2025 Real Estate Trends in Italy: Opportunities Amid Transformation + Bonus
From Sustainability to Student Living: Key Shifts Shaping Italy’s Real Estate Market
Hey, Carlo here! Happy New Year and welcome to a new issue of the Unlocking Real Estate Value newsletter. Each week I will provide you with exclusive advice and professional insights to help you realise long-term value through real estate development.
Happy New Year!
Welcome to the first newsletter of 2025! We’re thrilled to kick off the year with fresh insights and a special contribution from Ehson Kolb—make sure to read to the end for his fantastic piece.
2025 is shaping up to be a pivotal year for global real estate markets, brimming with optimism and new opportunities for growth. In today’s edition, we spotlight Italy’s Top Real Estate Trends for 2025, exploring how the country’s market is evolving and creating new avenues for investors and developers.
Building on key patterns observed in 2024, this year will see Student Living and Hospitality sectors continue to expand. Meanwhile, the Office Sector is primed for a rebound, driven by the urgent need to tackle widespread obsolescence. Across Europe, 80% of buildings face obsolescence by 2030, requiring significant repositioning or repurposing (read more here).
This edition covers:
• Urban Supply Shortages and the rising demand for high-quality assets
• Investment Trends in resilient sectors like logistics and hospitality
• Sustainability Imperatives, including decarbonisation and ESG compliance
• Residential Growth amid housing shortages in key cities
Let’s dive in.
1. Italy’s Urban Centres: Supply Shortages and Demand Surge in 2025
Cities like Milan and Rome are struggling with a growing supply-demand gap, especially in Class A office spaces.
In Milan’s CBD, prime rents hit €730/sqm/year in 2024, marking a 4% annual growth, and are expected to rise by 3% this year. Similarly, Rome’s prime rents, currently at €600/sqm/year, are forecast to grow by 2%.
The root of this issue lies in limited new developments and urban planning challenges, making modern, sustainable properties more desirable than ever. Meanwhile, demand for peripheral areas is declining.
For investors, this imbalance creates opportunities for value-add strategies like converting outdated spaces into residential or hospitality properties. In 2025, energy-efficient buildings will attract premium tenant demand, reinforcing the importance of retrofitting assets in prime locations.
2. Resilient Sectors Leading Italy’s Real Estate Market
Resilient sectors like hospitality, logistics, and retail continue to draw strong interest from investors.
Here’s what’s happening:
Hospitality: Investment surged to a record €2 billion in 2024 (up 30% YoY) and is set to grow further as tourism rebounds.
Logistics: Stable rental levels and growing demand for green buildings keep this sector attractive. Prime rents reached €67/sqm/year in 2024 and are projected to grow by 2% in 2025.
Retail: Modernisation efforts and higher yields are reviving investor interest.
Milan and Rome remain central to these trends, offering a mix of growth and resilience for domestic and international stakeholders.
3. Sustainability: The Cornerstone of Italy’s Real Estate Strategy
Sustainability is no longer a choice—it’s a necessity. ESG compliance and decarbonisation are reshaping Italy’s real estate priorities.
Retrofitting buildings in Milan and Rome not only address obsolescence but also help reduce operating costs and attract premium tenants.
Adaptive reuse is another growing trend, with many outdated office spaces being transformed into housing or hospitality to meet urban sustainability goals. These efforts reflect the sector’s commitment to long-term growth and environmental responsibility.
4. Residential Growth: Capitalising on High Demand
The residential market is booming, driven by housing shortages and growing rental demand.
Notable trends include:
Purpose-Built Student Accommodation (PBSA): A fast-growing segment as international students flock to university hubs like Milan.
Build-to-Rent (BTR): A popular solution for younger generations seeking flexibility and modern amenities.
While urban constraints limit traditional developments, they open doors for conversions and innovative value-add projects. Investors who focus on amenity-rich, high-quality housing will be well-positioned for success.
Final Thoughts
As we navigate 2025, Italy’s real estate market offers a mix of challenges and opportunities.
From addressing supply shortages to embracing sustainability and adaptive reuse, there are numerous ways to embrace emerging trends to realise successful investments.
Here for you is a final bit of magic poetry to start 2025 written by the one and only
!
Dear Home,
A bird’s nest,
a snake hole—
tiny, perfect, enough.
A beaver dam holds back the river,
a spider’s web catches light like a prayer.
Mud walls rise where hands and earth agree,
thatch whispers secrets to the wind.
To build with not on, to fit in.
Houses of wood, of stone, of breath.
But then—
steel spines, glass skins,
lights that never sleep.
We built up, and through.
New York’s frenetic flicker,
Chicago iron screams in jarring pain.
Our homes became beacons of defiance,
turning forests and jungles into concrete canyons.
Monuments, not to harmony with nature, but to our victory over it.
We stopped asking the land,
stopped hearing the sky.
But still—
a sprout cracks the pavement,
a pigeon finds rafters in a station,
and coyotes prowl the icy streets of River North.
There’s something here, isn’t there?
A thread we can pick up,
a nest we can rebuild.
Not to conquer, not to own—
but to belong.
To make homes again,
like the bird, like the snake,
like the quiet love between earth and sky.
And maybe—just maybe,
we’ll remember how to stay.
-
See you next week!
— Carlo
Founder and Managing Director Benigni
Weekly Resource List:
1. Global Real Estate Outlook 2025 (JLL)
(Reading time: 8 minutes)
Highlights five key trends shaping global real estate in 2025, including supply shortages, decarbonization, and investment opportunities.
2. 2025 Trends in Italian Real Estate (Cushman & Wakefield)
(Reading time: 7 minutes)
Examines Italy’s 2025 real estate outlook, focusing on Class A offices, retail recovery, logistics growth, and residential investment.
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