The main role of Ditch Global is to raise funds at the lowest cost. Real estate is a “capital intensive” industry and needs a lot of capital, from the smallest development operations to the largest investments. Finance is also useful in investment analysis; real estate represents an important asset class in both institutional and private portfolios. Analyzing the real estate investment with a financial approach is therefore fundamental.

In fact, more and more space has been given to the evaluation of all economic, income, equity, and financial factors affecting the management of real estate portfolios with a consequent impact on the portfolio ability to produce profit. These quantitative factors became as significant as the qualitative (material and architectural) characteristics of real estate.

On the other side, the number of companies offering services in the real estate market increased, resulting in higher competition both nationally and internationally. All this led to greater exposure of national operators to threats and opportunities with consequent competitive challenges. In this scenario, the real estate industry faced several changes, increasingly dealing with new logics and stakeholders, with ever-changing organizational and structural dynamics. This continuous transformation implied more and more interest in the organizational models of the companies providing asset management services (in Italy, the so-called “Società di Gestione del Risparmio”—SGR).

This interest is also due, on the one hand, to the need to identify more efficient production assets (in a context of reinvigorated requests for the protection of investors in financial instruments exposed to stock market turbulence) and, on the other hand, to the increase of demand for improving the quality of the offered services.

These structural and organizational changes led over the years to mergers, acquisitions, and consolidation of real estate asset management companies, with a consequent increase in company size. Economies of scale are the cost advantages that companies gain from their scale of operation (typically measured by the amount of output produced), with cost per unit of output decreasing with increasing scale.

By transferring this notion to the real estate asset management industry, it can be assumed that as real estate portfolios increase in size, the incremental cost of managing additional properties should fall. So real estate asset management companies with larger property portfolios should be more efficient than those with smaller portfolios.

While most previous studies focused on the economies of scale in US Real Estate Investment Trusts (REITs), this analysis aims to show, starting from the financial statement data, that there are no specific economies of scale in Italian real estate management companies.

This study briefly summarizes the literature on the subject and the issues arising on the matter. Then, considering some empirical research variables, it tries to find some relationships between them to verify the presence or absence of economies of scale of Italian real estate management companies using multivariate regressions. The results show that there is no single model for profit maximization and cost minimization, but all depends on the business model that each SGR decides to adopt.