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The analysis conducted by Dils’ Team Research reveals that the first quarter of 2025 closed with investments amounting to approximately €2.7 billion, marking a 44% increase compared to the same period last year, currently confirming the cautiously optimistic recovery sentiment projected for 2025. Over the past 12 months, the Italian market has attracted an investment volume of €10.8 billion, showing a significant increase compared to the previous 12 months (+45%).
The quarter’s performance was driven by the Hospitality sector, which, confirming the momentum of recent years, attracted investments of approximately €660 million – almost tripling the results of Q1 2024. The sector showed particular dynamism in some of Italy’s top tourist destinations, such as Rome, Capri, and Milan, with a strong focus on the luxury segment. Moreover, in this first quarter, the asset class stood out for its ability to channel capital into high-value transactions: three of the four largest single-asset Hospitality transactions in the past 12 months took place during Q1 2025.
The upward trend continues for investment volumes in the Logistics sector, which attracted €640 million in the quarter – doubling the volume of Q1 2024 and growing by 22% compared to the previous quarter. The completion of the sale of two major portfolios, both valued at over €200 million, has solidified the sector as the second-best performing asset class of the quarter, reaffirming its position as a preferred choice for investors. The gradual decline in prime net yield also persists, currently standing at 5.30%.
The take-up of logistics spaces in the first quarter reached approximately 485,000 sqm, marking a slight decline compared to the same quarter in 2024 (-13%). This decrease is partly due to a lower average surface area per deal, which stood at around 20,200 sqm. Nevertheless, the result remains in line with the current market level, which, after years of strong growth, is now undergoing a stabilization phase. The target for this phase is to reach an equilibrium at a take-up level close to 2 million sqm per year.
Despite the recent overall growth trend, no increases were recorded in prime rents across Italy’s main logistics markets during Q1 2025. As a result, the national prime rent remains stable at €70/sqm/year, a level observed in both Milan and Rome.
During the quarter, the Office sector recorded transactions worth €500 million, remaining in line with the results of the same period last year. Milan reaffirmed its role as the country’s primary market, attracting 86% of the invested capital, with a strong dominance of domestic equity, which accounted for 92% of the total.
In the first quarter of 2025, the Milan office market recorded a take-up of approximately 105,000 sqm, marking an 11% increase compared to the same period in 2024 and exceeding the average for first quarters over the past five years. Due to the limited availability of Grade A/A+ spaces on the market, only one large-scale transaction (exceeding 10,000 sqm) was completed during the quarter.
In Q1, Milan’s occupier market was primarily driven by demand for mid-sized spaces, with around 40% of transactions falling within the 1,000–5,000 sqm range. Meanwhile, high-quality spaces (Grade A/A+) continued to account for over 75% of the market. After the growth recorded in 2024, prime rent remained stable at €775/sqm/year in the first quarter of 2025, with prospects for further increases in the coming quarters.
In the first quarter of the year, the Rome office market recorded a take-up of approximately 34,000 sqm, in line with the results of Q1 2024. Out of a total of 36 recorded transactions, only 6 involved Grade A/A+ properties, confirming that the scarcity of high-quality assets in the most sought-after submarkets continues to impact take-up dynamics. This shortage has contributed to the postponement of some deals and the creation of a new pipeline while also supporting an upward outlook for prime rent in the CBD. During the quarter, prime rent reached a new peak, standing at €610/sqm/year.
Building on the strong performance of 2024, the Retail sector recorded approximately €500 million in investments in the first quarter of 2025, marking the best start to a year in the past five years. A key contribution to these results came from the sale of two Luxury Outlets located between Florence and Sanremo, with a combined value exceeding €300 million, as well as some significant High Street transactions in Milan and Florence.
The Living sector recorded a positive performance, with approximately €180 million invested in the first quarter – an increase of 27% compared to Q1 2024 and 11% above the quarterly average of the past two years. Despite urban planning challenges that have impacted the Milan market, investments in the redevelopment and repositioning of residential properties in the city continued to play a key role in driving the sector. However, the most significant transaction of the quarter was the sale of a modern PBSA facility in Bologna, reflecting the strong momentum observed in the Student Housing segment over recent quarters.
The Italian residential sales market closed 2024 with positive results and a favorable outlook. Q4 2024 further improved the trend of previous quarters, thanks to over 217,200 NTN (Normalized Transaction Numbers), marking a 7.2% growth compared to Q4 2023. Overall, national transactions in 2024 reached 719,578, showing slight growth over 2023.
Milan recorded a significant shift compared to previous quarters: Q4 2024 saw 7,692 transactions, setting a historical record for the last quarter and a 9.5% increase over Q4 2023. The market thus ended the year on a positive note, although it did not surpass 2023’s figures, closing with 23,987 total transactions (-3.5%). Smaller-sized units, despite a slight decline, remain the most in-demand: nearly 65% of the sales in the city involve properties under 85 sqm. The volume of newly built homes sold doubled compared to the previous quarter, accounting for 22.9% of the total (almost double the national average).
The residential market in the Capital continued to grow, up 9.6% from Q4 2023, finishing 2024 with 35,072 transactions (+2%). Medium-to-large units over 85 sqm made up 49% of the total volume, while smaller units under 85 sqm saw a slight decrease compared to Q4 of the previous year. The rise in sales of newly built homes was also characteristic of Rome, where the share increased to 13.4%, up from 7.9% in the previous quarter.
From a credit perspective, unlike Q3, the last quarter saw a decrease in the proportion of purchases supported by mortgages: it dropped to 48% in Milan (-3%) and 53.5% in Rome (-6%).
The rental market at the national level remained stable in terms of the number of registered contracts. However, Rome and Milan showed differing trends: in the Capital, there was a decline in long-term contracts (-6.0%) along with an increase in annual rent values (+3.2%), whereas Milan saw both a decrease in the volume of contracts and rent values (-4.6% and -3.6%, respectively). As for short-term contracts, Rome experienced a decrease in volume despite an increase in cumulative rents (-9.1% and +1.1%), while Milan saw growing demand for this type of contract (+6.1% in contracts and a 9.9% increase in annual cumulative rent).
Compared to the trend of recent quarters, the Alternative sector attracted a lower volume of investments. However, we believe that segments such as Education, Healthcare, and particularly Data Centers will play a leading role in the market in the coming years, thanks to their ability to tap into long-term macro-trends.
Finally, approximately €170 million were invested in Mixed-use assets, primarily due to two medium-sized transactions in the markets of Milan and Bergamo. These involved properties with a mix of office-residential-commercial use in the first case, and office-industrial use in the second.
The results of the recently concluded quarter confirmed, as expected, the growth trend in investments that had already characterized 2024, reaffirming strong investor interest in more established asset classes, especially Logistics and Hospitality. There was also a growing exploration of diversification opportunities in the more innovative segments of the market, with Data Centers leading the way. In the current context of profound societal change and shifting international dynamics, the challenge for the Italian real estate sector will be to strengthen its leading role within the European landscape by capturing medium- and long-term macro-trends, in order to continue offering investment opportunities that align with the objectives of major institutional and private investors.
