Italian Real Estate Market 2025

• The italian market returns to peak levels with €12.4 billion invested in 2025
• Historic record for retail with over €3 billion
• Living sees strong growth - student housing investments double

According to Dils Research Team’s analysis, in 2025 the Italian real estate market recorded investment volumes of approximately €12.4 billion, marking the highest level of the past six years and approaching its historical peak. The fourth quarter made a decisive contribution to this result, with around €4.3 billion invested, representing the strongest quarterly performance of the last four years. Compared to 2024, this corresponds to a 23% increase on an annual basis and a 25% rise in Q4 alone. This performance reflects the strong confidence of both domestic and international investors in the outlook and resilience of the Italian real estate market.

Also in 2025, Retail confirmed its position as the most dynamic asset class in the Italian real estate market, standing out for its strong ability to attract capital. In Q4 alone, investments amounted to approximately €1.1 billion, bringing the annual total to €3.4 billion. This represents a 39% increase compared to the already solid 2024 performance and marks a new all-time high for the sector in Italy. This momentum was supported by several landmark transactions, including three deals exceeding €400 million in value; among them, a significant share deal involving a grocery retailer stood out in Q4. Looking at full-year 2025, investment activity was primarily concentrated in the Factory Outlet, High Street, and Shopping Centre segments.

The Hospitality sector continues to rank among the most attractive for investors, positioning itself as the second-largest asset class in the market. In Q4 2025 alone, investments reached approximately €450 million, bringing the annual total to nearly €2.4 billion - the strongest performance of the past six years and a 30% increase compared to 2024. Investor interest focused primarily on iconic properties and assets with repositioning potential in the luxury segment, as evidenced by five transactions exceeding €100 million in value. Capital was mainly deployed in major cities - most notably Rome, which attracted over €650 million investments - as well as in the country’s most established tourist destinations.

In the fourth quarter, the Logistics sector recorded investments of just under €1 billion, ranking among the strongest results ever achieved by the asset class. Total investment volume for the year amounted to approximately €2.2 billion, representing a 31% increase compared to 2024. The quarter was characterized by a high share of core transactions, confirming the strong confidence of investors - predominantly international - in this asset class. This environment continues to support the gradual compression of prime net yields, which stood at 5.20% in Q4 2025, with further compression expected over the course of 2026.

Logistics take-up accelerated in the fourth quarter, reaching approximately 815,000 sqm - the strongest quarterly performance of the past two years - and bringing the 2025 total to nearly 2.5 million sqm, in line with the previous year. This marks the seventh consecutive year in which the Italian logistics sector has recorded at least 2 million sqm of take-up, confirming the level of maturity the sector has attained, despite a stabilization in volumes compared to the peak reached in 2023. On the rental side, conditions remained broadly stable, with prime rents holding at €70/sqm/year in both the Milan and Rome markets.

The Office sector showed particularly solid performance in the fourth quarter, with investments totaling approximately €800 million, up 20% compared to the same period in 2024 and the best quarterly result in the last three years. Overall, 2025 closed with volumes of €1.9 billion, down 14% year-over-year, reflecting a market that remains selective but dynamic in high-quality deals. Milan remains the main hub for capital, attracting over 70% of investments, followed by Rome with approximately 20% of the national total.

The strong acceleration observed in the fourth quarter was primarily driven by core deals on iconic assets, which contributed, after approximately two years of stability, to an initial compression in prime net yields: 3.80% in Milan and 4.30% in Rome. This downward trend is expected to gradually continue in the coming quarters, supported by renewed investor interest in prime products in key markets.

In 2025, office space take-up in the Milan market reached approximately 405,000 sqm, a volume in line with both the previous year and the average of the last ten years. The fourth quarter provided a particularly significant contribution, with approximately 125,000 sqm absorbed, making it the most dynamic quarter of the year thanks to the increase in the average deal size. In fact, four leases exceeding 5,000 sqm were completed during the period, compared to only five in the first three quarters of 2025. Over the past two years, the persistent shortage of available space in the most sought-after submarkets, such as the CBD and Porta Nuova, has limited the full expression of demand, despite strong tenant interest. This imbalance between supply and demand is driving a progressive increase in rents, particularly for higher-quality properties: in the fourth quarter of 2025, prime rent in the Milan market reached €850/sqm/year, with further increases expected throughout 2026.

In the Rome market, the fourth quarter saw take-up of approximately 51,000 sqm, bringing the annual total to approximately 150,000 sqm. This represents a 10% increase compared to Q4 2024, but a 14% decrease on the full year. Over 2025, there has been an increase in transactions involving Grade A/A+ properties, reaching approximately 67,000 sqm, confirming the strong demand for quality assets in the Rome market. In Q4, this momentum was supported by two significant pre-lets: the first, concluded in the CBD with a renowned fashion firm, contributed to the increase in the prime rent benchmark, which now stands at €630/sqm/year; the second, for a total of 28,000 sqm in EUR Core, represented a record transaction for the submarket in terms of tenant standing and project quality, involving the new headquarters of a leading global engineering firm. In this context, rent growth prospects remain solid, supported by limited space availability and a limited development pipeline, factors that continue to put significant pressure on prime assets in the most sought-after submarkets.

The Living sector has consolidated its position among investors' favorite asset classes, returning to levels in line with 2022, the year that saw the sector's best performance. In the last quarter, investments reached approximately €330 million, bringing the total year-to-date to over €1 billion, an increase of over 70% compared to 2024. Milan remains the leading destination for residential investments in Italy, accounting for 66% of capital, followed by Turin, Rome, and Bologna. The sector's performance was primarily driven by Student Housing, which, on an annual basis, doubled its investment volume, with over half of the value linked to core transactions.

In the third quarter of 2025, the Italian residential sales market confirmed the positive trend seen in the first half of the year, with 174,892 transactions, up 8.5% compared to the same period of 2024.

In Milan, 5,662 sales were completed (+11.8% compared to Q3 2024), with a clear prevalence of small units (65% under 85 sqm). New constructions accounted for 9.5% of transactions, in line with previous quarters and 3.1% above the national average.

In Rome, the market also continued to grow, with 8,327 transactions (+6.4%), consistent with the positive trend ongoing for over a year. Almost half of the sales (49.2%) focused on medium-to-large units (over 85 sqm), while new constructions accounted for 7.6%.

The stability of the financial context continues to support the market: in Q3 2025, average interest rates stood at 3.35%, and the share of purchases financed with a mortgage reached 54.4% in Milan and 60.8% in Rome, both increasing compared to the values recorded since the beginning of the year. The positive trend reflects the national pattern, where the mortgage share reached 47.0% in Q3 2025.

The rental market continued to grow nationally in the third quarter, albeit with differing trends across major urban centers. In Rome and Milan, long-term rental markets continued to decline, with a first drop also observed in the short-term segment. Compared to Q3 2024, standard rental contracts (4+4) decreased by -1.6% in Rome and by -3.0% in Milan. Overall rents also fell, by -2.0% and -4.1%, respectively. As for short-term contracts, the number of rented units declined by -3.1% in Rome and -1.2% in Milan. However, the total rental income for this segment grew by 7.2% in Rome and 3.0% in Milan.

The Alternative sector confirms its appeal to investors, with a total annual volume exceeding €1.5 billion, of which over €600 million was recorded in Q4 alone, marking the best result of the past five years. In the last quarter, investments in the Healthcare segment reached approximately €390 million, mainly attributable to two nationally significant portfolios. Notably, the sale of the San Siro Stadium (Stadio Meazza) was also recorded, acquired by the clubs FC Internazionale and AC Milan.

In 2025, the growth trajectory of the Italian real estate market, already underway in 2024, was further strengthened, bringing investment volumes close to historical highs. The performance was supported both by traditionally well-established sectors - such as Retail, Hospitality, and Logistics - and by the growing contribution of more recent asset classes, such as Living and Alternatives, which are expanding opportunities for investment diversification.

Within the European context, Italy, together with other Southern European markets, stands out as one of the main destinations for real estate, distinguished by the strength of its fundamentals and its ability to attract capital even in a global environment characterized by high complexity and uncertainty.