ITALY Trends and Developments Contributed by: Gabriele Capecchi, Giovanni Manno and Giuliana Serra, Legance
where short-term rentals, especially through platforms such as Airbnb, are becoming an increasingly profitable business for property owners. On the one hand, long-term rental prices are experiencing a steady increase, especially in large cities, driven by a constant growth in demand that is not followed by a correspond - ing growth in supply. Milan and Florence remain among the most expensive cities for renters, with forecasts of rents rising again in 2025. On the other hand, the short-term rental market is thriving because Italy has regained its posi - tion as a top global tourist destination. With the recovery of the tourism sector, demand for short- term rental properties has increased, especially in high-traffic areas such as the historic centres of Florence, Rome and Venice. This has led to higher returns for owners willing to convert their properties to short-term rentals. This trending increase in rental prices is expected to be con - firmed during 2025, especially in tourist destina - tions and, most of all, in Rome, which will likely see a massive influx of tourists from all over the world due to the ongoing Jubilee. However, in response to the constant and appar - ently unstoppable increase in the short-term rental market, local governments are beginning to regulate it more closely, introducing meas - ures to limit excessive short-term rental growth in certain areas, as analysed in the next section. These regulations may affect returns in some locations in the near future. Government Policies and Their Impact The recovery of the Italian real estate market recorded in 2024 and expected to continue in 2025 has been significantly supported by the actions of the Italian government, which has
introduced several measures to support this sector. These measures include tax incentives for first- time house buyers and bonuses for energy- saving building projects, which are guiding the real estate market in a more sustainable direc - tion. Notably, the “Renovation Bonus” offers a 50% deduction on a maximum expenditure of Euro 96,000 in the case of a first house, while a reduced deduction of 36% is applied to second houses. The “Ecobonus” , aimed at facilitating renovations, is also confirmed for 2025, with a 50% deduction on renovations concerning first houses and 36% for second houses. By offering these incentives, the Italian government aims to reduce the environmental impact of construc - tion, meeting the growing awareness of individ - ual economic operators to issues concerning environmental sustainability. Conclusion and 2025 Housing Market Trends As we approach the conclusion of the first quar - ter of 2025, the outlook for the Italian real estate market remains optimistic. Thanks to the gradual stabilisation of interest rates, renewed interest in mortgages, and increased demand for real estate transactions, the market is poised for continued growth. While challenges persist, particularly those regarding affordability and supply constraints, the overall trend points toward continuous growth. With initiatives to encourage urban regeneration and energy efficiency, the Italian Government is adopting measures to create new opportunities for house buyers and perceptive investors. These latter, jointly with house own - ers and developers, will have to adapt to chang - ing market conditions, but those who will take a strategic approach will find success in both the residential and commercial sectors, particularly
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