Real estate, investment 2025 in Italy at 12.4 billion

Overall, 2025 closed with volumes of EUR 1.9bn, or -14% year-on-year, reflecting a market that remains selective but dynamic in higher quality deals. However, the sector showed a particularly strong performance in the fourth quarter, with investments of around EUR 800m, up 20% from the same period in 2024 and the best quarterly result in three years.

Milan is confirmed as the main centre of capital attraction, catalysing over 70% of investments, followed by Rome with about 20% of the national total.

The strong acceleration observed in the fourth quarter was mainly driven by core transactions on iconic assets, which contributed, after about two years of stability, to an initial compression of prime net yield: 3.80% in Milan and 4.30% in Rome. A gradual continuation of this downward trend is expected in the coming quarters, supported by renewed investor interest in prime products in core markets.

During 2025, the take-up of office space 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 made a particularly significant contribution, with about 125,000 sqm absorbed, making it the most dynamic quarter of the year thanks to the increase in the average size of transactions. In fact, four lettings of more than 5,000 sqm were concluded in the period, compared to only five in total 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 been a limitation to the full expression of demand, even in the presence of high tenant interest. An imbalance between supply and demand that is reflected in a progressive growth in rents, particularly for the highest quality properties: in the fourth quarter of 2025 the prime rent of the Milan market reached 850 euro/sqm/year, with further margins of increase expected during 2026.

In Rome, the fourth quarter recorded an absorption of about 51,000 square metres, bringing the total since the beginning of the year to about 150,000 square metres, down 14% year-on-year. The prime rent stands at 630 euro/sqm/year. In this context, rental growth prospects remain solid, supported by limited space availability and a restrained development pipeline, elements that continue to exert significant pressure on rents in the most sought-after office areas.

In the last quarter, living reached approximately EUR 330 million in investments, bringing the total since the beginning of the year to more than EUR 1 billion, an increase of more than 70% compared to 2024. Milan confirmed its position as the main destination for residential investments in Italy, concentrating 66% of capital, followed by Turin, Rome and Bologna. The sector's performance was mainly driven by student housing, which doubled its investment volume year-on-year, with more than half of the value attributable to core transactions.

In the third quarter of 2025, the Italian residential buying and selling market confirmed the positive trend of the first half of the year, with 174,892 transactions, up 8.5% compared to the same period last year.

In Milan, 5,662 sales were concluded (+11.8% on Q3 2024), with a clear prevalence of small units (65% under 85 sqm). New constructions accounted for 9.5% of exchanges, a figure in line with previous quarters and 3.1% higher than the national average.

The market in Rome also continued to grow, with 8,327 transactions (+6.4%), in line with the positive trend that has been going on for over a year. Almost half of the transactions (49.2%) were concentrated on medium-large sizes (over 85 sqm), while new constructions accounted for 7.6%.

Also in Q3 2025, average interest rates stood at 3.35% and the share of purchases with a mortgage reached 54.4% in Milan and 60.8% in Rome.

In the third quarter, the growth of the rental market continued nationwide, but with different trends in the main urban centres. In Rome and Milan, a decline in the long-term rental market continues to be observed, with an initial drop in the transient market.

Compared to the third quarter of 2024, standard contracts (4+4) contracted by -1.6 per cent in Rome, while in Milan the decline was -3 per cent. Overall rents also fell, by -2.0 per cent and -4.1 per cent respectively. On the other hand, as regards transitory contracts, the contraction in the number of homes rented was -3.1% in Rome and -1.2% in Milan. However, the volume of rents for this segment increased by 7.2% in Rome and 3.0% in Milan.

The alternatives sector confirmed its attractiveness to investors, with a total annual volume of more than EUR 1.5 billion, of which more than EUR 600 million was recorded in the fourth quarter alone, marking the best result in the last five years. In the last quarter, investments in the healthcare segment reached approximately EUR 390m, mainly attributable to two major national portfolios. Also of note was the purchase of the Meazza Stadium in San Siro, acquired by FC Internazionale and AC Milan.

"2025," explain Dils analysts, "reinforced the growth path of the Italian real estate market that had already begun in 2024, bringing investment volumes back to levels close to historical highs. The performance has been sustained both by the traditionally more consolidated segments - such as retail, hospitality and logistics - and by the growing contribution of newer asset classes, such as living and alternatives, which are expanding investment diversification opportunities. In the European context, Italy asserts itself, together with the other markets of Southern Europe, as one of the main drivers of real estate, distinguishing itself for the solidity of its fundamentals and its ability to attract capital even in a global scenario characterised by high complexity and uncertainty.".