Foreign investors were the driving force behind 2017’s recovery of investment into Italian corporate real estate.

Total corporate real estate investment grew to €11bn in 2017, from €9.1bn a year earlier, with foreign investors accounting for about 70%, according to figures published by Italian research and consultancy firm Nomisma.

Even though the Italian market still accounts for less than 4% of total investment at a European level (3.8% in 2017 from 3.6% in 2016), in absolute terms this is the first time it has bounced back to pre-crisis levels: its previous peak was €9.5bn in 2007, according to Nomisma figures.

Milan alone absorbed one third of total corporate real estate investment in 2017, followed by Rome (12%) and the rest of Italy (55%). In terms of functions, the office segment made up 39% of the total corporate real estate investment last year. Another 22% and 27% went to the retail and alternative assets segments respectively, and the remaining 12% went to hotels and other mixed-use real estate.

“The overall economy is getting much better. In 2017 annual GDP growth was about 1.5%, which brings us closer to the European average, much better than in the past,” said Piergiorgio Borgogelli, head of the Italian Trade Agency (ITA).

“The reliability of what has been done in the past years has stabilised the economy, and many of the recent reforms are sustaining that strategy. On the real estate especially we are improving our capability as an ecosystem to provide a better offer to the investors in getting more availability not only of real estate building proposals, but also extending that capability to real estate development projects. Thus as an ecosystem we are much better than in the past.”

The ITA coordinated a mission of Italian local authorities looking to market major real estate development and urban regeneration projects at Mipim, the real estate fair held in Cannes every year. The agency also created InvestinItalyrealestate.com, an online window marketing some 360 real estate development projects throughout the territory put on sale by both public and private organisations.

Italian authorities have made efforts to attract foreign capital and shore up chronically weak economic growth. Among other things, the previous government set up a special committee for the attraction of foreign investment, streamlined visa procedures for investors coming from outside the EU and passed major tax breaks to lure wealthy foreign individuals to set up their fiscal residency in Italy.

Yet political uncertainties cast a shadow over the recovery of the Italian economy, as a hung parliament emerged from the general elections held on March 4.

Gross FDI amounted to €12.1bn in 2017, down €16.6bn in 2016 and in line with the €12bn recorded in 2015, according to figures published by the Bank of Italy.