Retail Leads Italy Real Estate Investment in 2025

Italy’s commercial and residential real estate market reached a total transaction volume of approximately €12.4 billion in 2025, broadly in line with historical averages. However, the outcome was largely driven by a limited number of sizeable deals. The fourth quarter proved particularly dynamic, signalling renewed investor appetite after a cautious phase.

The year reflected a strategic shift in capital allocation. Investors increasingly focused on large, liquid assets offering transparent cash flows and predictable returns. International capital accounted for roughly 60% of total investment activity, with strong participation from US and European funds.

Regionally, the market remains highly polarised. Northern Italy, especially Lombardy and Milan, dominates in transaction volume. Rome retains strength in office and hotel investments, while southern regions and islands are more active in retail and tourism-related assets.

Retail real estate emerged as the leading sector in 2025, attracting around €3.45 billion in investments. Capital was concentrated in premium formats, with shopping malls accounting for 36% of retail allocations, outlets for 22%, and prime high streets for 21%. Secondary assets continued to draw limited interest.

The appeal of prime retail reflects investor preference for resilient assets with stable footfall and predictable rental income. Premium locations are perceived as more resistant to macroeconomic volatility.

Logistics retained its position as a core asset class, supported by steady demand. Capitalisation rates continued to decline gradually, signalling disciplined pricing and increasing ESG requirements among investors. Energy-efficient and sustainable logistics facilities are gaining priority.

The hotel sector attracted approximately €2.1 billion, benefiting from stable tourism flows and strong international interest. Over 60% of investment volume was directed toward four- and five-star hotels, typically combining prime locations with repositioning or renovation strategies.

The office segment showed signs of stabilisation, with investments concentrated in Milan and Rome, particularly in properties with redevelopment potential. Outdated buildings lacking conversion opportunities remained less attractive.

Residential real estate, while accounting for a smaller share of total volume, is increasingly viewed as a strategic growth area. Structural trends such as student housing, Build-to-Sell developments and integrated urban regeneration projects are expected to support future expansion.

As International Investment experts report, retail’s leadership in 2025 reflects a broader market pivot toward quality assets with transparent income streams. Logistics and hospitality remain structurally strong, while residential real estate is likely to play a more prominent role in the next investment cycle as urban transformation and demographic shifts reshape Italy’s property landscape.