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According to the Dils Research Team, in the first quarter of 2026 investments in the Italian real estate market reached approximately €2.6 billion. This figure is broadly in line with the average quarterly volume recorded over the past ten years, although it reflects a moderate decrease compared to Q1 2025 (-5%). Overall performance confirms the resilience and attractiveness of the Italian market, which - despite a context of widespread uncertainty- continues to attract both domestic and international investors across an increasingly diversified range of asset classes.
In line with the trend observed over the past two years, the Retail sector remains the most dynamic asset class in the Italian real estate market, with investments exceeding €650 million. Volumes increased by 22% compared to Q1 2025, although they remain slightly below the average quarterly levels of the previous two-year period. Capital deployed in the sector is primarily driven by institutional investors, with major transactions focusing on the Factory Outlet, High Street, and Retail Park segments.
Given its prominent role within the Italian real estate market, the Hospitality sector ranks as the second-largest asset class by investment volume, with approximately €510 million recorded in Q1 2026. This represents a 27% decrease compared to Q1 2025 - a period marked by one of the strongest performances in recent years- while remaining broadly in line with the sector’s average quarterly levels. Key transactions included two share deals involving seaside tourism assets and the acquisition of a prestigious villa on Lake Como, all completed by foreign investors. Among Italy’s main tourist destinations, Milan and Rome recorded the strongest activity levels, in line with trends already observed in 2025.
During the quarter, the Logistics sector recorded investments of approximately €310 million, marking a 52% decline compared to the same period of the previous year, which had been particularly active in terms of transactions. Nevertheless, investor confidence in the Italian market remains solid, especially among international players. Investment activity in Q1 was largely concentrated on single-asset transactions, accounting for the vast majority of the total volume.
With regard to logistics take-up, Q1 2026 recorded the highest level ever for a first quarter, with approximately 836,000 sqm transacted (+59% compared to Q1 2025). This also represents the strongest quarterly result of the past four years. The positive start to the year continues the strong performance recorded in the second half of 2025, confirming a particularly dynamic phase for the sector. Demand- robust and primarily focused on newly built, high-quality assets - is also driving a renewed upward trend in rental growth. Prime rents at the national level, recorded in the Milan market, stand at €72/sqm/year (+3% on previous quarter), with increases also observed in Rome (€71/sqm/year), Bologna (€70/sqm/year), and Piacenza (€61/sqm/year).
Investments in the Office sector reached approximately €400 million in Q1 2026, down 20% compared to the same period in 2025. Investor activity was primarily concentrated in Rome, which emerged as the most dynamic market both in terms of invested volume and number of transactions. Notably, the largest deal at the national level during the quarter involved the sale of a trophy asset in a strategic CBD location. The transaction could mark the beginning of a phase of progressive renewal and qualitative upgrading of office stock in the most sought-after submarkets.
Meanwhile, the Milan market is expected to see the closing of a major transaction in Q2, following reports of a new disposal of the mixed-use trophy asset located at Via Montenapoleone 8, valued at over €1.4 billion.
On the occupier side, the Milan office market recorded a take-up of approximately 70,000 sqm in Q1 2026, representing a 35% decline compared to the same period in 2025. This reflects a slowdown primarily attributable to the limited availability of Grade A/A+ space in the most sought-after submarkets, such as the CBD and Porta Nuova, where vacancy remains below 2% of total stock. In terms of absorbed volumes, the quarter was mainly driven by demand for medium-sized spaces: approximately 48% of transacted space falls within the 2,000–5,000 sqm range, while high-quality assets continue to account for 72% of the market. Following the growth recorded in the second half of 2025, prime rents remained stable at €850/sqm/year in Q1, with expectations of further increases during 2026.
In Rome, quarterly take-up reached 38,000 sqm, marking a 14% increase compared to Q1 2025. Absorption was driven by five transactions exceeding 2,000 sqm, accounting for more than 70% of the total. During the period under review, prime rents remained stable at €630/sqm/year following a recent upward revision driven by the persistent shortage of high-quality space and, more broadly, by the significant and ongoing reduction in availability- including grade B or lower - particularly within the most sought-after submarkets and their immediate surroundings.
The Living sector started 2026 on a positive note, attracting over €380 million in Q1 -doubling volumes recorded in the same period of 2025 and marking the strongest quarterly performance of the past four years. Approximately 60% of these volumes were driven by a series of major Built-to-Sell transactions in Milan, a particularly encouraging result given the ongoing uncertainty linked to persistent urban planning constraints, which may act as a deterrent for investors. The Student Housing segment remains a significant component, accounting for approximately 36% of the volumes invested in the sector, with a primary focus on development projects in major university cities in Northern Italy, led by Milan.
In 2025, a total of 766,753 residential transactions were completed in Italy, marking a 6.6% increase compared to the previous year and representing the second-highest annual result of the past decade. While the first three quarters recorded strong growth (+9.2% year-on-year), this momentum slowed in Q4, with volumes remaining broadly in line with Q4 2024, suggesting the potential onset of a stabilization phase.
At the national level, new-build properties accounted for 8% of transactions in Q4, up from 6.4% in Q3, while in Milan the figure reached 18.1%, significantly higher than in previous periods.
The financial environment remains overall supportive, albeit with some signs of moderation. In Q4 2025, average mortgage rates stood at 3.51%, up by 16 basis points compared to the previous quarter. The share of transactions financed through mortgages declined to 44.9% nationwide, interrupting the growth trend observed during the first three quarters of the year.
As for the residential rental market, the national picture appears stable, with differentiated dynamics across major urban centers. Compared to Q4 2024, standard lease contracts (4+4) declined by 1.2% in Rome and 4.1% in Milan, with total rental volumes decreasing by 3% and 5.5%, respectively. The short-term rental segment shows a more heterogeneous trend: leased units increased by 7.6% in Rome, while recording a slight decline of 1.5% in Milan. Meanwhile, regulated student lease contracts are expanding rapidly.
The Alternative sector is also strengthening its appeal among investors, attracting over €360 million in Q1 and - similarly to the Living sector - doubling its performance compared to Q1 2025. More than 60% of capital was allocated to the Healthcare segment, which saw the completion of a significant transaction involving a portfolio of nursing homes located in Northern Italy.
While 2025 consolidated the growth trajectory of the Italian real estate market -bringing investment volumes close to historical highs thanks to renewed country attractiveness - performance in 2026 is proving to be strongly influenced by a combination of exogenous and endogenous factors.
On one hand, uncertainty related to evolving international tensions and their potential impact on financial markets and the real economy is prompting caution among both investors and prospective tenants, also affecting the short-term outlook for prime net yields across asset classes. On the other hand, concerns persist regarding ongoing urban planning challenges in Milan, Italy’s leading economic and real estate hub.
As a result of these combined factors, we estimate that approximately €1 billion in transactions were either put on hold or postponed in Q1 2026; if completed, such volumes would have resulted in a record-breaking quarter.
Nevertheless, within this context, the Italian market continues to stand out internationally for its solid fundamentals, which represent an element of stability and mitigation. At the same time, opportunities for sector diversification are expanding, supported by the growth of emerging segments such as Student Housing and Alternatives.