1400 9,00%
+ 94%
1200 CAGR
17vs12 8,00%
1000
800 7,00%
600 5.5% 6,00%

400
5,00%
200
0 4,00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
Investiments (€ mln) Prime Net Yield (dx)
46 €/sqm/y 662,772 sqm

ec ndar a eu
Rent Ital H1 2018
56 €/sqm/y €544m
ri e Rent tal In est ents
ilan and R e area in H1 2018
urce anal sis
33
Italian
Hotel sector H1 2018 - Investments t d tel erf r ance and a
In tel sect r rec rded a

reater access t credit e
erf r ance as increase t e interest
d - 22%
decrease f c ared t t e sa e f in est rs er sec ndar l cati n ecrease in Italian tel
eri d f t e re i us ear e lu e and alternati e se ents tel c ains in est ents s
in ested in reac ed ar und n a e aluate rec n ersi n f tr assets
rec rd ear f r t e tel sect r in t e ain cities c n ersi n f e istin
e st si nificant deals f t e alf
ere t e ac uisiti n f a rtf li f t
structures and als ac uisiti n in
sec ndar l cati ns it ne rands r €1.4bn
r erties in ilan and a a a in R e su rands in rder t enter in
rei n ca ital as t e i est s are er ne ar ets
tal In est ents
t e t tal lu e in ested alt u t ere is fter se eral ears f ar et rec er in 2017
als a return f Italian in est rs ainl in t e f recast f r is still siti e
siti ns n t c nsidered internati nal it an esti ated in est ent lu e f
in est rs In est rs ere attracted circa n t e end f
€416m
tal In est ents
In est ents trend
in H1 2018
1600
1400
1200
1000
+ 37%
CAGR
17vs14
5.5%
800 ilan ease c ntract
600
416
net ield
400
200
0
2014 2015 2016 2017 H1 2018
tel net ields

8% 2017 Q4
2018 Q2
6%
ields in R e and ilan a e

4% stl c ressed f r lease
and ana e ent c ntract
2% c ared t t e re i us
ear ile re ainin sta le f r
acant ssessi n
0%
Rome Milan Rome Milan Rome Milan
Lease contract Management contract Vacant Possession
ain cities erf r ance

300
73% 73% 80
71%
68%
250 € 242 70
60
200
€ 178
ADR - RevPAR
€ 169 50
150 € 139 € 144
40
€ 119
100 € 102 € 98 30
20
50
10
0
Venice Rome Florence Milan 0
ADR (€) RevPAR (€) Occupancy (%) urce anal sis
Italian
Hotel sector 2017 - Tourism demand tel de and in Ital

300 3,14 3,09 3,02 2,86 2,91 2,93
cc rdin t t e latest a aila le data fr
3,0
I I Italy recorded circa 94m arrivals with
Average lenght of stay (days)

240
Bednights (thousands)
268m bednights in 2017 e data f r 46% 48% 50% 50% 49% 49%
180
c nfir and c ns lidate t e r t rec rded 2,0
since Internati nal de and acc unted 120
f r f t tal ed ni ts and t e ain 54% 52% 50% 50% 51% 51%

60 1,0
feeder ar et is er an
0
2012 2013 2014 2015 2016 2017
cc rdin t t e latest data fr I I 5 and
Italian International Avg. lenght of stay
4 star hotels report an interesting increase
in the stock ereas l er cate r tels
rec rded a sli t decrease
However, the 3 star category records the ati nalit i edni ts
highest number of structures and available
rooms e est erf r ance is rec rded in
enice f ll ed R e
21%
Italy
Germany
2.4
UK
2% USA
2% 51% France
3%
Switzerland
en t 4%
Austria
f sta 4% China
4% Other
12%
nt l edni ts distri uti n
4.0
50,000 4,0
3.6
45,000
3.1
40,000 3.0
39% 3,0
2.7 2.6
35,000 2.5 2.4 2.5 47% 2.5
2.4
2.2
Average length of stay (days)
30,000
Bednights (thousands)
25,000 51% 2,0

58%
20,000
15,000 55% 61% 61%
51% 53% 62% 1,0
43% 51% 36%
10,000 45%
49% 42%
5,000 57% 49% 49% 45% 39% 38% 64%
55%
Jan Feb Mar Apr May Jun Jul Ago Sep Oct Nov Dec
Italian International Avg. Length of stay
urce anal sis n I I data

35
Italian
Alternative Asset Classes
Nursing Home sector ic are acti e it s eciali ed funds The nursing home sector represent circa
and acc unt f r nearl ft e 5-6% of the total volume of transaction in
Italy, around €500m e sect r er t e eri d
Ital is e ind ur e t f r t e ffer Italian nursin e in est ents et een and acc unted f r n a e
f s eciali ed structures and f r t e t tal In Ital t ere are 13.6m people aged ra e f er ear ile et een and
in est ents in t is s ecific sect r 65 and over, representing 22% of the r se n an a era e f
e erall sect r suffers fr a lac f total population In t e ne t fe ears
su l and ne de el ents in c ntrast a c ntinu us r t f f t is a e
it t e str n re uest f eds t r u
t e Italian territ r e Italian nursin
ut r u is esti ated reaching around
18m in 2035 and representing 30% of 13.6m
e ffer is ainl c aracteri ed s all the entire population in Italy.
structures e leadin areas it a str n e and er a e r u is e ected
ulati n
structured ffer are t e etr litan areas t reac a ut illi n e le in in Ital
f ilan and urin re t an
e ain la ers n t e ar et are e ur ean c issi n identifies
s eciali ed in est ent funds
c ncentrated in
ic are
ard and ied nt
a standard f
in a itants er
eds er
ears as standard
18.1m
ile t e s ut suffer due t a lac f ara eter f nursin and residential ulati n
su l ard and ied nt attract care facilities ffer ile in Ital t e ffer in Ital
ca ital due t a c ncentrati n f an a in is l er a r i atel eds er
ulati n in t e area su rtin de and t usand in a itants er ears
f r nursin es r u ut t e Italian territ ries t ere
e ain in est rs currentl eratin in is a reat i alance it a str n
t e ar et are Rea r In estire r c ncentrati n f eds in t e n rt ern art
reest nes a ital and ri nial R I f Ital and lac in su l in t e s ut
recast ulati n in Ital a e ar s
-9.2% +32.5% +35.2%
40
35
30
25
(millions)
20
15
10
0
15 - 64 > 64 > 79
2017 2020 2025 2030 2035
urce anal sis

Italian
Student housing and ants t in est in t e sect r in e nu er f eds er unit f r students in

t e ne t t ears Ital in c aris n it t e st i rtant
ur ean ar ets is t e l est at e
In Ital in est ents in student usin cc rdin t is a s data a ut alf a rit f t e ffer is ana ed re i nal
re ain l as t e funds are c ncentrated f student usin residences as an aut rities Internati nal ni ersit residence
n t e ain c ercial ar ets acc dati n et een and erat rs and t e sa e ni ersit
urrentl ressure n u lic finances eds ile as eds Onl
under ines t e increase in uni ersit f structures a e re t an
usin ana ed
In Ital t ere is a lac f
uni ersities
eds t reac
eds acc
are a us
dati n et een t e t ere
r er ata units €7.3bn
t e ur ean a era e and in est ents f t e tudent usin an art l e
er n are needed t ada t t e ffer dell era de li tudi di rent units
tal In est ents
e lac f su l as led t t e r t a us raticelli f isa units and in ur e
f nu er us ri ate erat rs suc as t e Residential entre f ni ersit de li
s ecialist fund rist tle t e lar est it studi della ala ria al st eds
circa eds and in de el ent In t e Real state lternati e In est ents
ls internati nal erat rs a e entered a rica r as eds f r uni ersit tal in est ents
t e Italian ar et as t e utc tudent students ana ed rist tele fund and in ur e as increase
tel and it s de el in t ree student ras fund
usin in l na R e and t in In t is asset class a rica as in ested
ten ti es since
l rence it a t tal f er units f r a us r er ata as een
a t tal in est ent f
r u
e erican
ines as alread started de el in
t e first de el ent and t da is ne f
t e i est in ur e a rica als as a 6.0%
t ne s structures in ilan and l rence a us in ieti and an t er ne in ari
era e
et ield
Relati n t nu er f students are f nu er f eds

49,500
and nu er f eds f r si e f tudent usin u er
f eds
Spain 6%
100k
>200 beds
Netherlands 6%
Internati nal
Germany 9%
students in Ital
100-200 beds
France 11%
Ireland 15% 30-100 beds
UK 34%
Italy 3% 0 20 40 60
urce anal sis n ata

37
Italian
Real Estate Funds
Real estate funds in Italy represent about 3% of sset all cati n

the Italian asset management market. The funds
examined by Bank of Italy have assets under
14% 15%
management a untin t €70.8bn. 17% 19%
urin t e ei t f the first 5 SGRs ic
a unted t €32.8bn as sli tl decreased fr
14%
t e ain c nent f Italian 14%
rea estate funds is reser ed funds acc untin f r Europe Italy
er t e t tal a unt f ll ed retail funds
6%
ic decreased c ntinu usl er t e ears and 8%
ill e entirel li uidated e increase f 49% 44%
t e t tal nu er f reser ed funds als durin
is n t related t t e r t f t e nu er f asset
ana e ent c anies ut fr reater efficienc
Retail Retail
ac ie ed t ec anies in relati n t a lar er
Office Office
a unt f asset under ana e ent c c
Offices are t e st c n a n t e asset classes Residential Residential
c nstitutin f t e entire asset st c f ll ed at Other Other
a distance retail and residences
In t e funds e a ined cenari I iliari
int ut t at ere ainl f cused in t e ac uisiti n
f assets l cated in t e rt f Ital f ll ed
t e enter t e ut it t e Islands
and a r ad
R and erati e funds
500
400
300
200
100
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Operative SGR Operative funds
urce anal sis n an f Ital is a and cenari I iliari data

Italian
39
Italian
Italian NPL market
Asset Quality r ss and ad ans trend

22.0
- 16%
e current Italian ar et is e tre el 21.0
12 14 7
21.1
CAGR H1
18vs15
li el and t e lu e f transacti ns is + 22%
17.8 17.6
CAGR 18
in t rea t e last ear rec rd e ual t 15vs08 5
131 127 117
circa n f cl sed deals s f e er 14.3 21 14.7
5
t e cl sed transacti ns a unt t 11.3 13
109 12.9 13.0
11.0
94
11.8
n and n t e asis f t e ann unced 9.3 12 91 8.6
86
9.8
and n in transacti ns t e ar et 7.8 16 74
c uld reac an i ressi e lu e f re 66 6.3
7.5
200 200
9 184
t an n 4.9 57 4.6 165
33 3.5
156
e ar et as een dri en ainl i 2.5 125 130
107
u deals suc as t e n 42 59 78
ad l ans securiti ati n c leted 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
and t e n ad l ans rtf li
Bad Loans (€ bn) Unlikely to Pay (€ bn) Past Due (€ bn) Gross Bad Loans / Loans to Customer (%)
s ld t Intru Intesa an a l al n
it sta e f t eir ca ti e r ut
latf r ii t er si nificant securiti ati ns
ac ed as t e dis sal f n
et ad ans rend
n n ad l ans rtf li s
dele era ed res ecti el anc I 67.1
anca and R anca iii t er true sale 61.0

55.6 56.7
transacti ns 54.0
50.3
48.7
fter ea in t e a i u f n f 43.7
42.9
at t e st c c nstantl reduced 39.7
er t e last ears reac in n at 34.0

84
89 87
80
62 64
60
t t e r ss ad ans lu e 47
43
stands at n dr in f n durin 39
t e first si nt s f nli el t a 24
2.8 3.5 3.8 5.0 5.4 5.7 5.6 4.3 2.8
1.4 2.3
and ast ue s s t e sa e declinin
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
trend it res ecti el n fr n
at and n t e sa e lu e f Net Bad Loans (€ bn) Net Bad Loans / Loans to Customer (%) Bad Loans coverage ratio (%)
e lu e f net ad ans f ll st e
sa e decreasin trend at is e ual
t n n at e ad ans
c era e rati increased t fr
at
urce e Italian ar et
Italian
Gross Bad loans trend rea d n f r ss ad ans c unter art

1% 1% 1% 1% 1% 1% 2% 2% 2% 1.6% 1.6%
e rea d n f r ss ad ans rati
i li ts t e i est ercenta es in ria 20% 20% 20% 20% 19% 18%
16%
16% 17% 20.6%
21.6%
and ala ria e en t u t e
8%
7% 8%
re resent a tin rti n f t tal f Italian r ss 12% 11% 10% 9% 9% 8%
8.2% 8.3%
ad ans lu es res ecti el and
f t e t tal
• e n rt ern re i ns tend t a e a l er
r ss ad ans rati if c ared t t e 69.6%
nes f t e entre and ut f t e untr 73%
75%
74% 73%
70% 71%
• t t e r rate sect r 67% 69% 70% 68.4%
still re resents t e reatest s are

f Italian r ss ad ans f ll ed t e
nsu er l ans
• e ercenta e f ecured ad ans 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
is al st in line it le els Corporate & SME Family business Consumer Other
r ss ad ans re i n
5.6% Breakdown ecured r ss ad ans trend n t tal ad ans

7.8%
8.6% 8.7%
8.3%
10.2%
7.9% 11.6%
10.7%
14.2%
13.3% 50%
47% 48% 49%
45%
9.3% 42%
38% 38% 39%
36% 36%
11.2%
12.8%
13%
15.4%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
>14-16% 13.5%
>12%-14%
<12%
unter art
1.7%
Ratio
1.5%
22.5% 8.5% Corporate & SME 65%
6.2%
10.2%
2% Consumer 24%
3%
8%
2.1% Family business 8%
2.6%
10.6%
Other** 2%
4.8%
6.6%
2.1%
1.9%
ni ue ercenta e f r
sta alle and ied nt
>10% 5.6% ru and lise
>5-10% ulia and asilicata
>3%-5% Ot er includes and financial instituti ns
<3%
41
Italian
Gross Bad loans breakdown Unlikely to Pay (UtP)
e rea d n f r ss ad l ans ec n ic sect r e r ss t st c c siti n at illustrates

s s t at Real state and nstructi n acc unts f r t e f ll in
f ll ed anufacturin r ducts and • In ied nt sta alle and riuli ene ia iulia
lesale and retail trade t e ercenta e f t is l er t an ereas
e rea d n f r ss ad ans tic et si e i uria t e t rati is e ual t
s s t at lar e si e e sures er re resent • t e t rea d n re i n s s t e i est
f t tal ereas id si e e sures fr t le els in ard and a i
t and s all si e e sures el e en t u t eir t rati is e ual res ecti el
re resent eac ar und f t e t tal t and
rea d n f r ss ad ans n t re i n
4% 2.4% Breakdown
Real Estate and
6% Construction: 35% 1.1%
23% 26.3% 8.5%
9% 4%
9.6%
3.6%
2.8%
7.9%
15%
12% 1.7%
1.8%
14%
6% 3.6%
31%
1.6%
Construction 0.9%
Real Estate
>10%
Manufacturing products >5-10%
Wholesale and retail trade >3%-5% 4.2%
Professional services <3%
Industrial
Other
Ratio
5%
3.7%
9%
6.6% 8.5%
3.5%
30% 6.3%
17%
9.6%
7.2%
6.9%
7.5%
6.1%
8%
18%
5.5% ni ue ercenta e f r
26% 7.6%
sta alle and
6.4% ied nt
ru and lise
5% ulia and asilicata
Less than €75k
€75k to 250k >9%
€250k to 1m >7-9%
€1m to 5m >5%-7% 6.7%
<5%
More than €5m
Italian
Asset Quality usiness cl sures r cedure
Q1 2017 27.5%
In t e first t ree nt s f t e decrease
Q1 2018
f Italian c anies an ru tcies and luntar
arran e ents ent n ile an increase as
3.4% 4.8%
re rted f r f rced and luntar li uidati ns
t e latter t e f r cedure ainl due t t e -0.2%
-4.6%
i cl sure nu er f r d r ant c anies
ic re resent Italian c anies re istered ut -16.0%
n t eratin
urin t e first uarter f t ere as a
-35.3%
dr in an ru tcies it res ect t t e re i us -40.1%
ear cusin n n n an ru tc r ceedin s Bankruptcies Voluntary arrangements Forced liquidations Voluntary liquidations
t e st si nificant reducti luntar
arran e ents nc rdati re enti i te luntar arran e ent nc rdat re enti e
includin restructurin as een ser ed f r rced li uidati n i uida i ne c atta a inistrati a
usiness cl sures after lans in acc rdance it
re i us ear s trend c ntrast f rced and
luntar li uidati ns re rted s all increases an ru tcies ec n ic sect r
res ecti el e ual t and it Q1 2017
res ect t Q1 2018
e reducti n in t e nu er f an ru tcies
is al st e uall distri uted a n different
ec n ic sect rs e ce t f r ser ices
-1.3%
c anies In t e c nstructi n industrial and -7.3%
-8.6% -7.8% -9.3%
ser ices sect rs t e decline in an ru tcies is in
-17.2% -15.8%
line it t e re i us ear s trend e er t e -21.0%
a nitude f annual ercenta e c an es as Construction Industrial Services Other
re t an al ed n a era e it res ect t t e
re i us ear
urin t e nu er f luntar
li uidati ns increased a ain acc rdin t luntar li uidati ns le al status
esti ates re t an Italian c anies n t 31.0%
Q1 2017
under in an ins l enc r ceedin s ent int
Q1 2018
li uidati n e increase is ainl 17.4%
caused t e cl sure f se eral d r ant
c anies ereas t e incidence 2.7%
0.1%
f luntar li uidati ns f r c r rati ns and -0.7%
-3.4%
artners i s as een er dest
Corporations Dormant companies* Partnerships
te r ant c anies did n t su it an alid financial state ents

in t e t ree ears ri r t li uidati n
43
6.
Milan
45
Italian
Milan
Cities of opportunity
Stockholm 7
e f ll in is a su ar f ities f O rtunit
re rt ade in ic t e erf r ance f
Moscow 22
leadin cities t r u ec n ic de ra ic and
data c rrelati n lenses ere anal sed r idin
insi t n at s r in n and at directi ns la
a ead e anal sis c nsiders aria les su di ided
Amsterdam 5 Berlin 12
int indicat r cate ries and t er ec n ic and London 1
de ra ic indicat rs e indicat rs are se arated
int t ree distinct r u s
Paris 4
ls f r a c an in rld Milan 18
e first rin s t et er t e t ree
indicat rs t at est easure t se
t ls intellectual ca ital and inn ati n
tec n l readiness and cit ate a Madrid 16
t at a cit increasin l needs in a l all
inte rated n led e ased rld
High
ualit f ife ac cit s sc re is t e su f its ran in s
Medium acr ss aria les e rder f t e cities ran e
e sec nd r u assesses ur anites
Low fr u t t e i est
ualit f life t r u f ur indicat rs
trans rtati n and infrastructure ealt
safet and securit sustaina ilit and t e
natural en ir n ent and de ra ics
and li ea ilit
c n ics
e t ird easures cities ec n ic
tenc t r u t e t ree indicat rs f
ec n ic cl ut ease f d in usiness
and c st
ritain s ca ital c es first in t ree indicat rs sec nd in

a f urt and t ird in t t ers nd n ran s as ne f
t e t t ree laces in si ut f indicat rs and t en
finis es in t e t in t t ers The only Italian city
included in the report is Milan, which compared to
other leading European gateway cities shows that it
is a leader of employment in financial and business
services and has a high quality of living e t er
ur ean cities c nsidered in t e re rt are sterda
erlin nd n aris adrid sc and t c l

Italian
Why Lombardy and Milan Milan is listed it in t e t cities f r in est ents in

estern ur e and enti ned as ne f t e referred
Lombardy is ne f t e t re i ns in ur e a le t destinati ns f r in estin in t e real estate sect r
attract in est ents it its strate ic lan and is ne f t e ilan is an e cellent usiness en ir n ent and a d na ic
industrial a re ates cit In fact ilan can e c nsidered t e c rnerst ne f t e
ard is als t e ate a f r internati nal nati nal ec n it re t an f t e t tal fir s f
in est ents t enter int Ital ard ased in t e cit and its r ince and its is
ard is t e eart f Ital s ec n and is er f t tal Italian ilan as t e f ll in attri utes
attracti e t ultinati nal c anies t at ant t enter t e
Italian ar et In fact f all Italian c anies art f cit t at attracts usiness alue
internati nal c r rati ns a e ead uarters in ard t e ilan etr litan area acc unts f r nearl ne t ird
In additi n t e anufacturin industr f ard and f all f rei n in ested fir s in Ital re t an f t eir
ilan as r en t at it is a e t e a era e f t e est e l ees and f t eir turn er
ur ean standards
t a s ste ic le el t e ard industrial s ste str n s eciali ati n in t e ser ice sect r
c nfir s it ri tfull el n s t t e net r c sed sect ral e ertise
t e f ur ain ur ean industrial a re ates ic t e ni ersal siti n ilan as c nfir ed
includes aden rtte er R ne l es and atal nia t e r le f t e cit as a ca ital f usiness and
It als c nfir s its Italian leaders i and its tec n finance and a a net in attractin s f t uris fr t e
industrial structure it an s s eciali ed in i end rld In additi n e sect rs in ilan include I edia
r ducti ns and a le t ad t ernance ec anis s and inancial nsultin ser ices reati e Industr
usiness strate ies t at are unusual f r Ital fas i n and desi n Retail and erce and ife
cience and i tec n l
u f r talent u an ca ital
it its uni ersities and internati nal sc ls
acc untin f r re t an f t e Italian uni ersit
ulati n ilan area stands ut f r t e ualit f its
u an ca ital and educati n s ste at all le els l all
ren ned acade ic instituti ns and distin uis ed fas i n
desi n institutes are ased ere
leader in inn ati n tec n l

ilan area sts se en ad anced researc centers a n
ife ciences and i tec n l t at are s eciali ed in
ari us sect rs and ac n led ed as an e cellence it in
t e ur ean researc landsca e re t an
r ani ati ns in t e area f ilan are art f at least ne
tec n l ical cluster
n internati nal cit

ilan sts er c nsulates and f rei n
c ercial ffices and is in a central siti n in
n rt ern Ital e cit as t ree internati nal air rts
and ri ar trans rt infrastructure
urce anal sis

47
Italian
Milan – City Profile cti e c anies sect r
re t an e er ilan is t e Italian cit f c ice f r

10%
in est rs c nsiderin Ital alt u it as fell t ree
1% 1%
laces in t e ran in s li el t e attri uta le t t e
nati nal electi n ic resulted in t e f r ati n f a 14%
ulist ur sce tic c aliti n ern ent Internati nal
in est rs are n t alread er fa iliar it t e
51%
c untr are t e st cauti us e ill a id Ital unless
s e e ce ti nal rtunit is resented t us sa s
ne lar e de el er e andin in ur e ilan is fc anies in ilan
a r in and ital cit ut t e nl r le it Italian 25% are in ser ices ile nl
are in a riculture nstructi n
in est ents ri t n is t e nati nal ern ent sa s
c anies acc unt f r
an t er erseas la er and e l ft e
c ntrast ilan s l al r file still attracts internati nal r f rce
Services r t ilan
retailers e c ers include ni l tar uc s and t e
Trading as rec rded siti e and
first st re t sell as et all erc andise in ur e interestin results suc as a
Construction
ile le ened a cit centre a s i st re cals decrease in une l ent
Manufacturing
and an increase in ulati n
s ru ff t e nati nal litics intin t t e a int ent Agriculture and
f a eur su rtin finance inister in t e ern ent Other
e d n t e ect a ld anti eur e ent t e situati n
is n r alisin sa s ne l cal erat r urce anal sis n data r ided e a
er f c erce f ilan n a rian a di
r an t er ilan s erall stren t es ell e nd t e
litical fact rs e l cal cit ernance ean ile
is uni ersall raised f r its trans arenc e ertise and ll r ert return
res nsi eness ilan is f r in a ead it nu er us
6%
r ects includin t e i ed use rede el ent f t e
O site t e re enerati n f f r er rail a land
4%
and an ffice ar in t e s ut ern cit centre
Office de and is str n sa s a an ur ean in est r
2%
If u a e a d r duct in ilan t ere is a ueue
f tenants ecause t ere is a c nstructi n ac l
0
f ears r in is s rin in u in l cati ns
li e u and c in n n as t e ilanese
-2%
ar und t e central stati n Rental residential
f all f r s is in t e a e r t rtunit in
-4%
t e cit in t e c in ears due t t e a et een
su l and de and e decrease in ulati n in t e
-6%
ilan unici alit recentl re ersed ile t e cit ants
dern usin f r its students I see t e 2009 2010 2011 2012 2013 2014 2015 2016 2017
e luti n f t e residential ar et as ne f t e d inant

Income return Capital growth Total return
sect rs f t e future ne inter ie ee redicts
urce er in rends in Real state ur e

Italian
49
Italian
Residential
Municipality of Milan rend f Real state t c + 0.12%

800,000 CAGR 17vs12
110%
O er t e eri d t e a era e
Number of Normalized Transactions of 780,000 106%
residential in Milan is 20,082 transactions
per year.
760,000 102%
urin t e anal ed eri d t e trend as
een c aracteri ed a eneral rec er
795,537
er t e last f ur ears it t e nu er f 740,000 98%
transacti ns in +61.88% above 2013.

720,000 94%
23,707 700,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
90%
NNT Stock Trend Stock

2017
rend f
30,000 120%
+ 7.9% 25,000 + 10%

CAGR 17vs12
100%
NNT 20,000 80%
s
15,000 60%
23,707
+ 61.9% 10,000 40%
5,000 20%
NNT
s 0 0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
NNT Trend NNT
are di ensi nal class are area
8% 11% 6%
19%
9% 2%
3%
14% 12%
6%
21%
5%
26%
43% 15%
Up to 50 sqm Centre
50 - 85 sqm Inner city
85 - 115 sqm Semi center East Side
115 - 145 sqm Semi center North Side
> 145 sqm Semi center West Side
Semi center South Side
Periphery East Side
Periphery North Side
Periphery West Side
Periphery South Side
Italian
era e urc ase rice s

9,000
+0.1%
8,000 +24.9%
% Var. 2017vs2016 % Var. 2017vs2013
7,000
+1.2%
6,000 +25.3%
+0.7%
5,000 +33.4%
-1.1% +0.4% +1.6%
+15.5% +20.0% +3.9%
+19.5%
4,000 +37.9%
-1.6%
3,000 -0.1% -1.8% 0.0%
+6.6% +6.7% +0.7% +6.1%
2,000
3,803
1,000
0
Centre Inner city Semi center Semi center Milan Semi center Semi center Periphery Periphery Periphery Periphery
West Side East Side North Side South Side East Side North Side West Side South Side
e transacti n acti it in ilan increased in reac in a r i atel

12,170 et een
transacti ns and s
s re rted a
in an e ansi e c cle affectin all ur an areas r erties
increase in sales f t tal residential transacti ns
NNT in ilan ile r erties et een s sa an increase in transacti ns f
H1 2018 and acc unt f r f t e ar et
e er c nsiderin t e fast a s r ti n f units and a r t in sales f et een
and er t e ne t ears t e cit is in dan er f n t ein a le t satisf t e
+ 2.8% de and f r ne es
In the first half of 2018, 12,170 transactions were recorded, which was an increase of
2.8% compared to H1 2017.
NNT s f t ere are real estate de el ents under a f r t tal f units
s f ic a e alread een s ld sales are i er c ared t
it re ardin residences alread n t e ar et and t e re ainin f r ne
r duct intr duced in t e last nt s e areas it t e reatest increase in sales
+ 58.5% are in t e se i center and t e center
and ides read as n ne f t e icr
ared t sales are
nes as a sales ercenta e a
re
e
ene us
NNT
s rend f alf ear are
di ensi nal class
+ 11.1%
25,000
7%
21%
NNT 20,000 9%
11,864
s
15,000
21%
10,000
12,170
42%
11,843
5,000
0 Up to 50 sqm
2012 2013 2014 2015 2016 2017 2018 50 - 85 sqm
85 - 115 sqm
H1 H2 115 - 145 sqm
> 145 sqm
51
Italian
Province of Milan rend f Real state t c

+ 0.24%
CAGR 17vs12
2,300.000
O er t e eri d t e a era e 114%
u er f Normalized Transactions of 2,100.000
residential in t e Province of Milan is 110%
1,900.000
55,491 transactions per year.
urin t e anal ed eri d t e trend as 1,700.000 106%
een c aracteri ed a eneral rec er
2.137.224
1,500.000
102%
er t e last f ur ears it t e nu er f
transacti ns in +28.5% above 2013. 1,300.000
98%
1,100.000
56,310
94%
900,000
700,000 90%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
NNT
2017 Stock Trend Stock
rend f
+ 6.15% 80,000
70,000
120%
NNT + 6.9%
100%
60,000
s CAGR 17vs12
80%
50,000
+ 48.50%
40,000 60%
56,310
30,000
40%
NNT 20,000
s 10,000
20%
0 0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
NNT Trend NNT
are di ensi nal class are area
9% 13% 8% 9%
6%
10%
16%
26%
42%
52% 10%
Up to 50 sqm Abbiatense Magentino

50 - 85 sqm Alto Milanese
85 - 115 sqm Cintura Nord
115 - 145 sqm Direttrice Est
> 145 sqm Milano Capoluogo
Sud Milano
Italian
rend f se ester
60,000
50,000
28,419
40,000
30,000
20,000
27,891
29,422
10,000
0
2012 2013 2014 2015 2016 2017 H1 2018
H1 H2
53
Italian
Investment Trends
In est ents asset class

Investment trends
In H1 2018 the investment market in 5%

5%
Milan accounted for nearly €1.2bn,
with a level of volumes 12% lower than 11%
the same period in 2017. Office
The main market is still the office sector c
e
with 66% of total volume invested in
13% e
the first half. 66% O e
In t e st rele ant in est rs ere
real estate Italian funds en end f rei n
funds and real estate c anies and R I s
urce anal sis

Italian
Instituti nal real estate in est ents in est r class
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Real estate Italian funds Open-end funds (German and foreign) Real Estate companies and REITs
Assurance companies and Pension funds Private companies and investors Others*
Ot ers an s u lic sect r and s erei n funds
urce anal sis

55
Italian
Office sector
In H1 2018 ffice in est ents in ilan rend f In est ents

reac ed €780m, down by 14% in 2,500 5.5%
comparison with the same half of 2017.
ilan re ains t e st attracti e ar et in
2,000 5.0%
ter s f lu es and nu er f deals
e lac f ualit r duct re ains a
central issue e en f r t e ilan ar et 1,500 4.5%
ic is re ected in t e lac f deals n
indi idual assets re entin t e r t f
1,000 4.0%
t e ar et
Foreign capital in H1 2018 represened
58.9% of the total investments. 500 3.5%
ri e and sec ndar net ields ic

ere sta le in t e first uarter decreased 0 3.0%
res ecti el t and in t e 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
last uarter Foreign Domestic Prime Net Yeld %
In est rs
€780m
tal In est ents
in H1 2018
41%
11.2% 59%
acanc rate
in H1 2018
59% Domestic
Foreign
are f f rei n
in est rs in
urce anal sis

Italian
e a e u in H1 2018 reac ed nearl 190k sqm d n rta u a and entre in a ran e et een and
c ared t t e sa e alf f urin t e e ain a unt f s ace t at is difficult t let is due t
sec nd uarter f ta e u f ffice s ace in ilan t e r ert features n t c rres ndin t t e t e f
as circa s u c ared t t e re i us assets currentl re uested tenants In e er area f t e
uarter and a ainst t e sa e eri d f cit rade uildin s c ntinue t e t e ain c ice f
a e u re istered in t e last t ears is al st d u le tenants In ilan t e t tal a aila ilit f Grade A spaces
t e a era e lu es rec rded in t e eri d fr and is 25% f t e t tal e ual t s f ic s
circa s l cated in t and entre
Offices et een and s ere t e st re uested acant s aces in ilan are ainl f rade ft e
ccu iers and acc unted f r f ta e u in line f t tal a aila le s aces and and are c ncentrated
t e a era e rec rded in t e last ten ear e en if t ere are in t e eri er and interland areas In ilan ne rade
si nificant transacti ns e ceedin s de el ents are ra idl re let ef re c nstructi n
e ain features dri in t e tenants decisi ns durin c ntinuin t e s rta e in a aila ilit f ualit uildin s
t e last fe nt s are still t e ualit f real estate enants are inclined t e t ards t e entre and t
r erties and t e i le entati n f s art r in leadin t an increase f l er ualit uildin s it in
licies t eref re a re uest fr t e ners t a e t e eri er and interland is lac f su l f ualit
increasin l e i le s aces e first art f t e ear as assets is increasin l enc ura in de el ers t underta e
een als featured rele ant rental a ree ents si ned r ects f r t e refur is ent f t e e istin st c
it aut ti e c an educati n sect r c nsultin In June 2018, despite any completion in the last
anufacturin ener financial and i tec tenants quarter, there are 270k sqm of office space under
In t e vacant office space in t e cit f ilan construction and expected to be completed by the end
reac ed s In t e central area f ffice of 2020 Of t ese refer t r ects f a s eculati e
su l is acant ile in eri er and in nature In s f ne ffice s ace rade
interland ilan s a era e acanc rate is at ere deli ered ile refur is ents are increasin in
sli tl el t e first uarter f t e ear e ri e l cati n ic el t raise t e ualit f rade
acanc rate re ains articularl l in u r erties n ffer
a e u trend s u l rade
H1 2018
1.35m sqm
2017
25%
2016 31%
2015 acant ffice

2014 s aces in ilan
2013
- 7.1%
2012
2011
2010 44% r t ta e u
2009 s
2008 Grade A
Grande B
2007
2006
Grade C
2-4%
2005 acanc rate in u
0. 200.000. 400.000. rta u a and entre
urce anal sis

57
Italian
e a s s t e ari us ne ffice i eline f ne ffice su l area

de el ents in r ress and in lannin
ta in lace in t e cit f ilan
e a rit f de el ents are l cated 1
3
utside t e cit center ut in ell
c nnected areas
2
3
e a rit as n t et een let 5
ile a s all rti n is alread re let

1
r ein de el t e end user
CityLife / Portello Porta Nuova

area area
5 8
8% 4 12 11 13
5 9
7
14
18%
4
1
75% 2
3
6 Santa Giulia
area
Available
Pre-let 2
End user
Milano Santa Giulia 1
Simbiosys* 2
Milanosesto 3
New CityLife towers 4
Gioia 22 5
Spark One e Two 6
Libeskind tower* 7
Via M. Gioia/Sassetti 8
Unipol tower** 9
AXA Via della Chiesa 10
ED.G.E 11
Pharo Business Center 12
Porta Nuova Bonnet 13
In progress
Unipol Rasoio ** 14
Project
0. 50.000. 100.000.
re let nd user
urce anal sis
Italian
Rents Overview
r t e anal sis f rental a ree ents e er es t at t e
a era e ri e rent f r is s ic is e ilan ar et is r in t e er attracti e f r in est rs
sli tl i er t an t e alue re istered durin t e re i us and is und u tedl t e nu er ne ar et in Ital in ter s f
uarters s lu es and nu er f deals it re ard t c re in est rs
a r t in t e nu er f d estic in est rs as een
Rent €/sqm/y Growth % rec rded ile t e st acti e alue add in est rs are nce
Milan Average 1 year 5 years a ain ri ate e uit initiati es
Rent (CAGR)
ri e rent f r ffice in t e is r in in
570 unted t s
entre ut f 430 n/a
e i entre 320 rend f ri e rents s
eri er 240
Q2 2018 570
interland 220 n/a
Average 356 Q1 2018
Q4 2017
Q3 2017
ields
Q2 2017
nsiderin t e ar et rents t e ri e net ields are
su stantiall ali ned t e ri e ield in t e f ilan is Q1 2017
a ut and rises t in t e eri er Q4 2016
Q3 2016
Milan Q2 2018 Q1 2018 Q4 2017
Q2 2016
Q1 2016
entre ut f
Q4 2015
e i entre
Q3 2015
eri er
Q2 2015
interland
Q1 2015
Average 4,55%
Q4 2014
356 €/sqm/y
Q3 2014
Q2 2014
era e ri e Q1 2014
Q4 2013
Rent
Q3 2013
Q2 2013
4.55% Q1 2013
Q4 2012
era e ri e Q4 2011
et ield Q4 2010
Q4 2009
570 €/sqm/y
Q4 2008
Q4 2007
Q4 2006
ri e Rent Q4 2005
Q4 2004
Q4 2003
194k sqm
Q4 2002
Q4 2001
a e in Q4 2000
H1 2018 0. 200. 400. 600.
urce anal sis n ata

59
Italian
Hotel sector
nnual tel statistics

Investments and New Openings
Occupancy (%) ADR (€) RevPAR (€)
ilan c ntinues t e ne f t e a r ar ets t at nati nal 2016 135 88

and internati nal la ers are us in t enter and as 2017 137 97
n different 2018* 140 100
tels transacted in re ard t ur se uilt tels 2019* 144 103
and c n ersi ns and f ur a r tel transacti ns ere t e
recast
star tel r s ic is a c n ersi n ne t t
t e central stati n t at ened in star estin alace
ilan r s in ia a della Re u lica t e recentl uilt r t n re i us ear
star tel r s and t e star tel
Occupancy (%) ADR RevPAR
r s in est an i anni ic is an ffice c n ersi n
2016
re t an r s entered t e ar et in ic
included t e star tel I near t e nu entale etr 2017
stati n ne c nstructi n t e star a na suites 2018*
in t e a i li district c n ersi n and t e star tel 2019*

c n ersi n and t e star tel c lete recast
refur is ent t near t e central stati n
e and is f recast t re ain i er t e c in ears
it circa r s e ected t enter t e ar et
Opportunities
ati nal and internati nal in est rs and tel erat rs

€137
c ntinue t searc f r rtunities in ilan and interest era e
in t e ud et and li ited ser ices cate r c ntinues t
ail Rate R
increase as ell
In additi n t ere is si nificant acti it f lar e scale
71%
de el ents t r u ut ilan endlease ust nt e
u lic id t rede el t e area t at eld t e O
e r ect en isi ns a er anent u it a ne s ital
internati nal researc facilit and uni ersit ca us i ed 2017
it ne usin student acc dati ns usiness retail Occupancy
and a i rant u lic real a in it ne f t e lar est real
estate de el ents in ur e
ilan as attracted internati nal and nati nal c ains in recent
ears stl in t e and star cate ries
7m
2017 Total
2018 and 2019 forecast
rri als
13m
e rec er f t e Italian ec n is e ected t c ntinue
in and it real f recasted t r at
in and in
a es in t t e u lic and ri ate sect r are e ected t 2017 Total
increase al n it e l ent ic ill t dri e ri ate O erni t sta s
c nsu ti n and su rt r t
e le ac f t e O ne lar e scale de el ents an
e andin ec n internati nal e ents and increasin
leisure de and are all e ected t c ntri ute t t e c ntinued
€192m
r t f t e ilan ar et it Re R f recasted t tal In est ents
increase at and in and res ecti el
in 2017
urce anal sis
Italian
61
7.
Rome
63
Italian
Rome
Rome – City Profile cti e c anies sect r
an er in rends ur e res ndents uld li e t

in est in R e citin its tential and need f r ca ital
ut t e re ailin ie is t at t e cit is si l t uc 21%
28%
r and t un redicta le
e cit is n t i r in under an anti usiness a r
n r is it el ed Ital s nati nal litical latilit ic
is it is lan uis in nce a ain near t e tt f
2%
t e ran in s liticall t e cit is r le atic sa s an
Italian in est r nless litics and t e eneral a r ac 5%
f t e cit c an es t is ill al a s li it ne ca ital I 31%
R e as n t een a le t
d n t see a structural c an e er s n unf rtunatel 13%
re licate t e siti e trend
ilan t da is in ile R e is sufferin sa s recentl seen in ilan e en
an t er Italian inter ie ee R e is re difficult less t u une l ent as
decreased and t uris
attracti e t an it as in t e ast and t e nest ard t Services de and and ulati n a e
read e cit is in l cal litical tur il and it is difficult Trading increased
t see it can e attracti e t da On t f t at t e Construction as a ne ati e ariati n
Manufacturing et een and
ffice tenant ase is less di erse t an t er i cities fc anies are in
Agriculture
d inated as it is u lic ad inistrati n ccu iers Other tradin ile a riculture
cc rdin t ne Italian inter ie ee it as less t an alf re ains l
t e ta e u f ilan addin It as n t een an eas cit urce anal sis n data r ided
f r de el ers O i usl if u d n t a e re lets it is e a er f c erce f R e
er ris
t e er ne is deterred r t se tar etin c re ffices ll r ert return
t e ields in R e ffer a asis ints re iu
6%
er ilan
e ft e ri ate e uit fir s and ed e funds t at
4%
a e een acti e u ers f Italian n n erf r in l ans
a e ne n t a e direct in est ents in R e as ell
2%
as ilan
e eral cr ss rder in est rs a e f und uildin s
0
t c n ert t residential nd as a t ri in t urist
destinati n R e re ains t e lar est ar et in Ital f r
-2%
tel transacti ns it ercent f t tal trades er
t e ast ear
-4%
a in a r ad rus t Ital is an err r adds a an
ur ean in est r e a eas in centre in R e
-6%
and it is ercent leased t e rents are in reat and
t e ca rate is d 2009 2010 2011 2012 2013 2014 2015 2016 2017
Income return Capital growth Total return

Italian
65
Italian
Residential
Municipality of Rome rend f Real state t c

1,450,000 + 0.45% 115%
O er t e eri d t e a era e CAGR 17vs12 112%
Number of Normalized Transactions of
1,400,000 110%
residential in Rome is 32,082 transactions
per year.
urin t e anal ed eri d t e l est 1,350,000 105%
transacti n lu e as seen in
1,428,028
f ll ed a eneral rec er er t e 1,300,000 100%
f ll in f ur ears it fi ures
increasin er
1,250,000 95%
31,131 1,200,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
90%
NNT Stock Trend Stock
2017
rend f
+ 2.9% 50,000 120%
100%
NNT 40,000
+ 3.9%
s CAGR 17vs12 77% 80%
30,000
60%
+ 30.70% 20,000
31,131
40%
NNT 10,000
20%
s
0 0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
NNT Trend NNT
era e urc ase rice s are area are di ensi nal class
Rome -2.8% -15.0% Fuori GRA Nord - Ovest 1.4%
Fuori GRA Nord - Ovest -5.8% -20.2% 9% 9%
Fuori GRA Sud 1.0%
Fuori GRA Sud -6.0% -23.0% Fuori GRA Ovest 2.5%
Fuori GRA Ovest -3.7% -13.0% 12%
Fuori GRA Nord 1.3%
Fuori GRA Nord -5.5% -15.0% Fuori GRA Est 8.1%
Fuori GRA Est -6.2% -19.8% Tiburtina 4.1%
Tiburtina -2.6% -11.3% Salaria 8.1%
Salaria -2.6% -17.1% Portuense 5.3% 41%
Portuense -4.5% -15.6% EUR - Laurentina 4.2%
EUR - Laurentina -3.5% -19.2% Cintura EUR 3.1% 27%
Cintura EUR -0.5% -18.6% Cassia - Flaminia 3.3%
Cassia - Flaminia -5.0% -18.4% Casilina - Prenestina 8.6%
Casilina - Prenestina -2.2% -24.7% Aurelia 5.4%
Aurelia -3.1% -17.8% Asse Colombo - Ostiense - Litorale 7.7%
Asse Colombo - Ostiense - Litorale -1.5% -12.3% Appia - Tuscolana 5.2% Up to 50 sqm
Appia - Tuscolana -4.1% -17.6% 50 - 85 sqm
SC Salaria - Trieste - Nomentana 4.8%
85 - 115 sqm
SC Salaria - Trieste - Nomentana -2.2% -13.2% SC Prati - Trionfale 3.8% 115 - 145 sqm
SC Prati - Trionfale -6.0% -17.8% SC Parioli - Flaminio 1.7% > 145 sqm
SC Parioli - Flaminio -2.4% -8.5% SC Ostiense - Navigatori 4.1%
SC Ostiense - Navigatori +0.6% -7.5% SC Aurelia - Gianicolese 5.1%
SC Aurelia - Gianicolese -1.0% -12.0% SC Appia - Tuscolana 4.5%
SC Appia - Tuscolana -1.2% -14.4% Centro Storico 3.8%
Centro Storico -0.5% -10.8%
%Var. 2017vs2016 %Var. 2017vs2013

Italian
Real estate ar et data s s t at t e rices s in R e in c aris n it

ilan are uc l er and rices a e c ntinued t decrease in recent ears e ce t in
t e ri e area it an increase f e er R e is still t e ri ar real estate
15,612
ar et in Ital f r nu er f residential transacti ns it the first half of 2018 recording
15,600 residential transactions, which, however, have suffered a slight decrease
of -1.3% vs H1 2017. This slight decrease could be due to the high volume of
NNT transactions recorded in 2017 (circa 31,000).
H1 2018 r all f t e reatest increase f residential transacti ns ere f r r erties it
less t an s it a t tal f circa transacti ns f ll ed r erties
et een s it a t tal f transacti ns and al ne re resentin
- 1.3% re resent
f R an residential transacti ns ransacti ns f r r erties et een
f t e t tal and re er e a era e a art ent si e
NNT in R e is s ile t e a era e is s in t e t er ei t ain Italian cities
and s in eneral t r u ut Ital e real estate ar et in R e is di ided int
s different nes it str n identities ic attract s ecific de and tar ets It s een
se eral ears t at t e ist ric centre is aitin f r i r e ents ic uld create
+ 28.62%
de and fr Italian u ers f r t is area since t ere are ist rical uildin s it a i
arc itectural i rtance
NNT
rend f alf ear are
s di ensi nal class
35,000
9% 10%
+ 5.34% 30,000 13%
NNT 25,000
15,317
s 20,000
40%
28%
15,000
10,000
15.612
Up to 50 sqm
15,814
50 - 85 sqm
5,000 85 - 115 sqm
115 - 145 sqm
> 145 sqm
0
2012 2013 2014 2015 2016 2017 2018
H1 H2

67
Italian
Province of Rome rend f Real state t c

2,400.000 125%
O er t e eri d t e + 0.46%
CAGR 17vs12
ist rical trend f Number of Normalized 2,200.000
118% 120%
Transactions f residential in t e Province

115%
of Rome as resented an average value 2,000.000
of 49,707 transactions. 110%
urin t e anal ed eri d t e l est 1,800.000
2.218.967
transacti n lu e as seen in 105%
f ll ed a eneral rec er er t e 1,600.000
100%
f ll in f ur ears it fi ures
increasin er 1,400.000
95%
1,200.000 90%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Stock Trend Stock
45,447 rend f
80,000 120%
NNT
70,000
2017 100%
60,000
+ 3.4%
CAGR 17vs12 80%
+ 2.44%
50,000 70%
40,000 60%
NNT 30,000
40%
s
45.447
20,000
20%
10,000
+ 30.74% 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0
NNT NNT Trend NNT
s
are area are di ensi nal class
Rome 68.5%
10% 9%
Monti della Tolfa 0.1%

13%
Litorale Sud 6.1%
Litorale Nord 6.5%

41%
Castelli Romani 6.8%
27%
Asse Tirburtina 3.4%
Asse Salaria 2.0%

Nomentana
Up to 50 sqm
Asse Flaminia 2.0% 50 - 85 sqm
85 - 115 sqm
115 - 145 sqm
Asse Casilina 2.1%
> 145 sqm
Asse Fiume Aniene 1.3%
Area Braccianese 1.1%

Italian
rend f alf ear

50,000
45,000
40,000
22.470
35,000
30,000
25,000
20,000
15,000
22.977
23.021
10,000
5,000
0
2012 2013 2014 2015 2016 2017 H1 2018
H1 H2
69
Italian
Investment Trends
In est ents asset class

Investment trends
In H1 2018 the investment market in 12%

3%
Rome accounted for €642m, with a level
of volumes 17% lower than the same Office
period in 2017. 13%
c
The main market is still the office sector 50% e
e
with 50% of total volume invested in the
O e
first semester.
In t e st rele ant in est rs ere
22%
stl en end f rei n funds f ll ed
far fr Real state c anies and R I s
urce anal sis

Italian
Instituti nal real estate in est ents in est r class
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Real estate Italian funds Open-end funds (German and foreign) Real Estate companies and REITs
Assurance companies and Pension funds Private companies and investors Others*
Ot ers an s u lic sect r and s erei n funds
urce anal sis

71
Italian
Office sector
In t e ffice in est ents in R e rend f In est ents

reac ed d n in c aris n 1,200 6.0%
it t e sa e alf f
e first art f as affected a 5.5%
1,000
lar e deal in l in t e sales f r erties
a R an de el er f r ar und
800 5.0%
estic ca ital in returned t e
t e ain s urce f in est ents acc untin
600 4.5%
f r nearl f t e t tal lu e Interest
t ards t e ca ital re ain i and
400 4.0%
e ectati ns f r t e c in nt s are
siti e ri e net ields re ain sta le
200 3.5%
at
In t e first uarter f t ree deals
0 3.0%
ere rec rded f r s in t e 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
R aurentina and se i central areas
Foreign Domestic Nd Prime Net Yeld %
In t e sec nd uarter t e a s r ti n as
dri en f ur deals f r ar und ft e
t tal a s r ti n in t e uarter
e i eline f de el ents is sli tl
d n it s under c nstructi n a e s
ein refur is ed and e ected t e
deli ered et een and ile 300
ne c leti n f s as re rted
in t e first uarter
220.60
200
€276m
tal In est ents 100
82.90
in H1 2018
12.5% 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018
acanc rate
in H1 2018
cc lis ed and in r ress r ects s
21% 200
180
are f f rei n 160
in est rs in 140
120
100
80
60
40
20
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Existing In progress
urce anal sis

Italian
Rents Overview
r t e anal sis f rental a ree ents e er es t at t e
a era e ri e rent f r is s ic is a e u in as s u c ared t
sli tl i er t an t e alue re istered durin t e re i us c ared t
uarters s e nu er f units a s r ed in t e first si nt s f t e
ear as ic as i er t an t e se i annual a era e
Rent €/smq/y Growth % f t e last fi e ears ar und deals er uarter a e u
Rome Average Rent 1 year 5 year (CAGR) in as s c nfir in t e siti e trend
420 c ared t re i us ear n and n
enter 350 n/a nl t an t e rec rd f
e i center 300 The volume of space absorbed in the first half of 2018
R 340 is higher by 16% compared to the same period of 2017.
eri er 150
Prime rents were stable in the CBD and in the EUR area
at 420 and 340 €/sqm/y respectively.
Average 312
e el ents in t e i eline are in a decreasin trend
it nearl s under c nstructi n ren ati n
ields c leti n e ected et een and In est ents
nsiderin t e ar et rents t e ri e net ields are in t e first alf f reac a lu e f a r i atel
su stantiall ali ned t e ri e ield in t e fR e is estic ca ital as red inant in ter s f alue
a ut and rises t in t e eri er acc untin f r f t tal in est ents des ite a sl
start s ed a rec er i in siti e e ectati ns
Rome Q2 2018 Q1 2018 Q4 2017
f r t e c in nt s In t is eri d t ere as a r in
interest in est rs it a rater r ensit f r ris f r
enter alue added and rtunistic r ducts
e i center
R
eri er
Average 5,50% 5,55% 5,85%
312 €/sqm/y
era e ri e
Rent
5.50%
era e ri e
et ield
420 €/sqm/y
ri e Rent
82,916 sqm
a e in
H1 2018
urce anal sis n ata
73
Italian
Hotel sector
nnual tel statistics

Supply and deals trends
Occupancy (%) ADR (€) RevPAR (€)
fter a eri d f declinin su l and de and as nit red 2016 145 101
R rec rded siti e results it an increase in t t e 2017 145 102
r su l and t e nu er f r s s ld 2018* 147 103
R e s tel transacti n ar et ainl c nsisted f 2019* 149 105
internati nal in est rs ac uirin tr lu ur assets in ri e
recast
l cati ns lt u t ere is still str n de and f r t ese t es
f assets recent transacti ns als included tels in t e and
star cate ries it ari us in est r r files de l in ca ital r t n re i us ear
In additi n t ere is str n de and f r c n ersi n rtunities
Occupancy ADR RevPAR
t ren ate ist rical uildin s int star tels in t e cit
2016
centre ic is c nfir ed t e urc ase f t e f r er
ead uarters in and t assets in In 2017
t ree leadin tels re ened in R e t uc fanfare t e 2018*
lu uri us tel den finall ened after an e tensi e nt 2019*

rest rati n al n it t e ridien isc nti alace and t e recast
tel le n erated under t e uri ilt n rand
sa t e inau urati n f t e star einin er near er ini
stati n In and circa r s are e ected t
enter t e ar et stl in t e and star cate ries
One f t e st antici ated tels t return t t e ar et in
is t e tel e a ille under t e R cc rte rand
Opportunities
€137
era e
ue t t e lac f rtunities and i arriers t entr in
ail Rate R
t e cit centre in est ents re ardin c n ersi ns f ist rical
uildin s in ri e l cati ns are e ected t c ntinue int
70%
and
Internati nal and nati nal tel erat rs and in est rs
c ntinue t searc f r rtunities in enice R e ilan
and l rence it de and increasin f r seaside and t er 2017
seas nal t urist destinati ns as ell Occupancy
2018 and 2019 forecast

€262.5m*
e rec er f t e Italian ec n is e ected t c ntinue tal In est ents
in and it real f recasted t r at in
in 2017
and in a es in t t e u lic and ri ate
sect r are e ected t increase al n it e l ent ic
€110m
ill t dri e ri ate c nsu ti n and su rt r t
lt u R e is ne f t e leadin tel ar ets in ur e
erf r ance r t rec rded in as sta nant es eciall
en c ared t t er a r ar ets in Ital suc as enice tal In est ents f
ilan and l rence ic all sa su stantial increases in ic t c n ert in tel
Re R e tel ar et in R e is e ected t c ntinue t destinati n in
r e f recast Re R r t rates f and in
and ainl dri en an increase in R ic is cludes sc l rtf li transacti n
still el re crisis le els
urce anal sis

Italian
75
8.
International
trends
77
Italian
International trends
Macroeconomic overview e l ent r t fa ura le financin c nditi ns risin

r fita ilit and t e utl f r t e d estic de and
e r ss estic r duct r t f t e re ain ile u lic c nsu ti n is e ect t re ain neutral
s lid ut t e ur area is enterin a eri d f less d na ic r t in t e eur area is f recasted t ease fr a
e ansi n after fi e ears f c ntinuin r t cc rdin ear i f in t in ef re
t t e ur ean issi n t e after s iftin d n deratin furt er t in and in
in t e first uarter f ec n ic r t eld stead in e sa e attern is e ected f r t e it r t
t e sec nd uarter f recasted at in in and in
l al ec n ic r t is set t sl and ec e less In in ati n as easured t e t el e nt
s nc r ni ed acr ss c untries c n ic acti it in ur e c an e in t e ar ni ed inde f c nsu er rices I
ill c e t de end al st entirel n t e funda entals is r ected t rise fr in t als in
e ind ri ate c nsu ti n and in est ent c ntinued ef re deratin t in
Real r t rate
3.5
3.0
2.5
2.0
1.5
1.0
2016 2017 2018* 2019* 2020*
Germany United Kingdom France Italy Spain Netherlands

c n ic recast utu n
Real r t rate untries
Real GDP growth rate Y-o-Y

4.3 to 4.7
3.8 to 4.3
2.6 to 3.8
1.7 to 2.6
0 to 1.7
urce anal sis n ur stat data

Italian
Trend of European investments lu e f transacti n f ll ed retail and

residential
ur ean in est ents in 2017 re istered a r t f e ain ur ean c untries er an and rance in
c ared t t e re i us ear and a R f ter s f in est ents in t e last fi e ears a e rec rded
er t e last fi e ears a li ited r t c ared t t er ain ur ean
O er t e last ears t e indi idual sect r it t e lar est ec n ies ile t e ar et it t e i est in est ent
s are f in est ents is c ntinuin t e t e nited in d a e re istered a sli t decrease In
ffice sect r ic re resents circa f t e t tal ri e ar ets ields are at ist rical l s
rend f in est ent asset class

100% 350.0
90%
300.0
80%
70% 250.0
60%
200.0
50%
150.0
40%
30% 100.0
20%
50.0
10%
0% 0.0
2013 2014 2015 2016 2017
S. Housing & Care Dev. Site Hotel Logistic / industrial
Residential Retail Office Grand Total
ar in est ents s
Increase
>40%
>20%
0-20%
Decrease
0 – 20%
<20%
Not available
urce anal sis

79
Italian
European investments - H1 2018 In t e first alf f t e c untries ic rec rded

t e i est r t c ared t t e sa e eri d f t e
In est ents in H1 2018 reac ed a le el f €110bn a ut re i us ear are land and Ireland
l er t an t e sa e eri d in rance and t e et erlands are t e nl lar e ur ean
e indi idual sect r it t e lar est s are f in est ents ar ets ere lu e c ntinued t r at a str n
c ntinues t e t e ffice sect r ic re resents f ace it and res ecti el e sl d n
t e t tal lu e f transacti ns In recent ears f in est ent s as unif r fr t e ain in est ent
ffice de and is ra idl increasin in central and eastern s urces in t e first alf f estic and intra
ur e articularl in Russia and land Retail in est ents ur ean in est ents sl ed d n c ared
re resent nearl f ll ed residential l istic t t e first alf f ile cr ss rder in est ents fell
industrial and tel e c untr it t e lar est e s erei n ealt funds ere a sent
lu e f in est ents c ntinues t e t e nited in d in t e first alf f t e ear and t e ain funds fr
ic re resents f t e t tal a unt in ested ina iddle ast in a re and ur e didn t a e
in t e alf f ll ed er an and rance lar e ac uisiti ns
In est ents c untr and asset class
6%
18% United Kingdom Office
6%
2%
27% Germany Retail
France 10% Residential
3% 40%
Netherlands Logistic/industrial
3%
3% Spain Hotel
4% Sweden Dev. Site
Poland 17% S. Housing & Care
9% 22% Italy
Other Europe
10% 19%
ar in est ents s
Increase
>20%
0 – 20%
Decrease
0 – 20%
<20%
Not available
urce anal sis

Italian
Business environment Issues i actin usiness in

ur e s real estate leaders re ain ti istic a ut t eir
The following trends and forecasts are drawn from usiness r s ects in al eit less c nfident t an t e ere
Emerging Trends in Real Estate Europe ETRE, a a ear a as an air f late c cle cauti n settles n t e industr
report undertaken jointly by PwC and Urban Land earl alf t e r ert r fessi nals sur e ed er in
Institute. Emerging Trends in Real Estate Europe 2019 rends ur e indicate t at r fits and eadc unts ill e
reflects the views of 885 individual who completed static ile t e r rti n f t se t in in t e usiness
surveys or were interviewed. The interviewees and en ir n ent ill i r e in t e ear a ead as ne d n
survey participants represent a wide range of industry s as een t e case er se eral ears t e ri ar
experts in Europe, including investors, fund managers, c ncern f r t e industr is t e a aila ilit f suita le assets
developers, property companies, lenders, brokers, cited er t t irds f sur e res ndents
advisers and consultants.
“As far as equity is concerned, there is still an over-
allocation in global markets to real estate. There is still a
large amount of that allocation coming to Europe”
e sli tl re s er utl f r is s t atic n t

s uc f a erin c nfidence in t e c ntinental ur ean
ec n ut f t e unusuall r tracted r ert c cle and
structural c an es
Issues i actin usiness in
aila ilit f finance 4% 15% 12% 43% 26%
In ati n 5% 23% 32% 33% 7%
l al ec n ic r t 5% 41% 23% 28% 3%
ur ean ec n ic r t 6% 42% 28% 21% 3%
urrenc latil 7% 34% 27% 23% 9%
Interest rate e ents 10% 43% 19% 25% 3%
ersecurit 12% 40% 25% 18% 4%
nstructi n c sts 20% 41% 20% 17% 3%
aila ilit f suita le

asset land f r ac uisiti n 21% 47% 15% 15% 3%
and de el ent
er c ncerned e at c ncerned eit er n r t e c ncerned t at all c ncerned

81
Italian
Markets to watch In R ur e f t e sur e artici ants a e

a arded t is fact r as t e st i rtant el at
In est ents in t e first alf f in t e a r ur ean trans rt infrastructure i ti e e are a in re
cities ere sta le r d n nd n is still ur e s financial attenti n t r ads rail and air rts and i ed use
centre and it s i est st li uid ar et it str n sa s a an ur ean in est r ll in trans rt t e
de and f r tr assets fr sian in est rs and fe er ri rities include rtunities t in est r de el
deals f r s aller transacti ns e ne entries in t is e ect returns ar et si e and li uidit and a cit s
cate r f r si nificant in est ent lu es are u lin ec n ic erf r ance
and is n cc rdin t res ndents fr R re rt
is n is t is ear s c ice f r erall r s ects risin
laces t nu er “It’s not just about investing in London, Paris, Frankfurt
ur e s industr leaders ut trans rt c nnecti it at t e and Amsterdam. There can be a whole second tier of
t f t eir list en selectin t e cities t e is t in est cities that win on a number of different measures.”
ar ets in ur e n
16.0
14.0 H1 2017
H1 2018
12.0
10.0
8.0
6.0
4.0
2.0
0.0
r
ne
rf
on
rg
rid
ls
in
ris
on
ur
te
nn
ila
ge
rli
ic
sl
do
se
bl
a
ol
da
bu
Pa
og
sb
nd
ad
es
kf
O
un
Be
rd
M
Du
e
kh
ha
us
el
er
an
am
Vi
ch
Li
ol
Lo
tte
M
ss
oc
en
Br
st
C
Fr
an
H
Ro
Du
Am
St
op
M
ar in est ent s
Increase
>20%
0 – 20%
Decrease
0 – 20%
<20%
Not available
Oslo
Stockholm
Copenhagen
Hamburg
Manchester
Dublin Amsterdam Berlin
Rotterdam Dusseldorf
London Cologne
Paris Frankfurt
Munich
Vienna
Milan
Madrid
Lisbon

Italian
Attractive alternatives t e are seen as art f t e industr s structural c an e

t ards erati nal assets and r ert as a ser ice
Inside t e ain r u f alternati e real estate residential in cc rdin t er in rends ur e ur e in est rs
all its f r s d inate t e sect r reference f res ndents are all catin re ca ital t less c clical alternati e real
a in a s ift in t e industr senti ent er t e ast fe ear estate sect rs ic as een ne f t e si nificant
In ust f sur e res ndents said t e uld trends f recent ears
e en c nsider in estin in alternati es is ear al st
f res ndents are alread in estin in alternati es in s e “We see demand for alternatives remaining very
a and is t increase t eir ldin strong because of yields, compared with the more
In ter s f sect rs identified res ndents as a in t e mature sectors”
est r s ects f r in est ent and de el ent se en f t e
t sect rs re resent s e f r f residential r duct cc rdin t an t er instituti nal in est r i er returns
side fr residential data centers sc re ell ut ust f a a e een an initial attracti n f alternati e real
sur e res ndents are acti e in t e sect r t da estate ut re i rtantl
tels student usin and e i le ffices are t e sect rs
ere t e current e sure is i est ile student usin “We have started to really understand the
als t s t e is list in f r ard operational risk and we are now more capable
lternati e are su rted str n de ra ics and of analysing it properly”
lternati e sect rs ein c nsidered in
36%
32%
30%
26% 26%
20%
17% 17%
13%
11%
7%
3%
Student Hotel Co-working/ Retirement/ er iced ealtcare cial Co-living ata centers elf st ra e Other ne ein
housing e i le ffices assisted living apartments housing facilities c nsidered
Res ndents c uld c se re t an ne cate r s ercenta es d n t add u t

83
Italian
Introduction to the asset class Senior Housing sector
e ter seni r usin is a r ad l f r ducts

classificati n f r usin c unities eni r usin and care as ec e a ular asset class
t at cater t l n ter residents er a n t instituti nal and indi idual in est rs in recent
the age 65 ears It as alread ut erf r ed t er n ted real estate
sect rs and e elie e it ill c ntinue t e a fa ra le
Older adults s are f t e l al rtunit due t i ressi e de ra ic funda entals
ulati n increased fr ercent
in t ercent in and is Independent Living c unities are desi ned it ulti le
r ected t rise t 6 percent by 2050 units eant t r ide residence and a enities f r seni r
it t e se ent a es and lder adults e units are ften ne t t edr a art ents
r in t e fastest c lete it itc ens and laundr facilities and a e t e
a ilit t a e su rti e ser ices f r an additi nal fee
e ercenta e f e le in t is a e
rac et in t e rld s re de el ed Assisted Living facilities are desi ned it ulti le ri ate
c untries is r ected t reac units eant t use residents are disa led r una le
ercent u fr ercent n t li e inde endentl In additi n t c rdinatin ser ices
f utside ealt care r iders assisted li in r ra s
Growing transaction volumes a e r ide su rti e ser ices t residents
created reater li uidit in t e sect r
ic in turn as ade in est rs re Memory Care facilities are licensed ealt care facilities t at
c f rta le n in t at ulti le e it s eciali e in carin f r seni r adults li in it l ei er s
strate ies are ssi le isease e entia and t er c niti e i air ents
e c untries ere t e seni r li in Skilled Nursing facilities a e a licensed nursin staff

is re de el ed are er an urs a da f r atients re uirin care and su er isi n Often
nited in d rance et erlands ti es t ese facilities ffer re a ilitati n and t er s eciali ed
and eden ser ices t t se rec erin fr an accident sur er r
t er ealt issues ese ser ices c uld include sical
t era s eec t era ccu ati nal t era s cial
ser ices edicati ns and t er ser ices necessar t t e
ealt and ellness f t e atient
€ 13bn eni r usin in Ital

In Ital t e usiness is relatively new, accounting for
€139m in transactions in the last two years ut t ere are
ransacti ns in
s e e cellent e a les rn as fi e star t urist structures
ur e r as ist ric illas and t en c n erted t ne use er a s
t e st ell n n e a le is t e residence itt ria in
rescia stl ned t e renc c an rian ic
+ 2.4% s eciali es in t is t e f ser ices and as een restructured
it an in est ent f er s a e fees t at reac
Increase in ulati n er €5k per month and t e structure is e ui ed it
in ur e s s a la carte restaurant and ser ices f all inds In ilan
t ere are t e Real are residences lu ur a art ents t at
can e urc ased it in a c nd iniu c le as ell as
80.6 reen areas istr s

ana er Recentl
and ari us ser ices f a use
t e s Internati nal Realt ened
t e lu ur retreat in sta eralda In Ital t e de and is
ur ean life
esti ated at a ut 15-18m square meters f seni r use
e ectanc at irt structures er t e ne t ears
urce anal sis

Italian
Introduction to the market eni r usin in

ricin f r usin it are units cl sel irr rs t e
ere is a su stantial under su l f e ents in use rices f re sales sa an
units it in t e id and u er ar et increase in rice and f re sales sa an increase in rice
tiers and a ra idl r in lder ers n e a era e eri d et een sales as ears reater
ulati n ence a a r rtunit nd n ad t e lar est ti e et een sales at ears
f r in est rs and de el ers c nsidera l l n er t an r s ire at nl ears ere is a
fall in t e nu er f sales in and ic f ll s t e
rice r t in t e sect r als sa e trend in residential transacti ns in t e
c rrelates str n l it a era e use ince t ec und annual r t rate f r ur data
rice trends eanin l n ter returns as een c ared t f rt e usin ar et
are ssi le it annual a era e rice On t is asis a retire ent e in t is dataset uld d u le
r t f in alue in ears e a era e len t f ti e et een sales
in ur dataset is ust er si ears
O er s a e as uc as trilli n f it in a decade ne in fi e e le ill e er t e a e f
c ined usin e uit it al st it in ears t is ill increase t ne in f ur e increased
t t irds nin t eir es utri t life e ectanc articularl a n st er s eans t at
e a rit f t ese use lds are r t in t e lder ulati n is set t ut ace erall
in t e ainstrea usin ar et and ulati n r t si nificantl er t e ne t ears
acc unt f r f all e ners and usin it are is an esta lis ed c nent f t e
f use lds n es ar et in an c untries si ilar t t e in ter s f
de t free de ra ics and a ein ulati n ar et s are f r t is
t e f retire ent acc dati n e ceeds f all er
ere is a tential re uire ent f r an s in t e ustralia and e ealand ut in t e
additi nal usin it are units t e rate is ust n er s are re inclined
ic uld e uate t al st t use t is t e f acc dati n t e enetrati n rate
alf t e nu er f all ne es uilt is c ared t in e ealand
at t e current rate usin it are is n t i une fr t e ec n ic usin
c cle cust ers ften need t sell t eir n es first
in rder t urc ase a retire ent r ert and s sales
erf r ance tends t trac ider use rice trends
e er lder e le a e t e distinct ad anta e f
ein a le t use usin e uit en d nsi in and are
less c nstrained rt a e de t ere is als a lar er
r rti n f af uent ear lds at retire ent ill
e e en ealt ier t an t e current retire ent ulati n
eanin t at t is ar et as a er siti e l n ter future
O er n t tal ulati n
26%
18%
12%
1961 2016 2066
urce anal sis n ata

85
Italian
Introduction to the market Co-working
e ffice sect r is t ri in n a r l al rends in le i le r lace r isi n

c an e t e ra id rise f e i le ffices raditi nal ser iced ffices are ec in less a ealin t
and c r in t da s ccu iers are see in e i le s ace le i ilit
is a e fact r f r startu and s are initiall faced
le i le r lace c ers an it uncertain r t and cas e ectati ns le i ilit
increasin l ide s ectru fr and a ast tential f e er in tec n l ies r ides a
traditi nal ser iced ffice erat rs str n latf r f r e i le r lace erat rs t re ain
t c r in s aces e sect r c etiti e e l in t eir usiness dels le i le
as e l ed durin t e ears rid ffices d es n t ust entail s a in l n leases f r s rt
usiness dels are e er in in it is als e acer atin t e trend er ccu iers a in a
res nse t t e c stu ers and t s aller erall f t rint and f cusin n t e ffice as a lace
i r e r fita ilit f t e erati n ere e le c e t c lla rate
In nd n in t is su sect r “It is forcing occupiers to think about their space

acc unted f r re t an f all requirements, so offices in general are being challenged”
ffice ta e u and its e andin in
t er a r cities dri en t t e “People are quite clearly focusing on the co-working
rus f r r t f iants li e e r sector. One will see actually how it performs in the
and I and t e riad s aller longer term because it is a buy long, sell short market,
erat rs t at are ein ulled al n in and that tends to get knocked when the cycle goes
t eir a e against it. But at the moment, it seems to be attracting
more and more interest”
e st i rtant ser ices fr t an erat r and user

ers ecti e t find in c r in s aces are eetin r s
c nnecti it rea ut s ace and net r in rtunities
r lace r iders are see in t inte rate additi nal
ser ices in rder t r ide a ider ran e f enefits t t eir
users and increase furt er re enues
Real estate industr is ec in less r duct f cused
and ill instead r ide access t features and ser ices
n de and
ical ser ices ffered e i le r lace erat rs and de ands fr users
Operator currently offer Wanted by users

80%
70%
60%
50%
40%
30%
20%
10%
0%
ym
ks
er
ts
ce
vi to
ni ing
tiv e
om d
an
Ba
ge
rit
ag
en
ec rad
ow
ro te
l
pa
rs
ity
s
Ta
G
cu
ur
ad ess
ra
rtu rk
or
tie
g ca
ev
so
Sh
ts
nn g
at
Se
ve
po wo
st
tin di
of c
co ess
s
al
ou
pr Ac
be
ee De
re
le
op Net
ci
yc
è/
k
So
ee
si
ea
af
Bu
Fr
C
Br
m
urce anal sis n and R data

Italian
ain ar ets are f e i le r lace

l all and are leaders in t e e i le r lace
ar et acc untin f r re t an alf f all centres acr ss
4%
t e rld le i le r laces in rinci al cities stands
ar und illi n s it a r t f er t e last 15%
32%
t ears e as re erati ns t an t e ut t e
UK
sect r acc unts f r a s all rti n f t e t tal ffice st c USA
ar und cr ss t e a r cities e ain ur ean cities EMEA (excluding UK)
a e circa s f e i le r lace acc untin f r APAC
22% Latin America
an a era e f ust f t e t tal st c Onl sterda
as an i er ercenta e f e i le r lace circa
f t e t tal ffice st c sterda as ne f t e i est 27%
r rti ns f inde endent r ers in t e and ne f t e
st ature e i le r lace sect r acr ss ur e e
sian ar et is in ac ard c ared t t t e and
ur e ut as een e andin at a faster rate er t e last
c u le f ears e ain sian cities in ter s f e i le nnual a era e si e f unit leased
r lace r t are n n in a re and an ai
4,000
cus n nd n
entral nd n as t e lar est and st ature e i le
3,000
r lace ar et acr ss t e rld and er t e last fi e
ears as increased its l al siti n e r as een
t e st r lific ta er f s ace acr ss entral nd n 2,000
since ta in re s ace t an c anies in an t er
usiness sect r e sect r ec in increasin l i rtant
as led t a r t since f t e a era e si e f s aces 1,000
used t e erat rs It as r t fr an a era e f

s in t s in
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
nnual ta e u f e i le s aces
3,700 250,000 20%
era e si e f unit leased 200,000

15%
in entral nd n
150,000
10%
210k
100,000
5%
50,000
a e u f e i le
s ace in 0
2012 2013 2014 2015 2016 2017
0%
Flexible workplace take-up (sqm) f e i le r lace ta e u er t e t tal
urce anal sis n data

87
Italian
Key data Case study: WeWork Companies Inc.
e r anies Inc ic as e r in Ital

f unded in erates in t e In e r is e ect t en t ffices in ilan in ia
real estate industr it t e ai f a ini and in ia era i li e ner f t e first ffice is a
creatin dern e i le and s ared real estate fund ana ed a ills and su scri ed ines
r s aces e r is currentl and ill st e le e ner f t e sec nd ffice in
eratin in cities in rt erica ia era i li is t e fund ie l ana ed enerali Real
ut erica ur e sia and state e r ert cl se t u is an ist ric uildin
ustralia it a net r f re t an fr t e s and it as een c letel ren ated e
e l ees in re t an fund ie l as alread c lla rated it e r f r
uildin s ffices in aris
64
ities in ic r t f e r s s aces s
erates
1,200,000
197
1,000,000
800,000
u er f uildin s 600,000
ana ed 400,000
200,000
180k 0
Spaces (sqm)
2012 2014 2015 2017
u er
f e ers
r t f nu er f uildin s in t e net r
1.1m
urface 250
s 200
150
100
50
0
2012 2014 2015 2017
Buildings (#)
urce anal sis

Italian
r t f an s re enues
1200 250%
200%
800
150%
100%
400
50%
0 0%
Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
2016 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2018
Revenues Revenues trend
e su scri ti n at e r includes Internet

access cleanin and furniture e ers can
c se et een different lans t des in
usin free des s r ri ate s und r f ffice urce anal sis
atel e r a e launc ed a ne initiati e
ai ed at c anies f an si e et er t e
ant a sin le ers n satellite ffice in a ne
l cati n r a ers n ead uarters
89
Italian
Glossary
NNT
e nu er f standardi ed real estate units s ld sales
f r ert ri ts are c unted ta in int acc unt t e
s are f r ert transferred ic eans t at if an unit
is s ld nl f r a rti n f r e a le t is uld n t
e c unted as ne ut as
Stock
e nu er f real estate assets included in t e land
re istr arc i es in a i en e ra ical area
II
e real estate ar et Intensit Inde rati et een
and t c
IRS
Internal Re enue er ice Real state ar et i isi n
INSI
Italian ati nal tatistical Institute
ati nal ss ciati n f uilders

Italian
Contacts
Real state eals
Antonio Martino - MRICS

Partner - Real Estate Deals Leader Italy
antonio.martino@pwc.com
91
ce e e e efe e e e fi e e efe e e c e e fi
e e e e e c e f e e e fi e e e ce ce e e
ef e c f f e e fi c c ee ec e f e fe e e e e fi
e e ef e c f e e e fi c c ee ec e f e e e fi fe e
e e e fi e e ee cc c ef f e e

PWC Real Estate 2018

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PWC Real Estate 2018

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Real Estate

3. In est ents in nstructi n 13

5. Italian In est ent rends 27

5.1 lternati e sset lasses 36

5.2 Real state unds 38

6.2 In est ent rends 54

6.3 Ofﬁce sect r 56

6.4 tel sect r 60

6.2 In est ent rends 70

6.3 Ofﬁce sect r 72

6.4 tel sect r 74

8. Internati nal trends 77

2000 2010 2017

Italian main economic drivers

Economic Growth Tourism Population Migration

3.1% 3.1% 3.1% 3.1%

6 | Italian Real Estate Market Overview

r ss alue added industr estinati n f e rts ds

rea s Trade, transport, accomm., food services European Union

Public Debt Inflation Exports Unemployment

5.2% 5.2% 5.2%

u lic e t In ati n rts

-3.5% -3.5% -3.5% -3.5%

-5.0% -5.0% -5.0% -5.0%

Volume trend in Italy 07 – H1 18 as a unt su lied an s t use lds

i er c ared t ile rec rded a su stantial 20

increase f 70.6% over 2014. 10

c ared t t e sa e eri d f t e re i us ear

surr e and l an reﬁnancin 80

e an f Ital r ides data n ne rt a es transfer 70 49%

l ans and reﬁnancin startin fr t e t ird uarter f 60

In t e ﬁrst si nt s f 49.5% of the new 50

t e ac uisiti n f t e ﬁrst use t e sec nd use r 30

a c nstructi n restructurin erati n ile transfers 20 41%

surr e l ans acc unted f t e ar et and 10

reﬁnancin acc unted f r nl 0

than 60% of the total loans granted each year ese

Sicily 16.8% 10% 125

The affordability index is calculated as follows:

ears are ﬁ ed at and is

urce anal sis n Italian IR data

Investments in Construction Residential In est ents

e I I Inde re ardin uildin c nstructi ns underlines 140

t at t ere as a slight decrease of 0.1% during 2017 30%

c ared t it t e ne ati e d na ics f u lic

uildin s a unted t n c ared t

Forecasting construction investments 2018 expected to increase t an s t t e ﬁrst siti e si n

nstructi n in est ents f r uildin s c an e in uantit it res ect t t e re i us ear

urce anal sis n data

Stock and transaction ransacti n trend

asset classes retail is ri ar acc untin

Historical residential transaction trend

r t e residential real estate

ist rical nu er f residential transacti ns

Cycle I Cycle II Cycle III Cycle III 2013 - 2017

urce anal sis n Italian IR data

NNT H1 2018 - Residential ar s area

In t ere ere 280,970 residential

280,970 are f di ensi nal class

21% Milan Bologna Rome

20 | Italian Real Estate Market Overview

In 4.5m residential sqm were

urce anal sis n Italian IR data