Italy’s Commercial Real Estate in 2025: Surprising Investment Hotspots & Game-Changing Trends Revealed

Table of Contents

• Executive Summary: Italy’s Commercial Real Estate Snapshot for 2025
• Key Economic Drivers Shaping the Market
• Top Performing Cities and Regions: Where Growth Is Happening
• Investment Hotspots: Sectors Set to Outperform
• Law, Tax, and Compliance Essentials for Foreign and Domestic Investors
• Major Regulatory Changes and Government Initiatives (Sources: governo.it, agenziaentrate.gov.it)
• Rental Yields, Vacancy Rates, and Key Market Statistics
• Sustainability, ESG, and Green Building Trends (Source: gse.it)
• Risks, Challenges, and Mitigation Strategies
• 2025–2030 Outlook: Forecasts, Opportunities, and Strategic Recommendations
• Sources & References

Executive Summary: Italy’s Commercial Real Estate Snapshot for 2025

Italy’s commercial real estate (CRE) sector enters 2025 amid cautious optimism, shaped by macroeconomic stabilization, evolving regulatory frameworks, and shifting investor preferences. The market has demonstrated resilience in the face of recent global economic pressures, with transaction volumes showing a moderate recovery after the challenges posed by inflation and tightening financial conditions in preceding years.

Key indicators reveal that office and logistics segments are outperforming traditional retail, driven by the continued expansion of e-commerce and demand for sustainable, flexible workspaces. According to data from the Banca d'Italia, investment in logistics real estate reached record highs in late 2024, with Milan and Rome remaining the primary hubs for office and mixed-use developments. Vacancy rates for prime office spaces in these cities have stabilized at historically low levels, underscoring sustained tenant demand.

On the legal and compliance front, Italy’s commercial real estate landscape is governed by regulatory statutes such as the Consolidated Law on Real Estate (Testo Unico dell’Edilizia) and the Urban Planning Law (Legge Urbanistica), which set the framework for construction, zoning, and environmental compliance. In 2024, amendments to urban regeneration incentives and streamlined permitting procedures, introduced under the auspices of the Ministero delle Infrastrutture e dei Trasporti, have facilitated faster redevelopment of brownfield sites and adaptive reuse of obsolete properties, supporting sustainability goals.

Compliance obligations have also tightened regarding anti-money laundering (AML) and tax transparency, with the Agenzia delle Entrate reinforcing reporting requirements for significant transactions and foreign investment. Furthermore, the introduction of energy efficiency standards, in line with EU directives, will affect asset valuations and investment strategies, particularly as the deadline for near-zero energy buildings approaches.

Looking ahead, the outlook for Italy’s CRE market through 2025 and beyond remains positive but selective. Investors are expected to prioritize assets in prime locations with strong ESG credentials and ongoing adaptability to technological trends. With increased government focus on sustainable urban development, notably through the National Recovery and Resilience Plan, the sector is poised for continued modernization and international interest, albeit with heightened due diligence and compliance demands.

Key Economic Drivers Shaping the Market

Italy’s commercial real estate (CRE) sector in 2025 is shaped by a confluence of macroeconomic factors, legislative reforms, and evolving investor sentiment. The Italian economy, while demonstrating resilience, continues to grapple with moderate GDP growth projections of around 0.9% for 2025, as estimated by the Banca d’Italia. This subdued growth, coupled with persistent inflation pressures and high interest rates, directly influences both the cost of CRE financing and investor appetite.

Key economic drivers stem from shifting demand patterns. The gradual stabilization of remote work is impacting office space requirements, prompting occupiers to favor flexible and energy-efficient buildings. The logistics and industrial segments continue to benefit from the expansion of e-commerce and supply chain reconfigurations. According to the Agenzia delle Entrate, transaction volumes in logistics real estate have outpaced those in retail and traditional office sectors, reflecting the ongoing transformation of consumer and business behaviors.

The regulatory environment is another pivotal driver. Italy’s alignment with European Union sustainability directives—particularly the implementation of the EU Taxonomy Regulation and the Energy Performance of Buildings Directive—places increased compliance obligations on CRE owners and developers. The Ministero dell'Ambiente e della Sicurezza Energetica is advancing policies to promote energy efficiency in commercial buildings, linking incentives and tax deductions to adherence to higher environmental standards. Upcoming changes to the “Superbonus” tax mechanism are likely to further influence investment decisions in building upgrades and retrofits.

Foreign investment continues to play a significant role, with cross-border capital accounting for a substantial share of Italian CRE transactions. The Banca d’Italia notes that real estate remains attractive to international investors seeking diversification and relative value amid wider European market uncertainties. However, heightened scrutiny under anti-money laundering and beneficial ownership disclosure rules, overseen by the Unità di Informazione Finanziaria per l’Italia, is impacting transaction structuring and due diligence costs.

Looking ahead, the Italian CRE market faces a cautious but stable outlook for 2025–2027. While macroeconomic headwinds and regulatory changes may temper exuberance, ongoing urban regeneration projects, infrastructure investments, and digitalization initiatives—backed by the Piano Nazionale di Ripresa e Resilienza—are expected to underpin medium-term demand and reposition Italy as a competitive European CRE destination.

Top Performing Cities and Regions: Where Growth Is Happening

The Italian commercial real estate market in 2025 is marked by differentiated growth across cities and regions, driven by evolving investment trends, infrastructure projects, and policy initiatives. Milan continues to be the epicenter of commercial real estate activity, followed by Rome, while secondary cities such as Bologna, Turin, and Florence are experiencing renewed investor interest due to shifting demand and regional development policies.

Milan remains Italy’s most dynamic market, with its office and logistics sectors outperforming other regions. The city’s ongoing urban regeneration projects, such as the Porta Nuova and Scalo Farini redevelopments, are attracting both domestic and international investors. The city’s role as a financial, fashion, and innovation hub has reinforced demand for prime office space and mixed-use developments. According to Agenzia delle Entrate – Osservatorio del Mercato Immobiliare, Milan consistently leads in both transaction volume and capital investment in commercial properties.

Rome benefits from its status as the national capital and a center for public administration, legal services, and tourism. Recently, government-led initiatives to streamline planning permissions and incentivize urban renewal have begun to yield results, with new office complexes and hospitality assets being developed, particularly in the EUR and Ostiense districts. The Comune di Roma has highlighted increased investment in sustainable commercial buildings, aligned with national climate targets.

Secondary cities such as Bologna, Turin, and Florence are emerging as hotspots for logistics and tech-driven office spaces. Infrastructure investments, such as the expansion of high-speed rail and regional airport upgrades, are making these cities more accessible and attractive to multinational corporations and logistics operators. The Agenzia ICE has identified these regions as priority areas for foreign direct investment, particularly in industrial and logistics real estate.

• Lombardy (Milan): Leads national transaction volumes for offices, retail, and logistics.
• Lazio (Rome): Growth in mixed-use and hospitality projects, supported by public-private partnerships.
• Emilia-Romagna (Bologna): Logistics and industrial real estate growth outpaces national average.
• Piedmont (Turin): Increasing demand for flexible office and distribution centers.
• Tuscany (Florence): Expansion in retail and hotel segments driven by tourism rebound.

Looking ahead, new regulations on energy efficiency, as mandated by the Piano Nazionale di Ripresa e Resilienza (PNRR), will further shape investment decisions, with top-performing regions likely to benefit most from compliance-driven upgrades and green certifications. As Italy enters 2025 and beyond, metropolitan hubs and logistics corridors in the north and center are projected to maintain their growth trajectory, underpinned by robust demand and regulatory incentives.

Investment Hotspots: Sectors Set to Outperform

Italy’s commercial real estate (CRE) sector is undergoing a period of recalibration, with select segments poised to outperform in 2025 and the years ahead. The sector overall faced a slowdown in 2023 and 2024, as higher interest rates and inflationary pressures weighed on investor sentiment. However, underlying fundamentals and recent regulatory adjustments are creating opportunities in targeted asset classes and locations.

• Logistics and Industrial: Logistics properties remain the standout sector, driven by continued expansion in e-commerce and supply chain reconfiguration. Vacancy rates for prime logistics assets in Milan and Rome are among the lowest in Europe, while rental growth remains robust. Government incentives for industrial innovation and infrastructure upgrades are further bolstering the sector’s appeal (Agenzia delle Dogane e dei Monopoli).
• Office Market Transformation: While demand for traditional office spaces has softened, there is growing appetite for Grade A, energy-efficient offices in core urban locations. New energy performance standards, aligned with the EU Green Deal and Italian legislative updates on building sustainability, are driving a “flight to quality” and retrofitting activity (Presidenza del Consiglio dei Ministri). Flexible and hybrid workspace formats are also likely to outperform as tenant needs evolve.
• Retail Resilience in Prime High-Streets: Despite structural headwinds in the retail sector, flagship retail assets in high-footfall city centers—especially in Milan, Rome, Florence, and Venice—are maintaining strong investor interest. The luxury and experiential retail segment is particularly resilient, supported by robust tourism flows and international brand expansion (Banca d'Italia).
• Hospitality Recovery: The hospitality sector is emerging as an investment hotspot following Italy’s record tourism numbers in 2023-2024. Hotel occupancy and revenues are projected to surpass pre-pandemic levels in 2025, underpinning a wave of redevelopment, especially in the luxury and boutique segments (Agenzia Nazionale del Turismo (ENIT)).

From a compliance perspective, investors must navigate evolving anti-money laundering (AML) obligations and stricter due diligence under Italian and EU regulations. The government’s focus on transparency and digitalization of land registries will further shape the investment environment (Agenzia delle Entrate).

Looking ahead, with interest rates expected to gradually stabilize and the government prioritizing urban regeneration, logistics, hospitality, and prime office assets in Italy’s major metropolitan areas are anticipated to offer the most resilient risk-adjusted returns through 2025 and beyond.

Law, Tax, and Compliance Essentials for Foreign and Domestic Investors

Italy’s commercial real estate sector is governed by a comprehensive legal and regulatory framework that shapes investment dynamics for both domestic and foreign investors. As of 2025, the sector continues to attract significant interest, but compliance with evolving laws, tax requirements, and reporting obligations is essential for successful market participation.

Legal Framework and Ownership
Foreign investors generally enjoy the same property rights as Italian nationals, subject to reciprocity conditions. Title registration is mandatory through the Land Registry (Catasto) and Real Estate Register (Conservatoria dei Registri Immobiliari). Due diligence, including title verification, urban planning compliance, and environmental checks, is critical to mitigate legal risks. Lease agreements are regulated under the Italian Civil Code and Law No. 392/1978, with commercial leases typically lasting six years, renewable for another six unless terminated for cause (Ministero della Giustizia).

Acquisition and Transfer Taxes
Commercial property transactions are subject to various taxes:

• Registration Tax: Typically 9% of the property’s value (minimum €1,000), unless a VAT regime applies.
• VAT: Generally 22% for new buildings or sales by developers within five years of completion; otherwise, registration tax applies (Agenzia delle Entrate).
• Mortgage and Cadastral Taxes: Either €200 each (when VAT applies) or 2% and 1% (when VAT does not apply).

Corporate Structures and Tax Considerations
Investors often utilize special purpose vehicles (SPVs) or real estate investment funds (REIFs) for asset holding. Corporate income tax (IRES) is 24%, and a regional tax on productive activities (IRAP) is generally 3.9% (Ministero dell’Economia e delle Finanze). Italy’s real estate investment trust (SIIQ) regime offers tax transparency under specific conditions.

Compliance and Anti-Money Laundering
Transactions are subject to strict anti-money laundering (AML) regulations; notaries and real estate agents must report suspicious activities and verify client identities in accordance with Legislative Decree No. 231/2007 (Unità di Informazione Finanziaria per l’Italia). Foreign direct investments in strategic sectors, including certain real estate, may trigger “Golden Power” screening for national security reasons (Presidenza del Consiglio dei Ministri).

Outlook 2025 and Beyond
Italy is intensifying digitalization of land registries and streamlining tax procedures, aiming to enhance transparency and reduce bureaucracy. Compliance costs are likely to decrease, but enforcement of AML and foreign investment screening is expected to remain robust. Investors should monitor planned reforms and sustainability requirements, as ESG criteria are increasingly relevant for both lenders and institutional investors (Banca d’Italia).

Major Regulatory Changes and Government Initiatives (Sources: governo.it, agenziaentrate.gov.it)

Italy’s commercial real estate sector in 2025 is being shaped by significant regulatory changes and targeted government initiatives aimed at revitalization, transparency, and compliance. In recent years, the Italian government has made substantial amendments to property and taxation laws to stimulate investment and ensure a stable regulatory environment for domestic and international investors.

One of the most impactful regulatory changes is the ongoing reform of the cadastral system, designed to modernize property valuation and improve tax equity. The Italian government has continued to advance this reform in 2024–2025, with updates intended to align cadastral values more closely with actual market prices, affecting commercial property tax assessments and transaction costs. This effort, led by the Presidenza del Consiglio dei Ministri and the Agenzia delle Entrate, aims to reduce discrepancies in tax burdens and increase transparency for investors.

Compliance requirements have also become more stringent, particularly with anti-money laundering (AML) measures and the implementation of the EU’s Fifth Anti-Money Laundering Directive (AMLD5). Italian authorities have reinforced due diligence obligations for real estate operators, property managers, and notaries. These parties must now collect and verify detailed information about clients and beneficial owners for all significant commercial property transactions. Enforcement is overseen by the Agenzia delle Entrate and the Ministry of Economy and Finance, which regularly update compliance guidelines and conduct audits to minimize illicit activity.

In response to the economic impact of the COVID-19 pandemic and subsequent inflationary pressures, the government has extended targeted incentives for the redevelopment and energy efficiency of commercial buildings. The “Superbonus 110%” program, originally launched for residential properties, has seen gradual expansion to select commercial assets, offering substantial tax deductions for qualifying renovations and energy upgrades. This initiative, coordinated by the Presidenza del Consiglio dei Ministri, is expected to encourage adaptive reuse and sustainability in the commercial real estate sector through at least 2025.

Statistical data from the Agenzia delle Entrate indicate a moderate recovery in commercial property transactions during 2023–2024, with volumes up by approximately 8% year-on-year as of Q4 2024. This trend is projected to continue, supported by the regulatory clarity and fiscal incentives now in place.

Looking ahead, the government’s National Recovery and Resilience Plan (PNRR) allocates further funds for urban regeneration and digitalization of land registries, which are likely to enhance transparency and efficiency in the market through 2025 and beyond. As these measures take effect, the outlook for commercial real estate in Italy is cautiously optimistic, with a focus on compliance, modernization, and sustainable growth.

Rental Yields, Vacancy Rates, and Key Market Statistics

The Italian commercial real estate market in 2025 is characterized by evolving rental yields, fluctuating vacancy rates, and dynamic key statistics shaped by economic recovery and legislative updates. According to recent releases from the Bank of Italy, the sector has shown resilience despite broader macroeconomic volatility. Prime office yields in Milan and Rome averaged around 3.5% to 4.0% at the close of 2024, stabilizing after years of compression driven by high investor demand. In contrast, secondary locations and non-core assets reflect higher yields, sometimes exceeding 6%, to compensate for increased risk and longer vacancy periods.

Vacancy rates have diverged by asset class: Milan’s central business district office vacancy remained below 10% throughout 2024, buoyed by strong occupier demand and limited new supply. However, regional and peripheral markets have experienced elevated vacancy rates, with some exceeding 15%, due in part to shifting work patterns and a lag in adaptive reuse of obsolete spaces. The logistics segment stands out, with vacancy rates in major hubs such as Piacenza and Bologna consistently under 3%, driven by robust e-commerce growth and supply chain optimization efforts (Agenzia delle Entrate – Osservatorio del Mercato Immobiliare).

In terms of transactions, 2024 saw a moderate rebound in investment volumes, with the Osservatorio del Mercato Immobiliare reporting a 5% year-on-year increase in commercial property sales, particularly in logistics and prime retail. The retail sector remains polarized: while high-street locations in Rome, Milan, and Florence maintain low vacancy and stable rents, secondary retail assets continue to face structural challenges and elevated vacancy rates.

Legislation and compliance requirements have also influenced market statistics. The 2024 amendments to Italy’s commercial lease law (Law No. 392/1978), as clarified by the Ministry of Justice, introduced stricter tenant disclosure requirements and streamlined eviction procedures for non-payment, both of which are expected to slightly reduce average vacancy durations in 2025. Moreover, the implementation of the National Recovery and Resilience Plan (PNRR) continues to stimulate investment in sustainable and energy-efficient commercial properties (Ministry of Economy and Finance).

Looking ahead, moderate yield decompression is anticipated in non-core segments due to lingering economic uncertainty, while prime office and logistics assets are forecasted to retain their attractiveness, with yields remaining stable or narrowing. Vacancy rates are expected to gradually improve in urban centers, contingent on sustained economic growth and further adaptation of legacy assets.

Sustainability, ESG, and Green Building Trends (Source: gse.it)

Sustainability and environmental, social, and governance (ESG) criteria are increasingly shaping the trajectory of commercial real estate in Italy, particularly as the sector responds to evolving EU and national regulations and rising investor expectations. In 2025, the drive toward greener buildings is evident in both public incentives and compliance obligations. The Italian government—through the Gestore dei Servizi Energetici (GSE)—continues to administer programs supporting energy efficiency, renewable energy integration, and building renovations, with a significant portion aimed at the commercial property market.

One of the primary regulatory anchors is the National Energy and Climate Plan (NECP), which mandates reductions in greenhouse gas emissions and increased renewable energy usage. As part of these goals, commercial property owners are increasingly required to meet stringent energy performance standards and disclose building energy consumption. The Energy Performance of Buildings Directive (EPBD), incorporated into Italian law, requires energy certificates (APE) for commercial properties, influencing both leasing and sales due diligence processes (Ministero delle Imprese e del Made in Italy).

Compliance with ESG standards is further reinforced by the EU Taxonomy Regulation, which classifies sustainable economic activities—including real estate developments—according to strict environmental criteria. Institutional investors and listed property companies are under heightened scrutiny to disclose sustainability metrics in line with the EU Sustainable Finance Disclosure Regulation (SFDR) (Commissione Nazionale per le Società e la Borsa).

Key statistics highlight the momentum: according to GSE data, commercial buildings accounted for a growing share of applications for incentive schemes such as the Conto Termico, which subsidizes energy efficiency upgrades and renewable energy systems. In 2023, over €150 million was allocated to non-residential building projects, with a steady increase projected through 2025 as regulatory deadlines approach.

The outlook for the next few years indicates continued acceleration in green building certifications (such as LEED and BREEAM), retrofitting of existing assets, and integration of smart building technologies. Developers and landlords are prioritizing sustainability not only for compliance, but also to enhance asset value and occupier appeal. As Italy aligns its policies with the European Green Deal, ESG considerations are expected to become integral to commercial real estate transactions, financing, and long-term asset management.

Risks, Challenges, and Mitigation Strategies

The commercial real estate (CRE) sector in Italy faces a complex risk landscape in 2025, influenced by regulatory, economic, and operational factors. Recent years have seen heightened scrutiny on compliance and transparency, reflecting broader European Union directives and national reforms.

• Regulatory Risks and Compliance:
  Italian CRE is subject to evolving legal frameworks, particularly around anti-money laundering (AML) and tax compliance. The Bank of Italy and the Guardia di Finanza continue to enforce stringent checks on property transactions to prevent illicit financial flows. The adoption of EU directives, such as the 6th Anti-Money Laundering Directive, has placed new due diligence obligations on real estate professionals, including enhanced client vetting and transaction reporting.
• Market Volatility and Valuation Challenges:
  The Italian CRE market has experienced price volatility due to macroeconomic uncertainty and fluctuating demand in key sectors, notably retail and office spaces. According to Banca d'Italia, transaction volumes in 2023 remained below pre-pandemic levels, and while a gradual recovery is expected, risks persist around asset valuation and liquidity.
• Environmental and ESG Compliance:
  New regulations on energy efficiency and sustainability, in line with the EU Green Deal, are driving mandatory upgrades to commercial properties. The Ministry of the Environment and Energy Security oversees compliance with energy performance standards (EPCs), and failure to meet requirements can lead to penalties and reduced marketability.
• Legal and Taxation Changes:
  Legislative reforms, including updates to Italy’s Real Estate Investment Trust (REIT) regime and new rules on property taxation, require CRE investors and managers to adapt rapidly. The Agenzia delle Entrate (Revenue Agency) regularly updates guidelines on VAT, registration tax, and cadastral income, which directly affect transaction costs and investment returns.

Mitigation Strategies: To address these risks, stakeholders are adopting robust compliance programs and leveraging digital platforms for transaction monitoring. Regular legal audits, ESG due diligence, and proactive engagement with regulatory updates are essential. Collaboration with accredited professionals, such as notaries and certified appraisers, helps ensure compliance and accurate asset valuation, supporting resilience in Italy’s evolving commercial real estate sector.

2025–2030 Outlook: Forecasts, Opportunities, and Strategic Recommendations

The outlook for Italy’s commercial real estate sector from 2025 through 2030 is marked by both challenges and emerging opportunities, shaped by macroeconomic shifts, regulatory updates, and evolving investor priorities. Following a period of volatility due to global economic fluctuations and domestic reforms, the sector is poised for gradual recovery and transformation.

Key Statistics and Market Trends

• According to Banca d'Italia, commercial property investment volumes in Italy declined in 2023–2024 but are expected to stabilize in 2025 as inflationary pressures ease and interest rates moderate.
• Data from Agenzia delle Entrate indicate that office and logistics assets continue to outperform traditional retail, with logistics showing robust demand due to growth in e-commerce and supply chain reconfiguration.
• Regional disparities persist, with Milan and Rome accounting for over 60% of transaction volumes, while southern regions remain less liquid and more volatile.

Legal and Regulatory Developments

• The reform of the Urban Planning Law (“Testo Unico sull’Edilizia,” D.P.R. 380/2001) is under review by the Italian government, aiming to streamline permitting and encourage urban regeneration. Investors should monitor progress via the Presidenza del Consiglio dei Ministri and potential legislative changes impacting zoning and redevelopment.
• ESG compliance is gaining traction. The Commissione Nazionale per le Società e la Borsa (CONSOB) emphasizes disclosure of sustainability risks and opportunities, aligning with the EU Taxonomy and SFDR requirements effective through 2025 and beyond.
• The Istituto per la Vigilanza sulle Assicurazioni (IVASS) continues to oversee insurance sector exposure to commercial real estate, with new guidelines on risk concentration and portfolio transparency expected.

Outlook and Strategic Recommendations

• Investors are advised to focus on assets with strong ESG credentials, as regulatory and tenant demand will increasingly penalize non-compliant buildings.
• Urban regeneration and brownfield redevelopment—supported by national and EU recovery funds—offer significant opportunities, especially in metropolitan areas.
• Digital transformation, including proptech adoption and smart building upgrades, is essential for asset competitiveness.
• Stakeholders should closely track legislative reforms and local zoning updates via official channels such as Ministero delle Infrastrutture e dei Trasporti.

The Italian commercial real estate market is expected to enter a phase of cautious optimism, with resilience hinging on regulatory adaptation, sustainability, and strategic asset repositioning.

Sources & References

• Banca d'Italia
• Ministero delle Infrastrutture e dei Trasporti
• Agenzia delle Entrate
• Ministero dell'Ambiente e della Sicurezza Energetica
• Unità di Informazione Finanziaria per l’Italia
• Comune di Roma
• Agenzia ICE
• Piano Nazionale di Ripresa e Resilienza (PNRR)
• Agenzia delle Dogane e dei Monopoli
• Agenzia Nazionale del Turismo (ENIT)
• Ministero della Giustizia
• Ministero dell’Economia e delle Finanze
• Gestore dei Servizi Energetici (GSE)
• Ministero delle Imprese e del Made in Italy
• Commissione Nazionale per le Società e la Borsa
• Guardia di Finanza
• Ministry of the Environment and Energy Security
• Istituto per la Vigilanza sulle Assicurazioni (IVASS)