Italy’s property market is expected to outperform most of Europe in 2026, boosted by political stability and regulatory clarity following a high-profile Milan building permits scandal, according to Scenari Immobiliari.
The research group forecasts that transactions will rise 8.4% to €175.8 billion ($205 billion) this year, with the residential sector accounting for more than 80%. This would surpass growth projected for Spain (7%), the UK (6.6%), Germany (4.1%) and France (3.2%).
The Milan scandal, which came to light in 2024, involved fast-tracking permits for high-rise developments. Over 100 projects were frozen, raising fears of capital flight. It also threatened up to €38 billion in potential investment over a decade. However, a period of political stability under Prime Minister Giorgia Meloni has helped restore investor confidence.
Real estate transactions in Italy grew almost 7% in 2025, making the country Europe’s second-strongest market behind Spain. Industry experts say the feared exodus of foreign investors has not materialised. Davide Dalmiglio, CEO of Savills Italy, said the investigations prompted unprecedented due diligence but did not drive capital away. Manfredi Catella, CEO of developer Coima, added that stricter regulations reduced uncertainty — long a key concern for investors — and recent court rulings clearing him reassured foreign backers.
Supply constraints remain a limiting factor. Newly built units accounted for only 10% of residential transactions in 2025, down from a historical average of 15%. Medium-sized projects of 20–30 units have often stalled due to tougher scrutiny from authorities, slowing urban regeneration, said Francesca Zirnstein, Scenari Immobiliari’s general director.
Focus on long-term growth
The Milan Cortina Winter Olympics in February 2026 may provide a short-term boost, especially in hospitality, but investors remain focused on long-term growth. Positive indicators, including narrower spreads between Italian and German bonds, improved ratings outlooks, and Milan’s stock exchange performance, point to diminished country risk.
Despite sluggish overall economic growth, expected at 0.7% in 2026, Italy’s property market is attracting attention from domestic and foreign investors, particularly wealthy individuals drawn by the country’s flat-tax regime. With residential demand strong and investor confidence rising, Italy looks set to maintain its place as one of Europe’s fastest-growing property markets.
