Italy’s real estate sector is attracting renewed investor interest in 2026 despite the lingering effects of a major building permits scandal in Milan that unfolded in 2024 and froze more than 100 construction projects. Market research group Scenari Immobiliari forecasts that total property transactions will rise by about 8.4 per cent to €175.8 billion this year, positioning Italy to outperform key European markets including the UK, Germany and France.
The scandal, which centred on the fast-tracking of permits for high-rise developments and subsequent corruption probes involving municipal officials, architects and developers, had raised fears of capital flight and long-term damage to investor confidence. Milan, Italy’s largest real estate hub, saw significant project delays and legal scrutiny, prompting concerns that foreign investors might withdraw or defer commitments.
Despite those issues, market participants say that heightened regulatory scrutiny and clearer enforcement have helped to stabilise conditions. According to executives from major property firms, including Savills and Coima, the episode prompted an unusually rigorous level of due diligence, reducing uncertainty around regulatory interpretation. This, together with a period of political stability under Prime Minister Giorgia Meloni, has encouraged renewed inflows even as the market adjusts to stricter construction and compliance requirements.
Investment metrics have also improved, with tighter spreads between Italian and German benchmark bonds and better performance of the Milan stock exchange helping to reduce perceived country risk among institutional investors. As a result, some asset managers have increased their Italian real estate allocations, citing strong fundamentals and a more transparent regulatory environment.
