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What will happen in Italy’s real estate market? Will prices go up or down? Is Milan still a hotspot for foreign investors? How is Italy’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Italy, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) International property funds will flood the Italian market and drive up prices in high-demand areas
Italy's real estate market is buzzing with foreign investment.
In 2022, foreign investors were behind 75% of the €12 billion in real estate transactions in Italy. Fast forward to 2024, and this trend has only grown, with 79% of commercial real estate deals involving international buyers. Major cities like Milan, Venice, and Rome are seeing the effects firsthand.
Property prices in these cities are climbing. In 2024, Milan's prices jumped by 6.9%, Venice by 6.5%, and Rome by 6%. Despite these increases, the demand remains strong, especially in Milan, which is a hot spot for investors.
International property funds are snapping up Italian assets, pushing interest and prices even higher. For example, Morgan Stanley bought a majority stake in 13 shopping malls, and Allianz Real Estate acquired office buildings in Milan and Rome. These deals show just how attractive Italy is to foreign investors.
Sources: Idealista, Italian Luxury Asset, ICE
2) Real estate crowdfunding platforms will empower smaller investors to enter the market
Real estate crowdfunding is booming in Italy, and it's opening doors for many potential investors.
Platforms like Walliance, Mamacrowd, and CrowdFundMe have been around since 2017, and their growth shows a strong interest in real estate investment. These platforms are becoming popular because they offer a way for people to invest in real estate without needing a huge amount of money upfront.
In 2022, Italian real estate crowdfunding platforms raised €145 million for 354 projects. This is a clear sign that more people are getting involved. Between July 2022 and June 2023, there was a 28% increase in annual collections, showing that the trend is continuing to rise.
One of the reasons for this surge is the improved accessibility of real estate investments. Platforms like Recrowd allow you to start investing with as little as €250. This low entry point is perfect for those who want to diversify their investments without spending a fortune.
For those interested in the Italian market, this means you can now participate in real estate projects that were once only available to big investors. The ability to invest small amounts makes it easier for everyone to get a piece of the action.
Sources: Born2Invest, LenderKit, Real Estate Investing Women
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3) Foreign buyers will target lesser-known Italian regions for unique and affordable investment opportunities
Foreign buyers are eyeing lesser-known Italian regions as property prices soar in popular areas.
In 2023 and 2024, places like Tuscany and the Amalfi Coast saw property prices skyrocket, with Tuscany hitting €2,529 per square meter and Amalfi reaching €7,479 per square meter. These price hikes are pushing investors to explore more affordable options. Regions such as Abruzzo and Calabria are becoming attractive for those seeking unique and cost-effective investments.
These lesser-known areas offer a rich mix of history, culture, and natural beauty, aligning perfectly with the growing interest in authentic Italian experiences. For instance, Puglia's "white city" of Ostuni has caught the eye of many investors, thanks to its charm and media spotlight. This shift is not just about affordability but also about discovering Italy's hidden gems.
The buzz around these regions is growing, with a noticeable rise in online searches and social media mentions. This increased visibility is drawing more potential buyers, showing that there's a real opportunity for growth and returns. Successful foreign investments in places like Puglia are proving that these areas are ripe for development.
Moreover, the Italian government is sweetening the deal with incentives for property investments in underdeveloped areas. These include tax breaks and subsidies, making the prospect even more appealing for foreign buyers. It's a win-win situation: buyers get affordable properties, and Italy sees development in its lesser-known regions.
Sources: Born2Invest, Immobiliare.it, August Collections
4) Student housing demand in Florence and Padua will increase rental prices near universities
In university towns like Florence and Padua, student housing demand is skyrocketing.
With over 1.9 million students in Italy, a 5% increase from previous years, the need for housing near universities is growing. This surge is not just from local students; international students are flocking to Italy too. In the 2022/2023 academic year, Italy welcomed 122,000 foreign students, a massive 75% jump from a decade ago. These students often prefer to live close to campus, making the competition for housing even fiercer.
Despite attempts to boost the number of available beds, the supply is still falling short. For instance, Florence has a mobile provision rate of only 19%, which is far from meeting the demand. This shortage means students are scrambling for limited options, inevitably driving up rental prices.
In these bustling university towns, the influx of students is reshaping the rental market. The scarcity of student accommodation is a pressing issue, and as more students arrive, the pressure on housing continues to mount. This trend is particularly evident in areas close to academic institutions, where the demand is most intense.
Local landlords are noticing this shift, with many seeing an opportunity to capitalize on the growing demand. As a result, rental prices are climbing, making it increasingly challenging for students to find affordable housing. The situation is creating a competitive environment where securing a place to live requires quick action and sometimes higher budgets.
Sources: Savills Student Housing Spotlight 2023, Erudera International Student Statistics, Shelterforce
5) Rental yields in southern Italy will rise as tourism and digital nomadism boost short-term rental demand
Rental yields in southern Italy are set to rise as tourism and digital nomadism boost demand for short-term rentals.
In 2023, international visitors flocked to Italy, spending over 50 billion euros, with a big chunk of that in the south. This spending spree continued into 2024, with tourists shelling out more than 55 billion euros on travel experiences, showing just how strong the tourism sector is.
April 2024 saw the launch of the Digital Nomad Visa, making Italy a hotspot for remote workers. This visa is a game-changer, expected to drive up demand for short-term rentals in southern Italy as digital nomads look for flexible living spaces while soaking up the local culture and scenery.
The Italian property market is buzzing, especially in cities where property prices are high. This buzz is likely to push up rental yields and open up investment opportunities, particularly in southern Italy's tourist hotspots. In Q3 2024, the average gross rental yield in Italy was 7.04%, with places like Catania offering even juicier yields of up to 8.41%.
Sources: Global Property Guide, GoGo Italia, All Roads Lead to Italy
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6) Rome's residential market will stabilize with moderate price increases in central districts after years of volatility
Rome's residential market is finally finding its footing after years of ups and downs.
In the first quarter of 2024, property transactions in Rome hit €1.9 billion, a whopping 98% jump from the previous year. This surge shows that Rome, along with Milan, is leading the charge in Italy's real estate scene. The buzz around these cities is palpable, with more people eager to invest and settle down in these vibrant hubs.
Foreign investors are also eyeing Rome, especially in the hospitality sector, which saw a 90% increase in investments early this year. This influx of international money is a big vote of confidence in Rome's potential, helping to steady the market. It's like a nod from the global community saying, "Rome's got something special going on."
Government efforts, like the National Recovery and Resilience Plan (NRRP), are also in play. These initiatives are all about making Rome greener and more tech-savvy, which in turn, supports a more stable housing market. It's a win-win: better living conditions and a boost to property values.
Central districts in Rome are getting a facelift, thanks to urban development projects. Old office spaces are being transformed into homes, making these areas more appealing to buyers. This shift is a key factor in the market's stabilization, as more people are drawn to the charm and convenience of living in the heart of the city.
Sources: Real Asset Insight, EURES, Idee Immobili
7) Rental yields in student and tourist hotspots will surpass traditional long-term rental markets
Rental yields in student and tourist hotspots are set to outshine traditional long-term rental markets.
Italy is a magnet for tourists, with cities like Rome, Milan, Venice, and Florence always buzzing with visitors. These cities are not just about their historical charm; they offer unique experiences that tourists crave. This constant influx of tourists means short-term rentals are in high demand. Meanwhile, the student population in Italy is on the rise. Major university cities are seeing more enrollments, which is driving up the need for student housing and boosting rental yields.
Platforms like Airbnb are thriving in cities such as Turin, Catania, and Naples. These places are not only rich in attractions but also benefit from relaxed rental regulations, making them attractive for investors. In fact, short-term rental yields in cities like Milan, Turin, and Catania are noticeably higher than those for long-term rentals.
Take Turin, for example. A studio apartment here can yield up to 8.00% annually. In Catania, the numbers are even better, with potential yields reaching 8.40% annually. These figures highlight the lucrative nature of investing in short-term rentals in these areas.
Investors are increasingly drawn to these cities because of their potential for higher returns. The combination of tourist appeal and student demand creates a perfect storm for rental success. It's not just about the numbers; it's about the vibrant life and opportunities these cities offer.
For those considering property investment in Italy, focusing on student and tourist hotspots could be a smart move. The blend of culture, education, and tourism creates a dynamic market that promises better yields than traditional long-term rentals.
Sources:: Global Property Guide, Hostaway, Savills
8) Smaller cities like Bologna and Verona will attract more investors
Smaller cities like Bologna and Verona are catching the eye of investors as they look for alternatives to the bustling markets of Milan and Rome.
In Milan, the cost of buying an apartment in the city center is quite steep, making it less accessible for many. Bologna and Verona offer more affordable property prices, which is a big draw for those looking to invest without breaking the bank. This affordability is a key reason why investors are turning their attention to these charming cities.
Not only are the purchase prices lower, but rental yields in Bologna and Verona are on the rise. Investors are finding that they can get competitive returns on rental properties here, even though the rental prices are lower than in Milan. This combination of factors makes these cities particularly appealing for those interested in rental investments.
Another factor boosting investor interest is the ongoing infrastructure development in these smaller cities. Bologna, for instance, is seeing urban regeneration projects that include build-to-rent schemes and co-living options. These projects are designed to meet high ESG standards, attracting investors who are keen on sustainable opportunities.
Verona is also benefiting from similar developments, making it a hotspot for those looking to invest in a city with a promising future. The focus on sustainability and modern living solutions is a significant pull for investors who are looking for long-term gains.
With these developments, Bologna and Verona are becoming increasingly attractive as they offer a blend of affordability, potential for good returns, and sustainable growth. Investors are finding these cities to be viable alternatives to the more crowded and expensive markets of Milan and Rome.
Sources:: KoronaPay, Hospitality Investor, Savills
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9) The Sicilian property market will experience growth with foreign investors
Sicily is becoming a favorite spot for foreign property buyers.
In 2022, 9% of houses sold in Sicily were snapped up by international investors, drawn by the region's affordability. With an average transaction cost of around 120,000 euros, buyers from Germany, France, the UK, and the US are finding great value here compared to pricier Italian regions.
While cities like Milan and Rome see property prices skyrocket, Sicily remains a budget-friendly alternative. Its stunning landscapes and ongoing infrastructure improvements make it even more attractive for real estate investment. These developments are gradually making the island more accessible and convenient for both residents and tourists.
Tourism is booming in Sicily, with more international visitors exploring its cultural and natural wonders. This surge is likely to increase demand for vacation homes and short-term rentals, offering more opportunities for investors. Additionally, the Sicilian government is providing incentives for property renovations, especially in historic areas, which could boost property values and draw in more buyers.
For those considering a property purchase, Sicily's blend of affordability and beauty is hard to resist. The island's charm, coupled with its potential for growth, makes it a compelling choice for savvy investors looking to capitalize on a promising market.
Sources: Sicilian Houses, Esales International
10) Milan’s real estate market will see more international investors targeting mid-range properties
Milan is becoming a top choice for international real estate investors.
By 2025, over 55% of real estate investments in Milan are expected to come from foreign investors, outpacing many other European cities. This trend highlights the city's growing appeal on the global stage. Investors are particularly drawn to Milan because of its stable rental yields, which average around 5.04%. This stability offers a sense of security for those seeking consistent returns.
There's a noticeable uptick in demand for mid-range properties, largely fueled by expatriates and international students. Milan's status as a business and cultural hub is on the rise, attracting a diverse crowd and boosting the need for such properties. The city's vibrant lifestyle and opportunities make it a magnet for people from all over the world.
Another factor making Milan attractive is the favorable exchange rates. The current rates between the Euro and other major currencies have made investing in Italian real estate more affordable for international buyers. This financial advantage is encouraging more investors to consider Milan as a viable option.
With its mix of cultural allure and economic stability, Milan is poised to see more international investors targeting mid-range properties. The city's real estate market offers a unique blend of reliable returns and growth potential, making it a smart choice for those looking to invest abroad. As Milan continues to evolve, its appeal to global investors is only expected to grow.
Sources: Born2Invest, Global Property Guide, Idealista
11) Fractional property ownership models will gain traction
In Italy, fractional ownership in real estate is gaining popularity among smaller investors.
These investors are keen to get a slice of the premium property pie, which was once out of reach due to sky-high prices. The buzz around fractional ownership is not just local; big names like Morgan Stanley and Allianz Real Estate are also diving into the Italian market, signaling a shift in how people invest in property.
In cities like Milan and Rome, luxury properties are hot commodities. Both local and international investors are eyeing these high-end assets, drawn by their quality and potential returns. The influx of foreign capital, with €2.75 billion in cross-border deals from January to early October 2023, highlights the strong interest in Italy's real estate scene.
Fractional ownership is becoming a game-changer, allowing more people to invest in these sought-after markets. It's not just about owning a piece of property; it's about accessing a lifestyle and investment opportunity that was once reserved for the wealthy.
With more fractional ownership companies setting up shop in Italy, the trend is only expected to grow. This model is opening doors for smaller investors, making it easier to tap into the lucrative real estate market without needing a fortune.
As the demand for premium properties continues to rise, fractional ownership offers a practical solution for those looking to invest in Italy's vibrant real estate market. It's a win-win for investors who want a piece of the action without breaking the bank.
Sources: Italian Luxury Asset, Idealista
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12) Rental prices in Florence and Bologna will continue to climb faster than inflation.
In cities like Florence and Bologna, rental prices are rising faster than inflation.
Florence is on track to become Italy's priciest rental market, with prices expected to jump nearly 17% in just a year. This spike is largely due to the growing demand for housing in these bustling urban areas. Tourists flock to both cities, boosting the need for short-term rentals. In Bologna, for instance, short-term rentals have a median occupancy rate of 76%, with properties booked for an average of 277 nights annually. This popularity for short stays means fewer options for long-term renters, which naturally pushes prices up.
Adding to the challenge is the limited housing supply in these cities. With fewer homes available, the competition among renters intensifies, especially in places where property prices are already high. This scarcity, coupled with the increasing interest in renting, drives rental prices even higher.
Florence and Bologna are not just tourist hotspots; they are also cultural and educational centers, attracting students and professionals from around the world. This influx of people looking for a place to stay further tightens the rental market. The combination of high demand and limited supply creates a perfect storm for rising rents.
For those considering buying property in these areas, it's essential to understand the dynamics at play. The rental market's current state reflects broader economic trends and local factors, such as tourism and housing availability. As these cities continue to grow in popularity, the pressure on rental prices is unlikely to ease anytime soon.
Sources: The Florentine, Airbtics, Esales International
13) Properties in rural Tuscany will experience price growth
Rural Tuscany is becoming a hotspot for foreign retirees seeking a peaceful lifestyle.
In 2022, Tuscany made up 66% of all property inquiries in Italy, according to Knight Frank. This shows a clear trend of retirees looking for scenic and tranquil places to settle down. The charm of Tuscany is undeniable, with its rolling hills, historic towns, and a slower pace of life that appeals to those looking to escape the hustle and bustle.
Population trends back this up, with a 2% increase in non-resident residents in Tuscany from 2019 to 2021, reaching nearly 426,000. Florence, in particular, has seen a significant rise, with a 37% increase in non-resident residents over the last decade. This suggests that Tuscany is not just a vacation spot but a preferred choice for long-term living among retirees and expatriates.
Real estate agents are noticing a spike in demand for rural properties. Vineyards, olive groves, and rustic villas with modern amenities are especially sought after. These properties offer the perfect blend of traditional charm and modern comfort, making them ideal for those looking to enjoy a serene lifestyle.
Media coverage has also played a role in boosting Tuscany's appeal. The region's rich cultural heritage and stunning landscapes are frequently highlighted, drawing more attention from potential buyers. This media spotlight has helped to cement Tuscany's reputation as a top destination for those seeking a tranquil and picturesque retirement.
With all these factors combined, it's no surprise that rural Tuscany is experiencing a surge in property interest. The combination of beautiful scenery, cultural richness, and a peaceful lifestyle makes it an irresistible choice for many retirees.
Sources: Knight Frank, Euronews
14) Real estate prices in the Italian Alps will rise as climate change shifts ski tourism to higher-altitude resorts
Climate change is reshaping ski tourism in Italy, with lower-altitude resorts like Campitello Matese facing challenges due to less snowfall and warmer temperatures.
Skiers are now flocking to higher-altitude areas, seeking more reliable snow conditions for their winter adventures. In response, regions such as the Dolomiti Superski are making significant investments to stay competitive. For instance, they've allocated over 95 million euros for the 2024-25 season to enhance snowmaking systems and install new lifts.
This strategic move is not just about maintaining appeal; it's about ensuring these resorts remain viable tourist destinations. The Dolomiti Superski's efforts mirror trends seen in other high-altitude regions like the French and Swiss Alps, where property prices have been on the rise over the past decade.
In these areas, the demand for properties is driven by skiers who value both consistent snow and luxury amenities. With limited property availability, prices are expected to continue climbing, making these regions attractive for real estate investment.
As climate change continues to impact snowfall patterns, the shift towards higher-altitude resorts is likely to accelerate. This means that investing in property in these areas could be a smart move for those looking to capitalize on the evolving ski tourism landscape.
For potential buyers, understanding these dynamics is crucial. The combination of climate change and strategic investments in infrastructure is setting the stage for rising real estate values in the Italian Alps.
Sources:: Time, Snow Industry News, Skiing Property
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15) Properties in small towns offering Italy’s €1 house scheme will appreciate after renovations
Italy's €1 house scheme is catching the eye of savvy property hunters.
Imagine buying a house for just €1 and transforming it into a dream home. That's exactly what a couple from the U.S. did in Sicily. They took on the challenge of renovating a €1 house and now enjoy stunning views of the Apuan Alps from their beautifully revamped vacation spot. This isn't just a one-off; many have seen their €1 investments skyrocket in value after renovations.
These €1 homes are not just about cheap buys; they're about breathing life back into small towns. When media outlets spotlight these deals, it draws tourists in droves. This influx doesn't just boost tourism; it revitalizes local economies and highlights the hidden gems of these quaint towns. Take Santo Stefano di Sessanio in Abruzzo, for instance. Thanks to the €1 scheme, it's seen a surge in tourism and new businesses, making it a hotspot for investors.
For those considering a move, these towns offer more than just a house. They promise a lifestyle change, a chance to be part of a community revival. The €1 scheme is a win-win: buyers get affordable homes, and towns get a fresh lease on life. It's a unique opportunity to invest in a property that could appreciate significantly over time, especially after renovations.
Investors are not just buying a house; they're buying into a vision of sustainable living and community growth. The charm of these towns, coupled with the potential for property appreciation, makes them an attractive option for long-term investment. As more people discover the benefits of the €1 house scheme, these small towns are poised to become thriving hubs of activity.
Sources: Idealista, Lonely Planet, Homestra
16) Real estate near UNESCO World Heritage sites will experience price increases
Real estate near UNESCO World Heritage sites is becoming more valuable as these areas gain global attention.
These sites are magnets for tourists, which in turn boosts the local economy and ramps up demand for nearby properties. Take Italy, for instance. In 2023, it was the fourth most visited country, drawing in 57.3 million tourists, many of whom flocked to UNESCO gems like Florence and Rome.
With more tourists comes more overnight stays. Rome alone saw 29 million overnight stays in 2022. This surge in visitors often leads to higher property values as people look to invest or rent near these hotspots.
The tourism sector is a powerhouse, contributing €215 billion to Italy's economy in 2023. This underscores the massive economic impact driven by UNESCO sites, making nearby real estate a hot commodity.
Local governments aren't just sitting back; they're investing in infrastructure around these sites to make them even more appealing. These upgrades can make the areas more attractive to potential buyers and investors.
Marketing campaigns by local authorities are also ramping up, boosting the visibility and allure of these sites. This increased attention can lead to higher property values as more people become interested in these areas.
Sources: Go With Guide, Global Property Guide
17) The market for luxury apartments in Venice will remain resilient
Venice's luxury apartment market is set to stay strong thanks to the city's global appeal.
In 2024, the average sales price for luxury real estate in Venice was $2.42 million, and there was a 78% increase in the number of properties sold compared to previous periods. This surge shows that even with a slight dip in prices, demand remains high. Venice's charm as a UNESCO World Heritage site draws in affluent visitors and investors, making it a hot spot for luxury real estate.
The city's rich cultural and historical significance makes it a must-visit destination, ensuring a steady demand for luxury properties. Plus, the limited availability of new luxury developments, due to strict building regulations, helps keep property prices stable and demand for existing luxury apartments high.
Venice's strategic location in Europe boosts its appeal to international buyers and investors. Its connectivity to other European luxury markets makes it an attractive option for those looking to invest in high-end real estate. These factors together contribute to the resilience of Venice's luxury apartment market.
Sources: Christophe Choo, Britannica, Esales International
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18) New government incentives will encourage the renovation of historic properties
New government incentives will encourage the renovation of historic properties, boosting their appeal to investors.
Italy's government is making it easier to renovate historic buildings with the Superbonus program, which offers a 90% refund on costs for energy-efficient and earthquake-resistant upgrades. This program is extended until the end of 2024, making it a hot topic among investors eager to restore old buildings.
Besides the Superbonus, there are the Ecobonus and Sismabonus programs, which offer refunds from 50% to 85% for energy-saving and seismic improvements. These incentives are not just about preserving history; they focus on sustainability and safety, which are big selling points for today's investors.
Italy's economy is bouncing back from the pandemic, thanks in part to tax credits for home renovations. This recovery has sparked a surge in the renovation of historic properties, making them even more attractive to investors.
Sources: The Ultimate Guide to the Italian Bonus System in 2023, Italy: 2024 Article IV Consultation-Press Release; Staff Report, First Home Incentives – 2024 Updates
19) Tax incentives for non-residents will attract wealthy expatriates to buy second homes in Italy
Italy is becoming a hotspot for wealthy expatriates seeking second homes.
Thanks to tax incentives for non-residents, more overseas buyers are eyeing Italian properties. In 2023 and 2024, there was a noticeable surge in interest, with searches for Italian homes peaking. This shows a strong desire among expatriates to invest in Italy.
The Italian government offers a flat tax regime that appeals to high-net-worth individuals. New residents can pay a fixed annual tax of €200,000 on their worldwide income, which is quite competitive compared to other European countries. This setup exempts them from declaring worldwide income in Italy and from wealth and inheritance taxes, making Italy a financially attractive option for a second home.
Regions like Tuscany and Puglia are seeing a rise in luxury real estate transactions, driven by wealthy expats. These areas are not just culturally rich but also offer a high quality of life, adding to their allure. The influx of wealthy expatriates is also pushing up real estate prices and rental costs, especially in urban areas like Milan.
Sources: Gate-away.com, Baker McKenzie, Nestmann, Trevi Elite, Knight Frank
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.