Key Highlights of the New Scenario:
A More Supportive Macroeconomic Environment for Capital
Italy enters 2026 in a phase of macroeconomic stability. While strong expansion is not expected, fundamentals remain solid: a strengthening labour market, rising real incomes and improving financial conditions continue to support household consumption and business activity. In addition, the anticipated easing of interest rates is reducing debt costs and restoring more favorable leverage conditions, encouraging capital to return to the Italian real estate market.
Investment: 2025 a Turning Point, 2026 a Year of Consolidation
2025 marked a pivotal moment for the sector, with total investment volumes reaching €12.5 billion (+23% year-on-year), the second-best result ever recorded and above both the five- and ten-year historical averages. Foreign capital accounted for 58% of total volumes, with a strong concentration in Retail, Hospitality and Industrial & Logistics.
In 2026, the outlook points to:
• A gradual return of core capital, particularly towards prime, well-located assets.
• Increased selectivity, with a focus on ESG-compliant properties and lower-risk profiles.
• Further consolidation of repricing and yield stabilization.
Office: Solid Demand, Limited Supply
In Milan, leasing activity is expected to remain stable, constrained not by weak demand but by the limited availability of medium- to large-sized Grade A space, particularly within the CBD. Prime rents are forecast to increase, with positive spillover effects on high-quality secondary assets. In Rome, competition between office and hospitality uses in prime locations, together with conversions to residential and hotel schemes, is further compressing supply and supporting rental growth.
Retail: Sector Revaluation and Return of Institutional Capital
2025 recorded all-time high investment volumes and the largest Shopping Centre transaction ever completed in Italy. Yield compression signals a broader revaluation of the sector and renewed investor confidence.
Logistics: Towards a New Phase of Balance
The vacancy rate is steadily declining due to ongoing space absorption and a more selective, demand-driven development approach. In 2026, vacancy is expected to stabilize, while prime rents in Milan and Rome will continue to rise, albeit at a more moderate pace, indicating a more mature and stable market. Demand will be supported not only by traditional drivers but also by European investment in defense and renewable energy.
Hospitality: Global Capital and a Focus on Luxury
With international brand penetration still at 21% (vs. a 41% EU average), Italy will continue to attract international hotel chains and specialized investors.
Investment volumes in 2026 are expected to increase further, with potential yield compression on prime assets due to limited product availability.
Living & PBSA: Structural Growth and Supply Shortage
The Italian PBSA market continues to expand but remains structurally undersupplied compared to the growing number of domestic and international students. Planning delays, high construction costs and regulatory constraints will limit the alignment between supply and demand in the short term, keeping PBSA among the core, high-performing asset classes—particularly in major university cities.
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