Real Estate 2023

Last Updated May 04, 2023


Law and Practice


Studio Belvedere Inzaghi & Partners has eight partners and more than 30 professionals, and is a leading Italian firm with more than 40 years of experience in real estate law and unique expertise in urban planning, investment, leasing and PPP. It combines high-quality Italian legal services with an international approach to the sector, offering clients full assistance in real estate transactions, with a particular focus on development projects. The team has great knowledge of all asset classes and focuses on new trends and market developments, such as logistics, residential, student housing and senior living. It recently assisted in the acquisition of Scalo Farini-Valtellina and Scalo Porta Romana (central dismissed railway areas in Milan), in the development agreements concerning both the dismissed sites of Santa Giulia and Milano-Sesto (each exceeding 1 million sq m), and in several acquisitions of residential (built to rent), touristic and office developments and buildings in Italy.

The Italian Civil Code is the main source of real estate law for civil aspects. Commercial leases are governed by Law No 392/1878 (the Tenancy Law), while residential leases are governed by Law No 431/1998.

Zoning and planning aspects are mainly regulated by several national, regional and municipal laws and regulations. In this regard, the main national sources are Urban Planning Law No 1150/1942, which disciplines planning aspects, and D.P.R. 380/2001, regulating construction aspects.

The relevant regulatory framework for the Lombardia Region is set forth in Regional Law No 12/2005, which in the last few years has been amended to include volumetric and economic incentives aimed at fostering regeneration schemes and promoting real estate investments.

The current planning discipline of the City of Milan (the so-called PGT 2030) also promotes regeneration projects and strives to support and keep up with the City’s unprecedented growth in terms of demographic and economic development.

Recent Developments

Many developments in real estate administrative legislation occurred throughout 2022 and the start of 2023, including the following:

  • the implementation of the National Recovery and Resilience Plan is progressing through the allocation of substantial funds;
  • the new “Stadium Law” entered into force (providing for quicker processes, the possibility to obtain public contributions and favourable tax measures);
  • new – and less strict – rules were approved on demolition and reconstruction works concerning areas subject to landscape protection;
  • start and end work deadlines for building permits and zoning agreements were extended from one to two years;
  • new – and less strict – rules were approved on panoramic windows on balconies and loggias;
  • the new Public Contracts Code was approved;
  • new rules were approved on the Environmental Impact Assessment (EIA) – eg, with regard to the possible extension of the EIA authorisations; and
  • a new accelerated single environmental authorisation procedure for strategic sectors was approved (eg, batteries, high-performance computing, cybersecurity, IoT, low CO2 emission manufacturing, and connected, autonomous and low-emission vehicles).

The total investment volume for commercial real estate in Italy in 2022 was approximately EUR12 billion, growing by 20% compared to 2021.

2022 marked the consolidation of “residential” as an institutional asset class, with EUR1 billion deployed by foreign and local investors.

The logistics sector recorded notable growth compared to 2021, with EUR2.9 billion invested and with a record take-up of 2,700,000 sq m (+5% YoY). The demand for technological facilities and healthcare assets continued, bringing the “alternatives” sector to a volume of EUR1 billion, matching the performance of 2021.

Hotels also maintained good volumes, becoming the third largest asset class in terms of capital invested, with a total of EUR1.5 billion. Four single asset deals represented 43% of hotel investments in 2022: two prime resorts and two deals in central locations in major Italian cities. Office transactions grew by 103% in volume compared to 2021, with significant sales of trophy assets mainly located in the centres of Milan and Rome.

Investments were mainly concentrated in Milan, but Rome and secondary cities such as Florence and Bologna also confirmed their attractiveness, particularly for the student housing segment, which recorded numerous transactions in such cities, also thanks to funds made available by the National Recovery and Resilience Plan.

The most significant deals in 2022 included:

  • the sale of the “Cortile della Seta”, a 26,000 sq m trophy asset for office and retail use in the CBD of Milan;
  • Enpam's sale of the “Dream” real estate portfolio, comprising 68 assets, for EUR842 million; and
  • the sale of a vast logistic portfolio by last-mile operator “Crossbay”, which involved several facilities in Italy.

The effects of the COVID-19 pandemic had a minor impact on the real estate market in 2022 compared to previous years, as shown by the increase in the office take-up (+35% YoY in Milan and +6% YoY in Rome) and the consolidation of the hospitality asset class, which were two of the sectors most affected by the pandemic-related lockdowns.

On the contrary, macroeconomic uncertainty, inflation and increases in interest rates led to certain difficulties, especially for investors relying on third-party financing to fund their investments, in matching the yield expectations of sellers, creating a slowdown of some investments and sale procedures, and leading to the prime yields for core assets registering a slight increase.

The Italian real estate crowdfunding market saw a significant increase in 2022, from both an equity and a lending perspective: 354 real estate projects were financed, with EUR145.4 million raised (compared to EUR99 million in 2021 and EUR65 million in 2020).

Start-ups and venture capitalists are focusing on improving the “tokenisation” of real estate assets, driven by the need to increase the liquidity of the market, and the fragmentation of investments. These technologies are still to be fully implemented but they have all the necessary features to become the right alternative market for small/medium projects accessible to retail and institutional investors.

Furthermore, following the end of the travel restrictions due to the COVID-19 pandemic, investors are continuing to make use of 3D virtual tours, due to their practicality, the savings in time and expenditure, and the realistic and surprisingly precise features enabling investors to perform “virtual site visits”.

The Italian Minister for Economic Affairs is currently considering unifying the lease agreement income taxation mechanism, extending the cedolare secca to commercial lease agreements; it is currently applicable to residential lease agreements only. The cedolare secca is a particular taxation regime consisting of a voluntary flat-rate tax that replaces ordinary taxation (IRPEF) applying to rental income. This proposal has been favourably evaluated by many real estate operators and associations, such as Confcommercio.

In addition, the Italian government is currently evaluating a reform of the Real Estate Cadastre, in an attempt to update properties’ cadastral values. The reform of the Cadastre could mainly have an impact on the local property tax (IMU), increasing or decreasing the amount due on the ownership of real estate assets.

The government has also been delegated by the Parliament to evaluate and regulate new forms of solidarity-based home living and co-housing for the elderly (“senior co-housing”) and intergenerational co-housing, especially between elderly and young people in disadvantaged conditions (“intergenerational co-housing”).

Furthermore, since “residential” is increasingly being perceived as an institutional asset class, operators and investors are currently involved in discussions to identify the potential reforms needed – mostly concerning the fiscal legislation – to efficiently implement new business models such as “Build to Rent”. However, the debate is mostly carried out with private investors and professionals, and there are currently no pending proposals under assessment by the public authorities in relation thereto.

The categories of property rights that can be acquired are as follows:

  • absolute freehold or full ownership (piena proprietà) – the right to fully enjoy and dispose of the property;
  • right to build or surface right (diritto di superficie) – the surface right is either the right to build on a third party’s property and, consequently, to purchase the property of the building built, or the right to sell the existing property of the building, separately from the property of the land;
  • beneficial interest (diritto di usufrutto) – the right to enjoy a third party's real estate for a specific (and limited) period of time;
  • right of use (diritto d'uso e di abitazione) – the right to use real estate in order to meet the needs of the person holding the right and those of their immediate family; and
  • long lease (diritto di enfiteusi) – the right to enjoy a property owned by a third party with faculties similar to those granted to the full owner.

Standard Italian transactions refer to sale and purchase or absolute freehold/full ownership.

The Italian Civil Code governs the transfer of title of ownership, along with tax, zoning/planning and cadastral regulations.

A deed transferring a real estate asset shall be in writing and executed before an Italian notary, who has the duty to authenticate it. Preliminary sale and purchase agreements shall take the same form as the final deed and, therefore, must be done in writing.

The parties can freely negotiate the content of the notarial deed, except for the following requirements, which must be included according to the applicable law:

  • the price and means of payment;
  • the cadastral data of the real estate asset and declaration of compliance of the cadastral plans (planimetrie catastali) filed with the competent Building Cadastre with the actual status of the real estate asset;
  • a list of building permits issued to build the real estate asset;
  • the rules allocating the risks and benefits of the real estate asset; and
  • details of the real estate broker involved (if any) and the relevant fee paid to the broker.

Once executed, the notary files the deed with the Real Estate Register (Conservatoria dei Registri Immobiliari); this is not a requirement for the validity of the notarial deed but it is necessary to avoid conflicts with third parties and future buyers.

Because the Italian legal system gives the buyer a certain level of assurance in terms of title to the property, title insurance might not be necessary; however, title insurance is increasingly being taken out at the time of acquiring a real estate asset because a great number of foreign investors are coming to Italy.

After the COVID-19 pandemic and the issuance of European Directive 1151/2019, which was implemented in Italy through the “European Delegation Law 2019–2020”, there was a significant expansion of the use of digital tools in the legal field, enabling the remote execution of computerised notarial acts, whereby the parties can intervene by videoconference, upon verification of their identity on the basis of digital tools and signatures.

This novelty is part of the regulatory trend that, since 2013, has legitimised the use of the so-called “digital public deed”, according to which, instead of signing paper documents in front of the notary, the parties can sign a digital version of the deed and the relevant attachments with their digital signature, followed by the notary’s digital signature and stamp.

A potential purchaser should build up a team of legal, tax, commercial and technical advisers.

Areas of investigation are as follows:

  • title to property – in this respect, it is fundamental to obtain a 20-year notarial report, including an investigation into third-party rights, registered prejudicial liens and the seller's title to the property;
  • leases and contracts relating to the property;
  • third-party rights and encumbrances affecting the property;
  • zoning/planning permits (including agreements entered into with Municipalities authorising the construction of the property);
  • litigation; and
  • analysis of all technical aspects of the property (eg, plants, fire prevention system and certificate).

Usually, technical and commercial analysis requires specific site visits. Because of the pandemic-related travel restrictions, many due diligence exercises were divided into a “documental phase”, where the advisers assess the documents in a dedicated virtual data room, followed by a second phase with site visits if there is a positive outcome from the first phase.

According to statutory law, the seller has to guarantee the following:

  • title to the real estate property;
  • that the property is free from any third-party rights, except those reported in the deed (if any);
  • that the factual cadastral situation of the property complies with that registered with the relevant cadastre; and
  • the list of the building titles.

According to the Italian Civil Code, the purchaser has to notify the seller of any breach of the warranties within eight days of the relevant discovery. A one-year statute of limitations applies from the date the purchaser takes possession of the property. These provisions may lead to the termination of the purchase agreement, and to a full refund of the purchase price.

According to current market practice, the parties negotiate and include additional representations and warranties, and agree to depart expressly from the set of rules included in the Italian Civil Code in relation to warranty defects, thus derogating to the above-mentioned time limitations.

As a result of the COVID-19 pandemic, additional representations and warranties are starting to be included in sale and purchase agreements, related particularly to the absence of arrears and/or discounts granted to the tenants because of the COVID-19 outbreak (or requests raised by the latter in relation thereto).

Parties usually include contractual remedies (eg, restoration of damages based on the concept of a de minimis/basket and cap, which is usually in a range of 10% to 20% of the purchase price, depending on several factors, such as the type of transaction, the asset class or the operators involved) or special indemnities to cure any breach of the representations and warranties preventing the termination of a sale and purchase agreement once the transfer of title has been executed.

The representations and warranties generally last for a certain amount of time (the “survival period”) following the execution of the sale and purchase agreement, and the buyer will not be able to cover claims that arise following the end of the applicable survival period.

The survival period for representations and warranties usually ranges from six months to two years, although representations and warranties covering the seller’s title to the property and tax matters usually remain valid until the statutory terms provided by law have elapsed.

Warranty and indemnity insurance policies providing cover for losses arising from breaches of the representations and warranties are being used with increasing frequency, particularly when one of the parties (often a real estate investment fund) is to be liquidated upon completion of the relevant transaction. Usually, the policy is underwritten by the purchaser, and the payment of the insurance premium is divided between the purchaser and the seller, depending on the commercial agreements among said parties.

Investors should carefully evaluate all tax aspects of the investment. Other areas to be taken into account would vary depending on the type of investment to be carried out. In relation to core investment, a detailed evaluation of leases in place would be required, while for value-add investments – where the goal is to increase/create value – planning and zoning aspects should be evaluated in detail, with the same approach to be applied as for the acquisition of development projects.

Italy applies the “polluter pays” principle, which means that an owner who is not responsible is not obliged to carry out any necessary remediation works. However, if the owner does not carry out remediation works, they would not be entitled to carry out construction works and, in the worst-case scenario, the public authorities may carry out the remediation works at the expense of the owner, by selling the area. In this case, upon the sale of the area, the public authorities should return to the owner the excess price obtained through the sale compared to the costs borne by the public authorities to carry out the remediation works. This has happened in relation to sites of national interest that have needed to be cleaned up.

The permitted use of an asset is set forth in the general town planning scheme of the city but, in the case of existing buildings, the construction history of each asset should also be taken into account, since it could affect the establishment of a specific use.

A buyer may ascertain the permitted use under the town planning rules in force by requesting a zoning certificate (certificato di destinazione urbanistica – CDU), from which it is also possible to discover any urban planning restrictions to which the asset is subjected.

The implementation of a project of development may require the developer to enter into a town planning agreement with the Municipality in order to regulate specific features of the project and the realisation of public works.

Private ownership might be subject to an expropriation procedure if there is a supervening public interest, such as the realisation of public works or works in the public interest. In this event, an indemnification shall be paid to the owner of the property/land. It should be noted that the indemnification is at market price of the property/land subject to expropriation.

Non-residential Property

The sale of a non-residential real property by one VAT entity to another VAT entity is generally VAT-exempt, other than in the following circumstances:

  • if the seller was also either the developer of a newly constructed property or the entity that carried out renovation works on an existing property, provided that the sale is performed within five years of the date when the construction or renovations works are completed; or
  • if the seller exercises the option to apply VAT to the sale and purchase transaction, and the exercise of this option is properly set out in the deed providing for the sale and purchase of the real asset.

In either of these cases, one of the following two mechanisms will respectively apply:

  • the ordinary regime in the first case provides that the seller must issue an invoice in connection with the sale; or
  • the reverse charge mechanism in the second case (ie, when the seller opts for VAT to apply) provides that the seller will not invoice VAT, and the purchaser then “writes in” the rate and amount of applicable VAT in the invoice, and then registers the invoice and the VAT in its input VAT register and its output VAT register. Consequently, the sale and purchase transaction will be VAT-neutral.

The applicable VAT rate is either 22% or the reduced rate of 10% if the real property sold had been subject to material renovation works.

The following taxes will be payable in any sale and purchase of non-residential real assets:

  • cadastral tax at 1% of the sale price;
  • mortgage tax at 3% of the sale price; and
  • registration tax of EUR200.

Mortgage tax and cadastral taxes can be reduced to an aggregate 2% rate if one of the parties to the transaction is an Italian real estate investment fund (REIF) or if the real property is acquired by an Italian listed real estate investment company (SIIQ). Generally speaking, VAT can be offset with output VAT, offset with other taxes up to the limit of EUR2 million per year, or recovered over a period of up to two years after the sale and purchase.

Residential Property

The sale of residential property by a VAT entity to another VAT entity is generally VAT-exempt, except where:

  • the seller was also the developer of a new property or is the company that carried out renovation works, the developer of a newly constructed property or the entity that carried out renovation works on an existing property, provided that the sale is performed within five years of the date when the construction or renovations works are completed; or
  • the sale and purchase transaction takes place more than five years after the works are completed, and the seller is the developer or entity that performed the renovation works on the property, and exercises the option to apply VAT. In these circumstances, VAT would be applied under the reverse charge mechanism.

The following taxes apply in sales of residential real properties that are VAT-exempt:

  • registration tax at 9% of the sale price;
  • cadastral tax of EUR50; and
  • mortgage tax of EUR50 each.

Otherwise, the registration tax, mortgage tax and cadastral tax will each be due at EUR200.

The sale of a real property whose VAT was not totally deducted by the seller VAT entity when it purchased the property is always VAT-exempt (and liable to proportional registration, cadastral and mortgage taxes).

Typically, the purchaser will pay the transfer tax, the fees for the notary and any legal fees or expenses in connection with the sale and purchase agreement, except for legal costs (if any) incurred to release any encumbrances over the real property, which are the responsibility of the seller. Brokerage fees typically range from 1% to 3% of the sale price.

If the transfer of the real asset is the result of the acquisition of the entity that owns the real asset, then the transfer transaction is VAT-exempt and a registration tax of EUR200 will be due, regardless of which percentage of ownership in the entity is purchased, and no stamp duty will be due in connection with the transaction. However, a financial transaction tax (also called a Tobin Tax) will be due in a purchase of any number of shares representing the corporate capital of a joint stock company (but not in the case of quotas in a limited liability company) that is an Italian resident company for tax purposes, regardless of whether the purchaser or the seller is an Italian resident. This financial transaction tax is 0.2% of the sale price.

In principle, there are no restrictions on foreign investors acquiring real estate. However, it shall be verified whether or not investors come from countries that are affected by international sanctions or where rights are limited or restricted, in which case the so-called reciprocity principle (ie, whether the country of the investor gives a similar right to Italy) or the investment screening regulations potentially provided at the European level might apply.

Commercial real estate purchases are generally financed through bank loans, although the number of real estate financings granted by non-banking institutions (eg, credit funds, insurance companies, securitisation vehicles) has increased significantly in recent years.

To encourage overseas investments in the real estate market, certain provisions were approved to regulate real estate investment trusts (ie, SIIQs) and remove barriers for foreign funds and insurance companies that obtain financing in Italy for real estate acquisitions.

Typically, Italian real estate finance transactions are assisted by an extensive security package that includes the following:

  • a mortgage over the real property;
  • the assignment of rental receivables;
  • a pledge over the corporate capital of the borrower;
  • a pledge over the borrower's bank accounts;
  • the assignment of receivables under other contracts or of insurance proceeds; and
  • a loss payee clause in connection with any insurance policy (other than covering third-party risks).

Pursuant to the Italian Banking Act and Decree No 53/2015, the providing of loans on a professional basis to the public (both clients and non-clients) is reserved for certain qualifying entities, which include financial intermediaries, insurance firms, alternative investment funds and securitisation vehicle companies. Lending provided by other entities is prohibited, and may give rise to a criminal offence.

According to Italian law, lending activity falls within the scope of the reserve described above when it is carried out on a professional basis. For lending activity on a one-off basis, legal advice should be sought to check the legal requirements and appropriate transaction structure, in order to avoid any risks of liabilities.

The following are payable when a mortgage is created over a real property:

  • notary fees;
  • nominal stamp duty;
  • registration tax of either:
    1. EUR200 where the mortgagor is securing its own obligations or where the mortgage must be created by law; or
    2. 0.5% of the secured amount where the mortgagor is securing the obligations of a third party; and
  • mortgage tax, of 2% on the secured amount.

If the transaction is eligible for substitute tax (ie, an all-inclusive tax at a rate of 0.25% of the principal amount of the loan, for business entities), then no registration tax, mortgage tax, cadastral tax, stamp duties, governmental duties or other taxes and duties will be charged, and “substitute tax” will be paid instead.

Substitute tax can be applied when:

  • the loan has an original contractual term of no less than 18 months;
  • the loan is granted by EU-incorporated banks, Italian branches of EU-incorporated banks or Italian banks;
  • the loan is executed in Italy; and
  • the lender opts for the application of the substitute tax provided for under Article 15 of Presidential Decree No 601/73.

The granting of security on own assets in favour of third parties is always subject to the existence of a corporate benefit, and to certain restrictions in financial assistance situations.

Corporate benefit should exist, and be verified, on a case-by-case basis. Transactions within a group of companies are evaluated by taking into account the group’s benefit (but there should nonetheless be a direct benefit for the entity concerned).

In the case of joint stock companies, financial assistance is generally prohibited, but it is possible to provide security over own assets subject to compliance with certain steps, formalities and restrictions. Limited liability companies are subject to stricter rules.

In the case of borrower default, the acceleration of the loan and the enforceability of the relevant security are regulated by the provisions of the Italian Civil Code, as supplemented by the facility agreement and the security documents. The Italian Civil Procedure Code sets forth the steps and formalities to be used to enforce security.

According to data released by the Ministry of Justice, the successful enforcement of a security could take 18 to 24 months from the beginning of the enforcement action. However, different factors can have an impact on the time required to enforce a real estate security, such as:

  • the attractiveness of the asset for the investors;
  • the court before which the enforcement proceeding is brought; or
  • the defensive activity put in place by the borrower in default.

When the security package of a real estate financing is structured, the lender can negotiate other forms of security interests, in addition to the mortgages, which can speed up the successful enforcement and realisation on a real estate property. Such forms include a Patto Marciano, which allows banks and other entities that are authorised to grant credit facilities to obtain the transfer in their favour of the property of the borrower (or third-party guarantor) granted as security of the loan, in case of default by the borrower. Also, if the shares of the Italian vehicle owning the finance or refinanced asset are issued in a dematerialised form and credited in a securities account opened in the Luxembourg jurisdiction, the lender can negotiate a pledge over a securities account governed by the Luxembourg law to successfully and more rapidly enforce the collateral upon default of the borrower.

Foreclosure or the realisation of collateral in real estate lending have not been impacted by the recent measures implemented by the Italian government in response to the pandemic.

In principle, secured debt ranks prior to subsequent debt because priority follows a timing order, subject in any case to the fulfilment of the relevant formalities.

Non-secured debt ranks junior to secured debt. However, in certain circumstances, the law provides for priorities ranking prior to secured debt, including in the absence of a formal security (by way of example, certain taxes or indebtedness vis-à-vis workforce and social security).

In any case, priority applies in an enforcement scenario.

In a bankruptcy scenario, the secured debt retains its priority but the security can no longer be enforced, because the process to sell the borrower's assets is managed by the bankruptcy receiver, in compliance with the provisions of the Italian Insolvency Law.

Italy applies the “polluter pays principle”. Where the current owner of a real property is not responsible for the pollution, it can still perform the remediation activities on a voluntary basis. Lenders are not juridically liable in relation to environmental issues affecting borrowers.

In principle, security constituted in compliance with the requirements set forth by law is opposable if the borrower goes bankrupt. If such requirements are not met (eg, security given after the drawdown of the loan, or for an amount exceeding the loan amount outside the current practice), certain security could be deemed void in cases of bankruptcy, upon a motion by the receiver and a finding by the court that the security is void.

In certain circumstances, any security created in breach of the Italian Insolvency Law may also give rise to criminal liability in the context of a bankruptcy procedure.

The variable rate commonly used in the Italian real estate financing market is the EURIBOR. To address the risk of LIBOR or benchmarks being discontinued while market participants continue to have exposure to that rate, financial institutions and clients usually agree to contractual fall-back provisions using Alternative Reference Rates as the replacement rate, in line with best recommended practice.

Town planning rules are set forth by each Municipality at a local level by means of the general town planning scheme.

The local discipline must be in compliance with national and regional legislation (indeed, zoning is a shared competence between the State and the Region), and with higher ranking plans (such as the regional and provincial plans).

The Region must also check each local town planning scheme, requiring any necessary changes of the rules provided in relation thereto, in order to guarantee compliance with the higher ranking plans.

The regulation of the design, appearance and method of construction of new buildings, and the refurbishment of existing buildings, is set forth principally at a national level. However, certain aspects of design and appearance may be further detailed locally, through the building regulation of the Municipalities.

The Municipalities are in charge of controlling compliance with the applicable provisions of law that rule the building activity.

The Municipality is responsible for authorising and controlling the development of individual parcels of real estate.

If the asset is affected by specific restrictions, the authority competent over the constraint must issue its prior approval; for instance, if the asset is affected by a cultural or landscape lien, the Superintendence of Cultural Heritage must also approve the project. Obtaining the relevant authorisation is a necessary and binding condition for the Municipality.

In any case, development projects must comply with town planning, building, hygiene, health and safety, static and fire prevention regulations, as well as any specific constraint (hydrogeological, cultural, landscape, etc) affecting the asset.

The entitlement procedure and specific building title depend on the type of building works to be carried out, and are mainly regulated by national legislation.

For most building works, the developer must submit a prior certified notice to the Municipality (a Start Works Notice or SCIA – Segnalazione Certificata di Inizio Attività), which is checked by the relevant municipal offices.

Particularly significant building works are subject to the issuance of a building title (building permit) on the part of the Municipality, which can be replaced by the SCIA for certain building works.

Furthermore, the general town scheme may – at a local level – provide for the necessity to approve a prior implementation plan or to enter into a town planning agreement.

An operator who requested and was denied a building permit may challenge such denial before the Administrative Regional Court.

Third parties may request to take part in the administrative procedure for the issuance of building titles and/or challenge an existing title (before the Administrative Courts) if they have legal standing and interest to sue (ie, they can prove to have a direct interest in the project of development and to be affected by it).

Entering into a town planning agreement is necessary for implementation plans. Through such agreements, the Municipality and the developer discipline various aspects of the development, such as the realisation of urbanisation works (roads, squares, parks, etc) and the transfer of areas to the Municipality for public use.

Town planning agreements are also sometimes necessary in the case of a mere building title, when certain specific features of the project must be ruled (eg, planovolumetric aspects, public works, the transfer of development rights or the establishment of private services of general interest).

Any building works carried out in violation of building and town planning regulations may be subject to a suspension order, a demolition order and/or an order to re-establish the legitimate status of the building. The developer may also incur administrative and criminal liability. However, in certain specific cases set forth by the building Law (D.P.R. 380/2001), it is also possible to apply to the Municipality for a regularisation procedure of the building abuse/non-compliance with the relevant works.

Real estate investments in Italy are mainly carried out via one of the following types of investment vehicles, or a combination thereof.


Real estate companies are special purpose vehicles carrying out the purchase/sale, management, leasing and building of real estate assets. Real estate companies are generally formed as limited liability companies (società a responsabilità limitata – S.r.l.) or joint stock companies (società per azioni – S.p.A.), and are usually not listed on an exchange (with few exceptions).


REIFs are undertakings for collective investments, and are generally utilised to invest in a plurality of real estate assets.

REIFs must be managed by licensed Italian managers (so-called SGR), or alternatively by non-domestic EU managers under the freedom to provide services regime (management passport), or by establishing an Italian branch.

REIFs must invest at least two thirds of their assets into real estate assets (including rights in rem on such assets, equity interests in real estate companies, and units of other REIFs). The remaining third may be invested in listed or non-listed financial instruments.

REIFs may not directly carry out building activity and, more importantly, may not directly own business activities, which are deferred to affiliates indirectly owned by the REIF.


Listed real estate investment trusts are Italian investment vehicles that have the following features:

  • SIIQs must be formed as joint stock companies, and their shares must be listed on a regulated stock exchange of an EU member state or a European Economic Area member state, and must be resident for income tax purposes in the same area;
  • no shareholder can own, directly or indirectly, more than 60% of the voting rights nor have the right to more than 60% of the company's profits;
  • at least 25% of the shares must be owned by shareholders who do not own, directly or indirectly, more than 2% of the voting rights nor have the right to more than 2% of the company's profits; and
  • SIIQs' main business must be the leasing of real estate assets according to the criteria set forth in the law.

Real Estate SICAFs

A Real Estate SICAF is an Italian joint stock company with fixed corporate capital that has its registered office and headquarters in Italy. A Real Estate SICAF raises capital by offering its shares or other equity instruments, and invests the capital raised into real estate assets.

The considerations that apply to REIF investments also apply, mutatis mutandis, to Real Estate SICAF investments.

Real Estate Securitisation Vehicle

The real estate securitisation scheme was introduced in Italy in 2019, so that a securitisation vehicle may now purchase real estate assets and benefit from the tax and regulatory regime applicable to the securitisation vehicles.

In a real estate securitisation, the real estate assets are transferred to a securitisation vehicle, which issues securitisation notes to finance the payment of the assets’ price.

The securitisation vehicle is a bankruptcy remote vehicle and, on the basis of the principle of fiscal neutrality, the proceeds deriving from the securitised real estate assets are not subject to direct taxes.

Limited liability companies have a corporate capital divided into quotas with no face value.

Joint stock companies have a corporate capital divided into shares with the same face value.

The minimum capital required is EUR10,000 (or EUR1 under certain conditions) for limited liability companies, and EUR50,000 for joint stock companies.

The minimum share capital for SGRs, as set by the Bank of Italy, is EUR1 million, even though SGRs with reduced capital (not lower than EUR50,000) are allowed under certain circumstances.

SICAFs’ minimum share capital is also EUR1 million (the minimum capital is reduced to EUR500,000 for SICAFs reserved to professional investors). For SICAFs entirely managed by external managers, the minimum capital is EUR50,000.

A limited liability company is characterised by greater flexibility, and quota-holders have wider autonomy in shaping the company according to their needs through the provision of different rules within the by-laws, while a joint stock company is governed by a major number of mandatory provisions.

Unless provided otherwise under the by-laws, the management of the company is granted to the board or to a sole director, or to more directors with a joint/single signature. Resolutions can be adopted through “written consents” or “written consultation” procedures. These companies can appoint a control body, composed – unless provided otherwise under the by-laws – of a sole statutory auditor and, as an alternative or in addition, an auditor or an auditing firm. If certain financial and patrimonial thresholds are exceeded, such appointment becomes compulsory.

As per joint stock companies, the standard model provides that the general meeting appoints the board of directors or a sole director for the management of the company, as well as a board of statutory auditors for the control of the compliance of the company's activity with the law and the by-laws, and on the fairness of the company’s management. This model applies unless a different model is explicitly chosen within the by-laws. An auditor or auditing firm controls the accounts of the company. In certain specific circumstances, the audit of the accounts can be vested with the statutory auditors (instead of the auditor/auditing firm).

See 5.1 Types of Entities Available to Investors to Hold Real Estate Assets regarding the governance principles that apply to REIFs, SIIQs and SICAFs.

The annual entity maintenance and accounting compliance costs depend on the amount of activities to be carried out. On an average basis, for both types of company, costs range from EUR10,000 to EUR20,000. Auditors’ costs will be added.

Italian law recognises two types of leases:

  • property leases; and
  • business leases.

Property Leases

A property lease concerns non-residential properties (eg, office, retail and hotel) and residential properties. Property leases are mainly regulated by the Italian Civil Code, Law No 392/78 (in relation to non-residential properties) and Law No 431/98 (in relation to residential properties).

The Italian tenancy law on non-residential properties (ie, Law No 392/78) was amended on 11 November 2014, allowing the parties to freely negotiate the terms and conditions of a lease if the lease provides for an annual rent higher than EUR250,000 and the building does not have historical value – so-called “large leases”. This new law granted more flexibility to the parties, particularly landlords, because the Italian tenancy law included provisions that were slightly more favourable to tenants.

Business Leases

A business lease covers a “going concern” or a business (ramo d’azienda or azienda) that might include a property. In this case, the lease is only regulated by certain provisions of the Italian Civil Code, so the parties are granted wider freedom to negotiate the terms and conditions of the lease.

The Italian tenancy law on non-residential properties regulates leases concerning offices, retail properties and hotels.

The parties are free to determine rent amounts.

Italian laws set a minimum term for leases (see 6.4 Typical Terms of a Lease), and the parties can freely fix the term in large leases.

After the 2021 eviction moratorium and tax exemptions due to COVID -19, there is currently no material pandemic-related regulation of rents or lease terms.

The Italian tenancy law provides for fixed minimum terms for non-residential leases of six years for office/retail properties and nine years for hotel properties. Temporary leases can be entered into based on certain objective reasons. In large leases, the parties can agree on a different term.

The lease automatically renews upon the expiry of the first period, unless either party gives notice not to renew at least 12 months prior to the expiry term, or 18 months for hotels.

A residential lease has a fixed/minimum term of four years. Upon the expiry of the initial term, the lease automatically renews for a further period of four years, unless the parties agree otherwise.

The Italian Civil Code distinguishes between ordinary and extraordinary maintenance works, and tenants are generally responsible only for ordinary maintenance; however, parties can deviate from this principle.

The frequency of rent payments can be freely agreed between the parties. Current market practice provides for payments on a quarterly basis. Usually, ancillary charges are paid by the tenant alongside the rent.

Because of the COVID-19 pandemic, new lease agreements tend to provide for specific definitions of “force majeure” (which was traditionally left to judicial interpretation), listing the events whereby tenants are entitled to rent abatements and/or to terminate the lease.

Some lease agreements are also providing for a general duty for the parties – in case of unforeseeable events preventing the tenant from using the leased premises – to renegotiate the amount of the rent (even if the Civil Code does not contain any explicit duty in this respect, only stating that the parties must perform their obligations in good faith).

In core transactions in particular, it is increasingly common to ask the seller for a “rental guarantee” in order to secure any potential rental discount requested by the tenants for a certain period after the sale.

Furthermore, since a significant increase in the cost of raw materials and combustibles was reported in 2022, specific price revision clauses linked to official price lists (such as the price surveys periodically published by the Chambers of Commerce) are increasingly being implemented if works are to be performed on a property.

The parties are free to determine the rent, but once fixed it is subject only to an annual review based on 75% of the ISTAT consumer price index (or 100%, depending on the duration of the lease). Since November 2014, the parties in large leases can freely negotiate and determine a mechanism to review and update the rent; however, current market practice still provides for the update of the rent based on the ISTAT consumer price index.

Turnover rents, stepped rents and free rent periods are also permitted, with certain limitations provided by case law.

See 6.5 Rent Variation.

Non-residential leases are VAT-exempt, unless a landlord opts for the VAT regime to be applied (at a 22% rate). The VAT option shall be clearly stated in the agreement.

No costs should be paid by the tenant, unless there are fit-out works to be carried out within the property. If this is the case, the parties shall define which works are for the benefit of the tenant and which are for the benefit of the landlord.

Each party pays its own maintenance costs. Maintenance costs for common portions of the property are sustained by the landlord and reimbursed by tenants on a pro rata basis.

Tenants pay utilities and telecommunications costs.

The tenant is required to take out policies covering any damage caused to third parties or to the property as a result of the activities carried out by the tenant within the premises.

Landlords are usually required to take out insurance policies covering the building where the leased premises are located.

Based on the insurance underwritten, tenants could recover rent payments or costs as a result of office closures incurred during COVID-19.

Use of the real estate shall comply with the zoning and planning provisions. The lease states the use of the property and the tenant is not allowed to change it, subject to termination of the lease.

The tenant is usually allowed to alter/improve the property, subject to the landlord’s consent. Upon the expiry of the lease, the landlord may require the tenant to remove all alterations and improvements, or may decide to acquire all alterations and improvements for free.

Law No 392/78 regulates commercial leases (eg, office, retail and hotel), and Law No 431/98 regulates residential leases. The Italian Civil Code applies to all leases.

A landlord is not allowed to terminate the lease in the event of the tenant's insolvency; a specific procedure set up by the court-appointed receiver will take place.

A cash deposit of up to three months’ rent is usually provided to a landlord to protect against a failure by the tenant to meet its obligation. Bank guarantees/insurance policies can cover higher amounts. Corporate guarantees are even delivered by the tenant.

Upon the expiry date, the tenant shall vacate the property. Should this not be the case, the lease provides for the payment of holdover indemnities up to a certain period. Upon the expiry of this grace period (if agreed), the landlord may seek a court injunction and the restoration of damages.

As per current market practice, a tenant might be allowed to assign the lease, subject to the landlord’s consent, although exceptions might apply for intra-group assignments. A sub-lease might be allowed subject to the landlord’s consent and on conditions that the sub-lease term is no longer than the term of the lease.

These provisions can be freely determined by the parties and are subject to negotiations, with particular reference to large leases.

Italian tenancy law provides that, if a tenant transfers the business along with the lease, the landlord can only oppose such transfer upon justified reasons. Large leases can deviate from this provision.

Leases include a specific termination clause listing all events pursuant to which a landlord can ask for termination. In any case, a tenant’s non-fulfilment of its obligations might allow the landlord to terminate the lease.

All leases have to be registered with the Tax Authority, and an annual registration fee equal to 1% of the passing rent shall be paid. The registration fee is usually paid equally by the landlord and the tenant.

Certain leases that have a first term longer than nine years should be executed before a notary and registered with the Land Register so that they can be opposed to all third parties.

If the lease has to be terminated because the tenant does not comply with the obligations arising therefrom, the landlord can terminate the lease and seek eviction. This is a court process, the duration of which changes on a court-by-court basis.

A lease can be terminated by a third party only in cases of compulsory procedure, and an indemnity is payable.

The most common structures are as follows:

  • a guaranteed maximum price to be determined based on an open book approach, except for variations;
  • a price determined on the basis of separate prices for certain works, and the overall final price is determined upon the completion of works; or
  • a cost plus fee basis, where the price is determined on an open book basis plus a pre-agreed fee.

Landlords might decide to enter into separate agreements for design and construction, and relevant liabilities will remain with the appointed contractor, except in the case of any necessary variants.

It is market practice to insert penalties to be paid by the contractor in case of delay. Regarding the feasibility of the project, the construction agreement usually includes proper representations and warranties. Contractors are even required to deliver performance bonds and evidence of insurance policies, in case of delay to the milestones or to the final terms of the works.

Construction contracts usually provide for penalties to be paid in case of delay.

Contractors are required to deliver a performance bond and, upon completion of the works, to give a ten-year insurance policy covering any defects of the building.

In the worst-case scenario (ie, default of the landlord), there might be a possibility for contractors/designers to encumber the property and enforce the sale in order to recover their outstanding debts. This would imply a judicial proceeding in court.

The law requires buildings to be fit for use before they can be inhabited.

According to the regulations currently in force, the fitness for use is self-declared by the developer through a certified technical assessment using a specific form.

With such certified technical assessment, in addition to the fitness for use, the developer must certify the compliance of the works with the submitted project and the regulations on hygiene, health and safety, plants and systems, and fire prevention.

See 2.10 Taxes Applicable to a Transaction.

Where non-residential real assets are purchased by a REIF or a SIIQ, the cadastral tax and mortgage tax applicable are halved to 0.5% and 1.5%, respectively.

The contribution to a REIF or SIIQ of more than one real asset mainly leased performed by a VAT entity is out of the scope of VAT and subject to fixed cadastral tax, mortgage tax and stamp duty.

An owner of real property is generally liable to the local property tax (IMU). The taxable basis is equal to the cadastral income (including a 5% increase), multiplied by a figure depending on the kind of property.

Each year the local Municipality approves the rates (from 0% to 1.14%).

The user of a property is also subject to the waste removal tax (tassa sui rifiuti – TARI) in order to finance waste management by the Municipality.

An investor may derive lease income from owned real properties, either directly or by means of dividends or distributions made by a corporate vehicle or fund. Tax on rental income may vary substantially, depending on the structure of the investment.

Where the property is held by an Italian corporate vehicle, if the real estate is leased to tenants, any rental income generated is subject to corporate tax (IRES) at a rate of 24% and to regional tax (IRAP) at the ordinary rate of 3.9% (or more, depending on the relevant region).

The taxable income of a real estate company for IRES purposes is the net revenue after the deduction of costs, as shown in the annual profit and loss account. Roughly all costs relating to the activities of a company can be deducted, including depreciation (excluding lands) and interest (as long as this exceeds interest receivable), up to an amount equal to 30% of tax EBITDA. Interest due on loans aimed at purchasing real estate properties for “letting” that are secured by mortgages over the same properties is not subject to the 30% threshold and is therefore fully deductible.

The taxable income of a real estate company in relation to the leasing of residential real properties for IRES purposes is represented by the rents minus maintenance expenses and interest up to the above limits. No other costs are deductible.

Interest is not deductible from an IRAP standpoint.

The taxation of dividends distributed to shareholders depends on the nature of the shareholder.

Dividends in favour of a foreign individual are generally subject to a withholding tax of 26%. Withholding tax rates can be reduced by any double tax treaty signed by Italy with the country of residence of the foreign investor.

On the other hand, dividends distributed to a foreign company are generally subject to a withholding tax of 26%, although this rate could be reduced by an applicable double tax treaty. Dividends distributed to a company that is resident in the EU or EEA and subject to corporate income tax therein are liable to a 1.2% withholding tax. Exemption from Italian withholding tax under the Parent-Subsidiary Directive may apply.

Dividends paid by an Italian resident company to foreign undertakings for collective investments (UCIs) are exempt from withholding tax if the following conditions are met (EU UCIs):

  • UCIs are incorporated and located in the EU or EEA; and
  • UCIs are compliant with Directive 2009/65/EC or are an alternative investment fund managed by managers subject to regulatory supervision in the country where they are established, pursuant to Directive 2011/61/EU.

In the case of direct investment performed by a foreign company (without a permanent establishment in Italy – please consider that ownership of Italian real estate does not automatically give rise to a permanent establishment in Italy), the income derived from letting property is subject to IRES, payable at a rate of 24%. 95% of the gross income derived from letting is taxable and no depreciation or other costs can be deducted.

Italian REIFs are not subject to IRES or IRAP.

SIIQs are not subject to IRES and IRAP on income from letting property, nor on the dividends paid by another SIIQ, if those dividends relate to letting property or profits distributed by an Italian REIF performing letting activity.

Tax on capital gains deriving from the sale of real estate properties may vary according to the structure of the investments.

Profits on the sale of a property realised by an Italian corporate vehicle are subject to IRES and IRAP at the aggregate rate of 27.9%, regardless of how much time has lapsed since acquisition. The profit is represented by the difference between the agreed purchase price and the net tax value of the property at the time of the sale. In some cases, it is possible to spread the liability for tax on capital gains over a period of five years.

In a sale of the participation into the Italian vehicle, the capital gain is subject to Italian income tax at a rate of 26%.

Starting from 1 January 2023, capital gains realised by foreign investors from the indirect sale of Italian real estate are subject to Italian income tax, including the indirect sale of participations in Italian real estate companies.

However, the sale of a non-substantial participation in an Italian vehicle (no more than 20% of the voting rights or 25% of the paid-in capital) performed by an investor that is resident in a white-list country is exempt, provided the participation value is represented (directly or indirectly) by less than 50% by Italian real estate (in making this computation, real estate to the production and exchange of which the business activity is directed should not be considered, nor should that used directly in the business activity of the company).

Any double tax treaty between Italy and the country of residence of a foreign investor may provide for exclusive taxation in the country of residence of the foreign investor.

Capital gains from the sale of property owned by an Italian REIF are included in the fund's net income and taxed at the level of the investors when the income is distributed.

Capital gains derived from the sale of real estate directly owned by a foreign investor without a permanent establishment in Italy are not subject to IRES if the property is sold more than five years after its acquisition. If the sale occurs within five years, IRES applies at a rate of 24%. The taxable income is represented by the difference between the price agreed for the sale of the property and its acquisition cost.

Capital gains from the sale of property owned by an Italian REIF are included in the fund's net income and taxed at the level of the investors when the income is distributed.

In a sale of the direct or indirect participation into the Italian REIF, the capital gain is subject to Italian income tax at a rate of 26%, excluding EU UCIs, which are exempt.

Starting from 1 January 2013, the previous exemption (eg, a sale performed by foreign investors that are resident in a white-listed country of either an institutional investor or a non-institutional investor that has less than 5% of the REIF) can no longer be applied.

In all cases, an applicable tax treaty could provide an exemption.

Capital gains from the sale of real estate by a SIIQ, whose rental income is exempt, are not liable to either IRES or IRAP. The sale of the participation into an Italian SIIQ is the same as that expected for the sale of an Italian vehicle, with the only difference being the threshold for the exemption, which decreases from 20% to 2%.

Financial transactions tax (Tobin Tax) is payable (at a rate of 0.2% on the agreed price) by the purchaser of shares in an Italian resident joint stock company, even if the purchaser and the seller are not Italian residents.

Italian corporate vehicles are allowed to deduct real estate depreciation, while direct investment from abroad is not eligible for any deduction. No benefits are allowed for residential real estate properties that are rented by Italian companies.

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Trends and Developments


Grimaldi Alliance has been, for over 20 years, one of the most significant law firms in the Italian, European and international legal market. With about 500 professionals in its offices in Milan, Rome, Bari, Parma, Padua, Naples, Verona, Turin, Treviso, Brussels, London, Paris, Lugano, New York and the possibility to operate in 70 jurisdictions worldwide, relying on about 2000 professionals, Grimaldi Alliance assists Italian and international clients in the main practice areas, with well-known expertise and professionalism. Grimaldi Alliance is a one-stop shop in Italy and abroad, as it is able to offer a well-integrated mix of expertise in the legal (with more than 300 lawyers operating in all sectors and with a very high degree of specialisation), tax (with a team of about 150 professionals all over Italy) and advisory fields (with more than 50 highly experienced professionals in areas such as corporate finance, corporate crisis, cybersecurity, real estate, artificial intelligence, public affairs, national and European public financing, compliance).

Asset Classes in the New Year

Market trends in Italy

After the COVID-19 pandemic, Europe is experiencing another crisis related to the Ukrainian war. The geopolitical situation that has emerged is having a strong impact on the macro-economic conditions of European countries: lower GDP growth, rising inflation and interest rates.

2022 closed positively for the Italian real estate market, which showed a growth of 22% compared to the previous year, with investments amounting to EUR11.7 billion, as indicated by the research of the real estate market elaborated by Coldwell Banker Richard Ellis (CBRE) and Jones Lang LaSalle (JLL).

The last quarter of 2022 saw the materialisation of the signs of a slowdown that had been felt since the European Central Bank’s (ECB) first upward revisions of interest rates, which had led to a wait-and-see attitude among investors, intent on monitoring the impact of the rising cost of capital on real estate prices before initiating new transactions. Investment volumes in the fourth quarter were 51% lower than in the same period of 2021 and 26% lower than in the previous quarter. The decline in investment volumes in the fourth quarter affected all major asset classes across the board and affected Italy in a similar way to what was observed in the other major European markets.

Geographically, it is once again the city of Milan that catalyses the largest share of investments in 2022, reaching 45% of the total, compared to 30% in 2021. In fact, Milan continues to lead the market in terms of investment volumes, reaching a share of EUR4 billion. In 2022, in contrast, Rome realised investments for a total of around EUR1.4 billion.

Current trends are expected to remain unchanged even during the first half of 2023, with transactions still slowed down by the continuing increase of the cost of capital and a reduced willingness to finance new transactions by banking institutions, particularly for investments in the “retail” market. In the last few months, however, there has been an improvement in real estate investors’ confidence, following the first signs of slowing inflation in Europe and the United States.

Asset class 2022

Overall, there were excellent investment volumes in 2022, affecting all the main asset classes across the board, except for the retail sector, which was particularly affected by the macroeconomic situation, registering approximately EUR800 million in investments with a marked decline throughout the second half of 2022, after the growth of the first two quarters.

In order to be able to forecast what the Italian real estate market will look like in 2023, it is first necessary to analyse the trends that characterised the real estate market in 2022.

The asset class that investors, both domestic and international, preferred in Italy in 2022 was office space; this is followed by logistics, hospitality and residential.


Office spaces in 2022 was the most dynamic real estate asset class in Italy and the most attractive sector, with more than EUR5 billion out of EUR11.7 billion in total real estate investments.

Milan continues to be the leading city with EUR2.7 billion in investments (around 70% of the national total), recording 38 purchase and sale transactions, involving both central and suburban areas. The rental market also showed strong growth, recording 224 transactions, for a total of 368,000 square metres rented in the first nine months of the year (+40% compared to 2021). Demand was mainly for offices below 1,000 square metres (61% of the total) and A-grade (76%). Approximately 35% of demand involved spaces located in the central areas (the central business district, historical centre, centre), 28% in the suburbs, 21% in the hinterland area and 16% in the semi-centre.

Rome recorded transactions for a total value of approximately EUR800 million, relating to properties located mainly in the centre and in the EUR district. There was also a growth in the absorption of office space in Rome, on the user side, where 148 transactions were concluded, for a total area of approximately 150,000 square metres (+5% year over year).

In the last quarter of 2022, compared to the previous quarter, prime office net yields increased in both Milan (3.75%) and Rome (4%), and prime rents increased in Milan to EUR690 per square metre per year, while they remained stable at EUR520 per square metre per year in Rome.

Despite the uncertain macroeconomic environment, the office asset class showed strong resilience during the year, reaching record numbers. The sector is affected by some important changes: companies have been testing how hybrid working operates and this has caused some important changes in space management.

The trend is to prefer smaller but higher quality offices that meet ESG requirements. At the frontline, of course, is the “environmental” parameter: a company that calls itself “green” certainly cannot be based in a building that is not as sustainable. However, that is not all. The pandemic has also played a fundamental role on the “social” benchmark in the office sector because, also due to smart working, the demarcation line between home and office has thinned, and a greater attention to space, linked to the quality of life of those who live there, has emerged in offices as well, with the need for partial renovations or redistribution of interior spaces.


The logistics sector has shown stability in volumes compared to 2021, realising investments of around EUR3 billion, making it the second biggest asset class.

Despite the limited supply of logistics buildings in areas close to urban centres, the demand for areas continues to be very strong on the part of logistics operators.

The higher attractiveness of northern Italian cities, such as Florence, Milan and Genoa, is justified by the higher concentration of logistics companies in these areas.

The positive market trend is driven, to a large extent, by the development of e-commerce and the consequent need to have storage facilities located close to urban centres and meet customers’ expectations of quicker and quicker deliveries; e-commerce in fact exercises considerable pressure on the logistics space market and is a real driver of operators’ choices. The location of warehouses is becoming one of the main distinguishing factors for urban logistics, as it can gain competitiveness in the market.


There was also a positive trend for the hotel sector, which recorded volumes of around EUR1.2 billion, confirming Italy as one of the most relevant markets for major investors in the hotel sector, with interest directed mainly towards resort and leisure destinations, by investors and operators. 2022 was a record year for investments in Italian luxury hotels and the trend promises to continue in 2023.

Except for the luxury sector, in all other sectors, despite the recovery of international and domestic air travel, hotel bookings have not yet returned to pre-pandemic levels. Inflationary pressures are also creating the risk that tourists will change their accommodation budgets.

Although there is a positive trend in all major Italian cities, Rome is now the most dynamic market in view of the numerous repositioning and conversion operations that will contribute to a significant improvement in the capital’s hotel offer. There is the Six Senses in Piazza di San Marcello, which is scheduled to open on 16 March 2023, the Bulgari, which will open in Piazza Augusto Imperatore in the former INPS headquarters in the spring, and the Hotel Intercontinental, which is scheduled to open by the end of this semester. In addition, the Rosewood hotel will be developed in the former BNL headquarters in Via Veneto, the Orient Express in Piazza della Minerva, will open following the renovation and rebranding of the former Grand Hotel de La Minerve, as well as the Four Seasons in Palazzo Marini and the Mandarin Oriental in the Villini Sallustiani.


Living reached a total of approximately EUR600 million. At a national level, the residential purchase and sale market in the first nine months of 2022 showed the best result since 2007 in terms of volumes (around 576,000 NTN, or “Number of Normalised Transactions”), up 7.4% on the same period in 2021. The third quarter of 2022 shows a substantial stabilisation of transactions (+1.7%) compared to the third quarter of 2021 and volumes in line with the historical records of 2006-07.

Investors’ interest in build to rent transactions is growing, and in 2022 it focused mainly on Milan and Rome, although recent transactions have shown the attractiveness of other markets, such as Turin and Florence.

In recent years, build to rent has become one of the most dynamic formulas in European real estate: it is an innovative investment model that creates housing estates for rent rather than for sale.

As noted by CBRE, investments in Italy in the build to rent sector in 2022 were close to the EUR1 billion mark, with Milan’s real estate scene dominating.

One example is the “SeiMilano” regeneration project, a significant development for the Italian real estate market of a redevelopment project that, due to its large size, can make up for the shortage of build to rent residences available in Milan today. Another building site is the one in the very central Via Maria Vittoria in Turin, where 66 flats on approximately 7,000 square metres will be built.

There is also growing interest in conversions from other uses ‒ mainly office use ‒ to residential, which together generated transactions worth more than EUR300 million, bringing the living investment volume to almost EUR1 million. Again, the different post-pandemic work requirements have influenced both the office and retail sectors.

Student housing

Significant development potential, due to the unmet demand for student accommodation, is also expected in student housing. While the number of students in Italy is rather high, the availability of student housing is still decidedly limited, which is why the sector represents an excellent investment opportunity in dynamic cities such as Milan, Rome, Florence, Bologna, Turin or Venice, and lends itself particularly well to the implementation of ESG aspects, with particular reference to environmental and social parameters.

In this sector, it is relevant to mention the latest determination of the Italian government which aims to triple the number of beds available for non-resident students, bringing them from 40,000 to 105,500 by 2026, encouraging the creation, by private entities, of new university building structures, thanks to the coverage of the costs relating to the first three years of management of the structures, by the ministry of the university.

In particular, the latest Ministerial Decree that was published on 27 December 2022, contains the guidelines on public financing of student housing. The Decree states that around EUR660 million will be available, with the deadline of 31 May 2026 for the delivery of the rooms. Calls for tenders are now underway; they will provide the detailed rules for submitting applications for the use of the funds.

What will be the real estate trend in 2023?

The year 2023 opens with unknowns dictated by an unstable geopolitical, energy and inflationary situation.

Slowing economic growth, a potential misalignment of price expectations between buyers and sellers, increased geopolitical uncertainty, worsening credit access conditions and persistently high inflation are elements of concern for real estate investors.

According to Savills Investment Management, 2023 will be a very challenging year; however, those who prepare now will be well positioned to take advantage of the upcoming market recovery. Modern assets in prime locations with strong cash flows and solid ESG credentials have the most potential.

As far as ESG parameters are concerned, in terms of the environmental limb, the real estate development plan must be directed towards optimising performance by implementing environmentally friendly design, including by favouring environmentally friendly materials. This is the aspect that, in the real estate market, can certainly be declined most widely: advanced plant solutions, ecological materials for building construction, renewable energies, and so on. These parameters can be translated into directly measurable indices, consisting of energy classes and certifications; it is precisely these indices that will naturally be able to influence investors’ choices in one direction rather than another. The year 2023 will still be characterised by uncertainty, but several forces are driving real estate towards the ecological transition; it will therefore be increasingly important to demonstrate the high environmental performance of real estate. During this year, investments in the commercial sector will increasingly focus on achieving high standards of sustainability and improving the ability to meet the changing needs of tenants. This is supported by the “2023 Italy Real Estate Market Outlook” by CBRE’s Team Research Italy.

Social criteria in real estate, on the other hand, currently direct investments along two lines. The first concerns the urban context in which the buildings are located; it is undeniable that the major players in the real estate market have a great responsibility towards the community, being able to have a direct impact on the territories by redeveloping run-down neighbourhoods. The second, however, relates to the new space organisation needs that have emerged during the pandemic, both in housing and in offices.

In the hotel sector, the contrast between the steady growth in tourist flows and the gradual obsolescence of the Italian hotel stock will continue to offer good opportunities for repositioning and redevelopment of existing hotels and for conversions of buildings with a different use in hospitality, despite the uncertain construction cost environment. The positive outlook for the hotel industry keeps interest in value-added investments high, considering the continued good performance of the market.

In the residential market, higher interest rates on mortgages will shift the focus to smaller projects. A further increase in the inflation curve would, in fact, push the ECB to further increase financing costs and this could lead to a decrease in demand for purchases. However, this is unlikely to lead to a market crisis, at least in cities that have historically shown constant price and demand volume increases.

ESG-compliant residential developments will increasingly attract investment due to their ability to attract financing and to adapt to the needs of workers, families, and communities.

In retail, investors are preparing for exit strategies from out-of-town investments, which are also affected by the maturity of real estate financing. Properties along major trade routes will be rewarded, watched with interest by investors looking for stabilised product or value-added opportunities. Brand expansion strategies will be more selective and will increasingly focus on high street and prime shopping malls/parks. In the search for space, increasing importance will be attached to the availability of space for products sold online.

Within logistics, interest in transactions will mainly focus on those with the greatest potential for rent growth, as they are able to absorb the rising cost of debt. Interest in core opportunities will remain strong, but it is important to remember that current income assets with short maturity contracts generally suffer from higher repricing.

The estimated forecast is more than 140 new developments in Northern and Central Italy for a total of 4,600,000 square metres.

Contractual trends

It is worth addressing a couple of contractual trends that are becoming increasingly topical today.

Sustainability agreements and green clauses

The focus on sustainability-related parameters by investors is also reflected in the content of contracts, which are beginning to include sustainability agreements and “green clauses”, ie, clauses relating to the parties’ commitment to comply with ESG laws and regulations or to adopt codes of conduct, with repercussions for investors.

An example of a “green clause” is the following.

“The company shall use commercially reasonable efforts to comply with applicable environmental, social and governance laws and regulations and shall foresee any known or expected future changes in the requirements and take all reasonable actions to ensure compliance. The company shall respond diligently to requests of information ESG matters received from the Investors. In case any ESG incident occurs, the company shall proactively inform the major investors as soon as practicable”.

As part of the lease agreements, the parties may include clauses concerning the tenant’s commitment to occupy the property in a sustainable manner, with reference to the use of sustainable materials and 100% renewable electricity, recycling, composting, heating, and constant compliance with regulations concerning the environmental performance of the property.

Similarly, regarding contracts for the construction of a building, a clause may be negotiated that contains contractual obligations regarding the use of green materials and waste management procedures to ensure that emissions and material waste are minimised.

Lenders have started to offer dedicated financing products with advantageous terms, such as green loans or sustainability linked loans, aimed at refinancing real estate developments or renovations, guaranteeing lower interest rates and/or other fees if certain ESG indicators are reached.

Non-possessory pledge

On 12 January 2023, a legal development introduced by Decree-Law 59/ 2016 (“Banking Decree”) finally became fully applicable following the establishment of the so-called “Register of Pledges” held at the Revenue Agency and the approval of the technical specifications is that of the non-possessory pledge.

The non-possessory pledge is an institution borrowed from Anglo-Saxon common law and other civil law rights that represents an absolute novelty in our country. It is an intelligent system that our legal system has finally adopted and it proves useful for foreign investors who are already accustomed to using it abroad.

This new form of collateral could prove particularly interesting in a sector such as the hotel and food and beverage industry, since the owner of the walls (the investor) or, in any case, a financing bank could obtain in this way an additional guarantee with respect to ordinary guarantees, represented by assets of the hotel tenant/landlord, who could continue to use the assets for their business.

While the non-possessory pledge does not require the debtor to dispossess the assets, this new institution is also a measure to facilitate access to credit for commercial entrepreneurs.

Technical trend (energy efficiency)

As is well known, in March 2023 the European Parliament approved the Directive number 2010/31/UE, the so-called “Green Homes”, which stipulates, for most residential buildings in the European Union, the requirement to achieve energy class E by 2030 and energy class D by 2033, and, for buildings other than residential use, class E from 2027 and class D from 2028. In addition, from 2028, buildings will have to be built to a zero-emission level.

Excluded are holiday homes, buildings of historical interest, churches and other places of worship as well as self-contained dwellings with an area of less than 50 square meters.

In Italy, the transposition of the Directive according to these exact criteria would entail renovation work for 75% of residential buildings, with costs estimated in the region of EUR1.3–1.5 trillion, with the aim of reducing the emission level by 0.11%.

This would be a de facto incentive for the renovation and refurbishment of buildings, both private and public, that has rarely been seen on such a scale. On this point, it will be interesting to assess the development of the legislative transposition process, in order to be able to identify the extent to which this gigantic incentive will actually impact the construction market.

According to recent market estimates, in fact, about 67% of residential and commercial buildings in Italy are in the energy classes E, F and G, which are considered to be less energy efficient. In Italy, almost half of all commercial property asset managers have experienced an increase of more than 50% in energy costs in their portfolio. A total of 14% report a growth of between +61% and +70%. Thus, to cope with high energy costs, 76% of them are adopting action plans to improve the energy efficiency of their real estate portfolios.

By the end of 2022, there were 501 certified projects and 832 were awaiting certification. On the national scene, some of the LEED certified buildings are the Cà Foscari University (Venice), Casa Monica (province of Modena) and the buildings in the Porta Nuova district (Milan), which qualifies as Europe’s first sustainable district. Included among these are the LaGare hotel, which is considered the first in Italy to be Gold certified, and the Fidenza Shopping Park, which is the first Platinum-certified shopping centre in Italy and the second in Europe. Finally, the Colliers Global Investors Italy fund managed to obtain the prestigious LEED Gold certification, with the complete redevelopment of the historic Hotel Executive (Milan), transformed into an innovative hub offering high levels of energy and environmental performance.

According to rankings published by the US Green Building Council (USGBC), Italy ranked ninth among the world’s ten best countries for certified sustainable buildings in 2022.


Access to real estate financing and the increasing focus on project sustainability by brokers will certainly influence trends within the various asset classes throughout the year.

Among the most relevant aspects for 2023 will be the regeneration and technological upgrade of office assets.

A thorough redevelopment guarantees a considerable reduction in energy costs, up to 40-60% for the same commercial surface area. Green real estate, in fact, in addition to being an environmental and urban sustainability issue, is increasingly becoming a “portfolio” issue; a high-efficiency property, in addition to guaranteeing savings in terms of utilities, is also much more attractive to the real estate portfolio of banks and credit institutions. A choice in this sense by the buyer will therefore facilitate access to a mortgage.

According to JLL’s analysis of the real estate market, technology will also continue to play a key role during 2023. In an environment where space is being used more dynamically and the composition of portfolios is becoming more complex, companies are turning to data and artificial intelligence to reduce costs, optimise investment decisions and achieve a truly hybrid working ecosystem. Around 56% of companies plan to adopt predictive systems for the facility management of their buildings in the near future to improve their performance.

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Studio Belvedere Inzaghi & Partners has eight partners and more than 30 professionals, and is a leading Italian firm with more than 40 years of experience in real estate law and unique expertise in urban planning, investment, leasing and PPP. It combines high-quality Italian legal services with an international approach to the sector, offering clients full assistance in real estate transactions, with a particular focus on development projects. The team has great knowledge of all asset classes and focuses on new trends and market developments, such as logistics, residential, student housing and senior living. It recently assisted in the acquisition of Scalo Farini-Valtellina and Scalo Porta Romana (central dismissed railway areas in Milan), in the development agreements concerning both the dismissed sites of Santa Giulia and Milano-Sesto (each exceeding 1 million sq m), and in several acquisitions of residential (built to rent), touristic and office developments and buildings in Italy.

Trends and Development


Grimaldi Alliance has been, for over 20 years, one of the most significant law firms in the Italian, European and international legal market. With about 500 professionals in its offices in Milan, Rome, Bari, Parma, Padua, Naples, Verona, Turin, Treviso, Brussels, London, Paris, Lugano, New York and the possibility to operate in 70 jurisdictions worldwide, relying on about 2000 professionals, Grimaldi Alliance assists Italian and international clients in the main practice areas, with well-known expertise and professionalism. Grimaldi Alliance is a one-stop shop in Italy and abroad, as it is able to offer a well-integrated mix of expertise in the legal (with more than 300 lawyers operating in all sectors and with a very high degree of specialisation), tax (with a team of about 150 professionals all over Italy) and advisory fields (with more than 50 highly experienced professionals in areas such as corporate finance, corporate crisis, cybersecurity, real estate, artificial intelligence, public affairs, national and European public financing, compliance).

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