Italy
Portugal
The Q4 sprint brings 2024 investment volume to €9.8 billion
Increase in capital invested in offices, hospitality, and alternatives
Retail back in the spotlight for investors
The Dils Research Team‘s analysis shows that 2024 closed with total investments amounting to approximately €9.8 billion, signalling a strong recovery in activity within the sector. Compared to 2023, the annual volume registered a 60% increase. In particular, Q4 played a key role, generating investments of around €3.4 billion, a result that reflected growth both compared to the previous quarter and to the last quarter of 2023 (+30%).
The main driver behind the performance of Q4, as well as the entire 2024, came from the Retail sector, which, after the record transaction in Milan’s Quadrilatero in Q3, continued to be fuelled by high-profile transactions. During the fourth quarter, this sector attracted nearly €800 million in investments, totalling €2.4 billion for the year – more than triple the amount in 2023 and the best result in the last six years. The Supermarkets and Shopping Centres sectors characterized Q4 activity and, given the strong deal pipeline expected, could sustain significant investment volumes throughout 2025.
With a 90% increase compared to the total of the previous year, the Office sector has firmly remained among investors’ preferences, with approximately €2.2 billion nationwide in 2024, nearly €700 million of which in the fourth quarter. Investments were primarily focused on the cities of Milan and Rome, which attracted 45% and 40% of the total annual investment, respectively. The five largest transactions in terms of value totalled over €900 million, with a predominance of domestic capital, followed by capital from European origins (Germany and France).
In 2024, the Milan office market recorded a take-up of approximately 400,000 sqm, slightly down compared to 2023 (-14%), mainly due to the lack of large-scale transactions, also influenced by the limited availability of Grade A/A+ spaces and the current urban planning challenges for new constructions. As in the previous year, only two deals over 10,000 sqm were concluded; however, the current pipeline foresees potential significant closings in the next two quarters. The absorption volumes for Q4, amounting to about 120,000 sqm, showed an increase compared to the previous quarter (+27%) and were above the average quarterly figures of the last five years.
In Q4, the Milan occupier market demonstrated its dynamism, and in terms of the number of transactions, it turned out to be the best quarter ever recorded, growing both compared to Q3 (+28%) and the same period in 2023 (+3%). This increase was mainly driven by demand for medium and small-sized spaces. 2024 once again highlighted a preference for high-quality office spaces (Grade A/A+), which accounted for over 75% of the market. In terms of rents, the prime rent in the Milan market increased in Q4, reaching 775 €/sqm/year, with expectations of further growth in the upcoming quarters.
The last quarter of the year saw the Rome market absorb approximately 46,000 sqm, slightly down compared to both the previous quarter and the same period in 2023. The total for the year, amounting to 174,000 sqm, while in line with both the five-year and ten-year averages, is still 31% below the outstanding performance achieved in 2023. The market was affected by the scarcity of high-quality product, which led to some deals being postponed to 2025, thus creating a new pipeline for the first half of the year. On the other hand, this contributed to maintaining a growth outlook for prime rents in the CBD.
After the excellent result of Q3, the Logistics sector attracted approximately €560 million in investments during the last quarter, reaching a total of around €1.7 billion for 2024, in line with the previous year. The Q4 performance was supported, in addition to a significant transaction involving a pan-European portfolio, by deals in the Piacenza and Milan markets, with Milan remaining the main logistics hub in Italy. The sentiment regarding ongoing transactions suggests the beginning of a downward trend and the first contraction of the prime yield to 5.4% after two years of stability.
With a take-up of approximately 615,000 sqm in the last quarter of the year, the absorption of logistics space in 2024 totalled 2.3 million sqm, down 19% compared to the record achieved in the previous year. After about a decade of consistent growth in the take-up of the Italian market, we are witnessing the stabilization of the demand-supply dynamics, which, however, still confirms the prominent role played by the logistics sector in Italy. Moreover, rents continue to rise in the best locations, with prime rents in Milan and Rome reaching 70 €/sqm/year. An increase in prime rents was also reported in the Piacenza market, at 60 €/sqm/year, and in Verona, at 58 €/sqm/year.
Already a prominent sector in 2023, the Hospitality sector in 2024 made further progresses compared to the previous year’s volumes (+66%), attracting approximately €1.8 billion and confirming the dynamism seen in the first part of the year. Contributing to this result in the last quarter was the transaction involving one of the most iconic Venetian hotels, which, at around €300 million, became the largest deal in the sector for the year. The luxury segment continues to drive investors’ choices, particularly in the Roman market, where a pipeline of new and prestigious openings remains strong.
After a first part of the year characterized by reduced investment activity, the Living sector showed a recovery in Q4, recording the highest quarterly volume of the last two years with nearly €300 million in investments. The annual result, totalling approximately €560 million, represented a contraction of about 20 percentage points compared to 2023. This decline is partly attributed to the aforementioned urban-administrative challenges in Milan. The strong performance in the fourth quarter benefited from the closing of three transactions in the Student Housing sector, totalling over €160 million; of these, two are particularly noteworthy in the Italian market, as they represent some of the first core-profile transactions in the student housing sector.
The Italian residential sales market in Q3 2024 (the latest available quarterly data) continued the positive trend that began in the previous quarter, showing a 2.7% increase compared to 2023, with over 161,200 NTN (Normalized Transaction Numbers).
Compared to the third quarter of the previous year, the residential market in Milan recorded a 4.8% decline in transactions. However, the trend showed improvement compared to the first and second quarters, which recorded declines of 13.2% and 7.3%, respectively. In this context of stabilization, smaller units remained the most in demand: over 65% of sales in the city involved properties under 85 sqm, a figure consistently higher than the national average (41%). In terms of total transactions, the share of new constructions decreased by two percentage points, standing at 10.6% (almost double the national average of 6.6%).
Rome consolidated the increase in transactions, recording a 1.1% year-on-year growth, in line with the 3.4% increase from the previous quarter. Medium-to-large units larger than 85 sqm accounted for almost 50% of the total volume, while medium-small units under 85 sqm decreased by 6.4% compared to Q3 of the previous year. The share of new homes, although lower than in Milan, was higher than the national average, standing at 7.9%, slightly down from the previous quarter.
Purchases supported by mortgage loans increased: in Milan, the share was 52% of transactions, up from 43% in Q2 2024; similarly, in Q3 in Rome, 57% of NTN were financed by mortgages, an 8-percentage point increase compared to Q2 2024.
The rental market at the national level grew by 1.1% in Q3 2024 compared to Q3 2023. The main cities, Rome and Milan, showed similar dynamics: compared to the same periods of the previous year, the Capital recorded a 6.9% increase in temporary contracts, while Milan saw a 9.7% increase. Long-term contracts, on the other hand, experienced a decline of over 5% in both cities (-6.9% in Rome and -7.3% in Milan).
Thanks to over €600 million in Q4, the Alternative and Mixed-use sector closed 2024 with investments amounting to approximately €1.3 billion (+47% compared to the previous year), of which about €900 million were related to mixed-use assets or developments. Compared to previous years, the share of investments in the Healthcare sector, which was a significant trend in 2023, decreased. In contrast, in 2024, the Education and Data Centre sectors played a central and growing role.
The results of the just-concluded quarter confirmed, as expected, the growth trend in investments for 2024, where improvements in the financial context and the continuation of the repricing process strengthened investor interest—both institutional and non-institutional—in the opportunities offered by the Italian market. However, the sector that has driven investments in recent years—namely, medium- and large-scale development transactions in Milan—has encountered a setback. This challenge was more than compensated for by the dynamism and performance recorded by other types of investments.
For 2025, we expect the continuation of the current growth phase, which has already contributed to generating a significant investment pipeline expected to materialize throughout the new year. Investments in more established asset classes will continue to be accompanied by “alternative” investments, which represent a strategic choice for diversifying investor portfolios and simultaneously offer an opportunity to meet the demand generated by new social and economic dynamics.
