ITALY: An introduction to Real Estate
The Italian Real Estate Market
The Italian real estate market is recovering and returning to positive territory.
According to Nomisma (an independent company that offers sector and territorial studies, and economic research), the increase in demand and the corresponding push to the market depends mainly on two factors: the stability of incomes and the gradual restoration of less restrictive conditions of access to credit.
Although some uncertainty remains, the recent growth in demand outlines a newly expansive scenario.
Similarly, on the rental front, while waiting for a full return of credit attractiveness, an increase in demand has been generated.
The most attractive cities of 2024, from a real estate point of view, were Milan and Rome, followed by Turin.
According to the analysis by Dils Research Team (a leading company operating in real estate services), during the third quarter of 2024, the Italian market recorded the highest quarterly investment volume of the last two years, with a total of approximately EUR3 billion, double the result of the same quarter in 2023.
The office sector remains a cornerstone of investors’ preferences, and the related transactions completed in Q3 were primarily focused on the Milan and Rome markets.
The logistics sector has seen significant growth, as has the interest in strategic sectors such as data centres and infrastructure.
The retail sector has emerged as the asset class that attracted the highest volume of investment in the first three quarters of 2023, and it is worth noting that during 2024, the largest single-asset deal in the history of the Italian market was completed (amounting to EUR1.3 billion and regarding the sale of a trophy asset intended for commercial and office uses on Via Montenapoleone).
During the third quarter of 2024, the living sector increased compared to the previous quarter.
One of the most dynamic sectors in the Italian market continues to be hospitality, and a market that is increasingly appealing for investors is that of university student accommodation: as reported by Scenari Immobiliari and Re.Uni, there has been a constant increase in international students in Italy, particularly in large cities such as Milan, Rome, Florence and Bologna.
The Challenges of Italian Legislation
In 2024, Italy faced important challenges to improve its regulatory framework, and this path will continue in 2025.
Among the most recent and important legislative developments, an amendment to the new Public Contracts Code was approved (Legislative Decree of 31 December 2024, No 209).
The legislative development at issue pursues the modernisation of the bureaucratic system.
In particular, the reform is aimed at further rationalising and simplifying the discipline of the Public Contracts Code, considering the needs represented by sector stakeholders, as well as the requests, presented at European level, for the modification and integration of certain legal institutions, in order to avoid infringement procedures by the European Commission.
The amendment, moreover, incorporates the case law handed down on the Code.
Another important reform implemented in 2024 was the approval of the so-called Salva Casa Decree (Law of 24 July 2024, No 105, converting decree-law 29 of May 2024, No 69).
The law introduced important provisions, inter alia, regarding the proof of the legitimate status of properties, the change of use and the regularisation of building interventions.
In particular, it is worth noting the introduction of the tacit consent institute, in relation to the regularisation of hypotheses of partial non-conformities and in the case of essential variations.
One of the future main objectives remains the national regulation on urban regeneration.
At the end of 2024, new impetus was given to the approval process of a national law on urban redevelopment.
Indeed, although many regions have their own regulations, stakeholders are calling for a regulatory intervention that frames the matter at a national level with a systematic approach.
According to the data from the Ministry of Economy and Finance (MEF) and the Agenzia delle Entrate, Italy’s real estate stock continues to be dominated by old buildings.
In Italy, a significant portion of the real estate assets date back to the pre-war period or to the post-war reconstruction, and many of them are devoid of any historical or architectural value.
Therefore, urban redevelopment represents an essential element for improving the quality of Italian urbanised areas, expressing itself in the revitalisation of abandoned or decayed urban fabrics.
The Main Future Challenge: The Certainty and Speed of 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 are still some delays in the concrete activity of the local administration offices and some interpretative uncertainties relating to the relevant 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 national legislature is aware of these issues, and it is possible that, in light of a draft law whose approval process is at an advanced stage, some important interpretative issues will be overcome.