ITALY: An Introduction to Real Estate

Italian Market Overview in Numbers 

According to ISTAT (Italian National Statistics Institute), in the fourth quarter of 2023 the price index of homes (IPAB) purchased by families, for housing or investment purposes, remained unchanged compared to the previous quarter and increased by 1.8% compared to the same period of 2022.

On average, in 2023, house prices increased by 1.3%. The most marked increase is recorded for new homes (+5.6%) while for existing homes the average annual price growth stands at 0.4%.

According to Nomisma (an independent company offering sector and territorial studies), in 2023 the real estate market shows signs of weakening.

The 9.7% drop in sales in 2023 is attributable to the mortgage-assisted demand component which suffered a decline of -26%, while the remaining market share grew by +4.8%.

The demand for rent is growing: +3 percentage points compared to 2022.

According to DILS-Team Research (primary company operating in real estate services), living continues to prove to be an asset class on the rise in investor preferences.

The Italian residential market focuses on Milan, the reference market for the sector, and Rome.

The Logistic sector confirms its leadership in real estate investments in Italy.

During the last quarter of 2023, the offices sector returns to recording investments in line with the volumes of previous years.

The hospitality sector records a positive result and for the retail sector, Q4 2023 represented the best quarter of the last two years.

The Real Estate developments and current Italian legislation

The Italian real estate market is an attractive option thanks to many factors, including the rich artistic and cultural context, the beauty and quality of Italian architecture and design, the boost that the Winter Olympic Games to be held in Milan and Cortina d’Ampezzo in 2026 are bringing and will continue to bring to the real estate sector.

To consolidate and further attract investments, however, further legislative reforms are required.

Should the State and local institutions, therefore, continue to work together to overcome the bureaucratic obstacles that still hold back the sector and to eliminate some uncertainties.

In 2023, important legal issues were addressed and resolved.

The new Public Contracts Code was approved through Legislative Decree No. 36 of 31 March 2023.

The new Code - adopted within the European regulatory framework consisting of Directives 2014/23/EU, 2014/24/EU and 2014/25/EU - implements an overall reorganisation of the sector and, unlike the previous Code, it is already complete of almost all its implementing provisions, contained in specific annexes.

With regard to environmental remediation of polluted sites, through Legislative Decree No. 104 of 10 August 2023, converted into Law No. 136 of 9 October 2023, it has been clarified that the Regions can confer administrative functions, environmental remediations, safety and waste management to Municipalities, Provinces and Metropolitan Cities.

The intervention of the national legislator became necessary following ruling No. 160 of the Constitutional Court of 24 July 2023, which declared the constitutional illegitimacy of a rule of law of Lombardy Region through which the functions relating to remediations had been conferred on the Municipalities, in the absence of a national provision to this effect.

Furthermore, the path aimed at implementing the National Recovery and Resilience Plan (PNRR) continues

The PNRR is the instrument that outlines the objectives, reforms and investments that Italy intends to achieve, thanks to the use of Next Generation EU European funds, to mitigate the economic and social impact of the pandemic and make Italy a fairer, greener and more inclusive country, with a more competitive, dynamic and innovative economy.

The PNRR sets objectives which in many cases directly involve and support the real estate sector, such as energy efficiency of buildings, the optimisation of the use of renewable sources, the construction of new residences for university students, the regeneration of urban suburbs and the sustainable development of rural and mountain areas.

The future challenges of Italian legislation 

In 2024, Italy will face important challenges to improve its regulatory framework.

Among the main objectives is national legislation on urban regeneration and the limitation of land consumption, in compliance with the objective set by the European Commission to eliminate net land consumption by 2050.

Many regions have their own legislation, but many stakeholders are calling for regulatory intervention that frames the matter at national level with a systematic approach.

Urban regeneration represents an essential element for improving the quality of urbanised areas and is expressed in the revitalization of degraded urban fabrics through their reuse and in the limitation of land consumption and of soil waterproofing.

Another important issue is accessibility to housing.

Italy, like the rest of Europe, is going through a phase of housing shortage and rising house prices.

High interest rates, property taxation, energy efficiency obligations, rising material costs, inflation and other factors make purchasing a home prohibitive.

The Italian Government is studying some measures that could help respond to this need.

A measure, informally called “Piano Salva Casa”, could be approved by the first half of 2024.

This provision should guarantee the possibility of regularising minor internal discrepancies in homes, with the aim of putting many properties back on the market.

Even with regard to the legislation relating to property taxation, many stakeholders ask for an overall vision.

Recently, many specific reforms have been approved, such as the one relating to the taxation of properties used for short-term rentals and the changes relating to incentives and building bonuses.

These measures intervened on specific problems but much more could be done to guarantee unitary and systematic management of the matter.

The main challenge: the certainty and speed of the procedures

In Italy, important reforms have been approved in recent years aimed at shortening the time and simplifying the procedures for issuing/finalising building permits.

However, there still remain some delays in the concrete activity of the local administration offices and some interpretative uncertainties relating to the legislation.

A key challenge that the real estate sector in Italy must face, therefore, concerns the definition of a higher level of certainty and speed of the administrative procedures needed to obtain building permits and other authorisations to implement real estate transformations and redevelopments.

The Italian government is already involved and some important interpretative issues should be resolved shortly.