Real Estate Market Q3 2026 in Italy

According to the analysis by Dils’ Research Team, in the first nine months of 2026, the Italian real estate market attracted approximately €10.6 billion in investments, marking the strongest result of the past decade for this period of the year. The figure represents a 30% increase compared with the same period in 2025 and stands 62% above the average for the first nine months of the past ten years, confirming the strengthening of investment activity in the Italian market.

Following the exceptional performance recorded in the second quarter, investment activity maintained a particularly strong pace in the third quarter, with volumes amounting to approximately €3.1 billion, up 18% compared with the same period in 2025. Performance was mainly supported by the Hospitality and Logistics sectors, which together accounted for around half of the capital invested during the period.

Retail confirmed its position as the leading asset class by investment volume year-to-date, with approximately €2.9 billion, up 29% compared with the first nine months of 2025. This represents the strongest result of the past decade for the January–September period, accounting for 27% of total investment volumes.

The third quarter recorded approximately €610 million in volumes, primarily concentrated in the Shopping Centre segment, which attracted around €420 million, representing 70% of the sector’s quarterly total. Performance was supported in particular by the sale of a portfolio of three shopping centres, which represented the largest transaction by invested value in the Italian real estate market during the quarter.

Over the first nine months of the year, High Street, Shopping Centre and Factory Outlet collectively attracted almost €2.4 billion, accounting for more than 80% of total Retail investment.

The Logistics sector recorded approximately €780 million in investment in the third quarter, broadly in line with the previous quarter and up 86% compared with Q3 2025. This brought year-to-date investment volumes to nearly €2 billion, up 63% compared with the first nine months of 2025 and 88% above the average for the same period over the past ten years.

Quarterly activity was evenly split between portfolio and single-asset acquisitions. Among the latter, the acquisition of a recently developed property by an end user stands out, confirming the growing role of occupiers in investment transactions observed throughout 2026.

Logistics take-up remained particularly strong, reaching almost 2.4 million sqm in the first nine months of 2026, including approximately 810,000 sqm in the third quarter. Both figures represent new records for their respective periods. Year-to-date take-up is up 41% compared with the same period in 2025 and, with one quarter still to go, is already approaching the total volume absorbed over the whole of 2025.

Quarterly performance was supported in particular by two large transactions in Veneto, which together accounted for approximately 180,000 sqm. More broadly, strong demand for large-scale space from retailers continued to shape the market, with retailers accounting for three of the five largest transactions of the quarter by floor area. Sustained demand continues to support rental growth, with prime rents reaching €75/sqm/year in Milan and €73/sqm/year in Rome and Bologna.

The Hospitality sector was the most dynamic asset class in the third quarter, with approximately €800 million in investment, a volume three times higher than in the same period of 2025 and up 18% compared with the second quarter of 2026. This acceleration brought total investment volumes for the first nine months of the year to approximately €1.9 billion, 59% above the average of the past ten years.

Investors continued to be particularly active both in the development of new product and in the repositioning of existing properties, especially in the most sought-after destinations in Lombardy and Lazio, which together attracted most of national investment in the sector. Interest in the sector is supported by the growth in tourism demand, confirmed by a record summer, with more than 276 million overnight stays between June and August 2026.

Investment in the Office sector reached approximately €500 million in the third quarter, up 62% compared with Q3 2025. Year-to-date, the sector has totalled approximately €1.4 billion, an increase of 29% compared with the same period of the previous year. Despite the recovery compared with 2025, volumes remain below the average of the past ten years. Third-quarter transactions were driven primarily by owner-occupiers and value-add investors, interested in repositioning properties.

The Milan office market continued to show a slowdown in the third quarter of 2026, in line with the trend observed since the beginning of the year, with approximately 85,000 sqm of quarterly take-up and total take-up of 220,000 sqm in the first nine months, down 22% compared with the same period of 2025. Among the transactions recorded in the latest quarter, the almost 25,000 sqm occupied by A2A’s new headquarters, Torre Faro, recently completed in the Scalo Romana submarket, stands out. The market is characterised by a substantial lack of large-scale available space in the central submarkets: in the first three quarters of the year, excluding Torre Faro, only three transactions above 5,000 sqm were completed, all in semi-central or peripheral locations.

Lower market activity is also reflected in a slight increase in overall vacancy. At the same time, the availability of high-quality assets remains limited in the CBD and Porta Nuova, which account for just over 5% of total available space, with an overall vacancy rate slightly above 2% of stock. Against this backdrop of particularly constrained supply, prime rent remained stable at €900/sqm/year.

In the Rome market, third-quarter take-up reached approximately 41,000 sqm, bringing year-to-date take-up to around 108,000 sqm, up 9% compared with the same period of 2025. Quarterly performance was supported by six transactions above 2,000 sqm, which accounted for 70% of total space absorbed. Strong tenant demand for large-scale space, particularly high-quality space available at short notice, remains evident. Supply is struggling to meet this strong demand and continues to contract significantly, both in prime submarkets and their immediate surroundings, supporting rental growth across the market.

The Living sector €1 billion in investment in the first nine months of 2026, up 35% compared with the same period of 2025 and marking one of the strongest result of the past decade for the January–September period. The third quarter contributed approximately €230 million, slightly down on Q3 2025. In the third quarter, the Built to Sell segment accounted for the largest share of Living investment, with activity concentrated primarily on acquisitions by developers. Among these, the sale of a portfolio of residential developments in Milan stands out as the largest transaction of the quarter in the sector. Student Housing, meanwhile, totalled almost €300 million in the first nine months of 2026, up 49% compared with the same period of 2025.

The Italian residential market maintained a positive trend in the first half of 2026, with approximately 381,000 transactions, up 2.1% year-on-year and representing the second-best half-year result of the past ten years. Growth was driven by the first quarter, while volumes broadly stabilised in the second quarter.

Milan and Rome followed a similar trend, recording growth of 7.1% and 3.1% respectively in the first quarter, slowing by the end of the first half to +3.3% and +2.6%. Compared with their respective ten-year averages, Milan remained broadly in line (+1%), while Rome recorded volumes 11% above its long-term average.

On the pricing side, in the first months of 2026, Milan recorded broadly stable prices compared with the end of 2025, while Rome continued to grow (+3.1%), as did the national figure (+2.5%).

Following a return to growth in 2025, the rental market recorded a decline of just under 1% year-on-year in the first half of 2026. The decline in standard long-term contracts continued for the fifth consecutive period, in favour of more flexible arrangements: agreed-rent contracts increased by an average of 3.8% YoY, while standard temporary contracts declined by 2.4%.

In Milan and Rome, contracts instead increased by 3.5% and 6.9%, respectively, reflecting different dynamics. Rome recorded growth across all contract types, with agreed-rent contracts accounting for more than 50% of transactions. Milan, by contrast, continues to be dominated by standard contracts, despite their decline, while agreed-rent contracts increased by 67% year-on-year.

The Alternative and Mixed sectors attracted a combined €1.4 billion in investment in the first nine months of 2026, up 57% compared with the same period of 2025, with the third quarter contributing approximately €200 million. Among the main segments, Data Centers and Healthcare stand out, with approximately €580 million and €280 million, respectively, in year-to-date investment, both recording strong growth compared with the previous year. Self-Storage is also gaining momentum as an emerging segment in the Italian market, surpassing €100 million in year-to-date investment.

The performance of the first nine months reinforces the growth trajectory of the Italian real estate market, which, with one quarter of the year remaining, has already attracted investment volumes exceeding the ten-year annual average of €10.4 billion. Growth across the main asset classes compared with the same period in 2025 highlights the breadth of this positive momentum and the increasing appeal of the national market as a whole. Retail’s continued leadership is complemented by strong growth in Logistics, the dynamism of Hospitality and the increasing contribution of Living. Rising investment by private investors and developers is also accompanied by the return of US institutional capital with investment activity reaching its highest level since 2022.

Italy’s performance reflects a positive trend shared by other Southern European markets, which are becoming increasingly competitive despite continued uncertainty in the international environment. Market participants remain focused on energy costs, security of supply and the investment required for the energy transition. These concerns are compounded by ongoing conflicts and uncertainty surrounding political developments and elections in major European countries, including Spain, France and Italy, as well as in some of the main international markets. At a structural level, questions are also emerging about the effects of artificial intelligence on demand for real estate and the use of space, while the growing debate around access to housing in Europe is bringing the need to expand the supply of affordable housing into sharper focus.

Against this backdrop, the prospect of a potential new cycle of interest rate increases is contributing to greater investor caution, in a quarter that has already seen a slight rise in prime net yields across some of the main asset classes. Nevertheless, the resilience of Italian market fundamentals and the opportunities for growth can continue to attract domestic and international capital, both in established sectors such as Hospitality and Logistics and in the development of segments such as Student Housing, Data Centres and Healthcare.