Italy is a country with a rich cultural heritage and a desirable location for those seeking a prime residential property in the Mediterranean. The country offers a high quality of life and continues to be a top prime residential destination globally, supporting stability within its prime residential markets.

A global hotspot for tourism, Italy welcomed 49.8 million tourists in 2022. This placed Italy as the fourth most popular tourist destination globally in 2022, behind Spain, Türkiye, and the United States. Italy has long held its appeal, not just to visitors, and is one of the most popular locations for second home ownership in Europe.

The market offers prime properties with amenities such as large terraces, sea or countryside views, and other features important to both domestic and global purchasers. Second home buyers are also attracted to the country’s historic properties and other types of trophy assets, of which Italy has a large supply. 
Italy’s geographic location close to major business hubs further boosts its desirability. Its membership of the European Union allows EU nationals greater access to the market and amplifies its global appeal. Italy has seen 4.8% GDP growth over the past five years and remains the European Union’s third largest economy, as well as an attractive place for foreign investment. 

The country is also positioning itself as a hub for innovation and education with its major cities of Milan and Rome boasting over 50,000 companies engaged in innovation projects between them, according to ISTAT. In addition, Italy is home to 13 of the world’s top 500 global universities according to QS. 

While Italy’s population has declined by 1.8% in the last five years, urban areas continue to see high levels of in-migration. Milan saw an annual average of 17,000 net migrants to the city over the last five years alone.

Major cities in Italy recorded positive rental and capital value growth over 2023, in spite of challenging global economic conditions and a higher interest rate environment. This resilience has been shared with other southern European markets, whose prime property markets remain more affordable than their northern European counterparts. Prices in Milan, Italy’s most expensive prime market, stand -15% below those of London and -36% below Geneva’s, for example.

As with other global markets, prime rents in Italian cities have outpaced capital value growth. All major Italian cities saw growth in their prime rental prices, averaging 2.5% and led by Florence with growth of 3.5%% in 2023.

Growth in prime rental markets has been fuelled not only by international tenants, but also by a continued undersupply of product on the market. Italy struggles to build enough housing to meet demand, compounded by current interest rate pressures.

Outside the major cities, rents and capital values have risen even more quickly in prime countryside locations as individuals prioritise greater space and access to nature. These locations will continue to see price growth as sought after trophy assets in these areas offer an escape from the busy cities and an often desirable change of pace.

Looking forward, many potential buyers and renters will continue to adopt a ‘wait and see’ approach due to the economic uncertainties. While global economic sentiment will likely continue to reduce overall transaction numbers, prime residential property remains resilient; lower sales activity will also likely support further rental growth over the coming year.

In Italy, a continued interest in urban markets and international and domestic interest in prime rural locations will drive growth in 2024. We expect prime residential price growth of 0.6% across major global cities, lower than the 2.2% recorded last year. Italian cities are set to follow a similar trend, with Milan forecast to see capital value growth of between 0% and 1.9% and residential prices in Rome to grow between 2% and 3.9% over 2024. While forecast growth is below the five-year average, there are opportunities for surprises on the upside should anticipated interest rates over the course of 2024 bring some of the ‘wait and see’ buyers back to the market.