Italy leads real estate fund growth in Europe

The global real estate fund market continues its expansion, reaching €4.8 tn in assets in 2024, a 3.4% increase, with REITs comprising the majority of those assets.

Scenari Immobiliari - presentation of report

Research by Italian research platform Scenari Immobiliari, in collaboration with Studio Casadei, highlights that Europe saw 3.1% growth, with €1.65 tn in assets across 2,007 funds and 258 active REITs.
While European real estate funds consistently hold 34.3% of global assets, their overall volume continues to grow. The five largest European markets (including the UK) saw a 3.5% increase in turnover in 2024, reaching €942 bn, and are projected to exceed €991 bn in 2025. Germany remains the largest market, followed by France, but Italy experienced the strongest growth at 6.6%, reaching €151.9 bn.
Italy's real estate fund sector is experiencing consistent growth, representing over 13% of European funds. Its Net Asset Value (NAV) reached €121.5 bn at the end of 2024, a 6.6% increase. Directly held real estate assets also grew by 6.1% to €139 bn. Further growth is projected for 2025, with NAV expected to rise by 5.3% and assets by 5%, and the number of funds potentially reaching 700.
The Italian real estate fund system's debt stands at €59 bn, about 43% of its assets, and has decreased slightly. Return on Equity, averaging 1.8%, is also down slightly. The Bank of Italy's Financial Stability Report notes that Italian funds, being closed-end, are less vulnerable to liquidity risks from redemption requests, unlike most European funds. The risk of significant valuation discrepancies between fund portfolios and market values at maturity is considered low.
Mario Breglia, president of Scenari Immobiliari, commented: "Even though the macroeconomic and political scenario is affected by uncertainty, the real estate sector is reacting well, partly because it is inherently countercyclical. In particular, the reasons that are moving investments from the US to Europe (which is more stable) are pushing the further development of the market. In Italy, the real estate market has returned to expansion with an acceleration in prices higher than consumer inflation, and the reduction in interest rates is stimulating the demand for mortgages. The outlook for the rest of the year is positive for all sectors, which contributes to the well-being of real estate funds."
Francesca Zirnstein, general manager of Scenari Immobiliari, added: "The asset allocation of Italian managed assets has seen the weight of the various sectors vary, with residential and hospitality showing growth. The outlook for 2025, based on the indications collected among the asset management companies that participate in the creation of our Report, is cautiously optimistic, with an increase in assets under management and diversification of portfolios compared to the current composition."