Private Wealth investment in Italian CRE surges

• Private wealth capital accelerating. Private investors increased their presence in Italian commercial real estate, reaching €1.1 billion in 2024 (+68% YoY) and €660 million in Q1 2025 alone.

• Shift from sellers to buyers. Since 2023, private investors have transitioned from primarily being sellers to becoming active buyers in the Italian CRE market, representing 10% of total investment volumes in 2024 and over 20% in Q1 2025.

• Larger deals gaining ground. Private investors are increasingly pursuing larger transactions (>€25 million), which represented 35% of deals in 2024, demonstrating growing sophistication in the market.

• Strategic diversification. While Milan remains the preferred destination, private investors are expanding across Italy, particularly in tourist destinations, with office, retail and hospitality each accounting for about 30% of Q1 2025 investments.
   

According to JLL's latest research, private wealth capital (UNHWI, Family Offices, Family Holding etc) invested €1.1 billion in Italian commercial real estate in 2024, accounting for 10% of total investment volumes.

This momentum has accelerated further in early 2025, with private investors deploying approximately €660 million in Q1 alone, capturing 24% of total investment volumes - their highest market share in recent years.

Several key factors are fuelling this significant growth in private wealth investment. Italy has solidified its position among the top 10 countries globally and 4th in Europe for UHNWI population, with a notable 17% year-over-year increase in 2023. The country's flat tax regime has proven particularly attractive to international private investors looking for strategic portfolio diversification opportunities.

The current macroeconomic environment has also contributed significantly to this trend. In response to economic challenges and global uncertainties, high-net-worth individuals worldwide have increased their real estate allocations to 19% of their portfolios in 2024, up 4% YoY (Capgemini data).

Historically, private investors were more active as sellers in the Italian CRE market. However, a clear reversal of this trend began in 2023, with private buyers now significantly outnumbering private sellers. This shift reflects the unique market conditions characterized by economic uncertainties, which have sparked greater interest in real estate as a stable investment opportunity.

Between 2019 and 2024, private investors were involved in approximately 20% of total real estate transactions in Italy annually, either as buyers or sellers. This figure rose to approximately 40% in Q1 2025, highlighting their growing influence in the market.

Office assets remain the most sought-after by private wealth buyers, consistent with trends observed in recent years. In 2024, the logistics sector secured the second position, primarily due to a significant portfolio transaction by a Spanish family office in Q3. Hotels and hospitality followed closely, reaffirming their position as areas of continued interest.

Q1 2025 showed a more balanced distribution across sectors, with office, retail, and hospitality each accounting for approximately 30% of total transaction volume.

While Milan remains the preferred investment destination for private capital, interest in other Italian cities has grown notably. This geographical diversification is particularly evident in the hotel sector, with major tourist and resort locations gaining significant traction.

Traditionally, private investors favoured deals under €25 million, which in the last 5 years represented about 75% of their transactions. However, 2024 saw a significant shift toward larger investments, with deals over €25 million surging to 35% of the total. This trend continued in Q1 2025, with larger transactions making up 32% of all deals.

Despite this trend toward larger investments, private investors continue to prefer carefully selected single assets over portfolios. This balanced approach indicates growing sophistication in the market, with private investors skilfully managing larger commitments alongside targeted, manageable single-property acquisitions.

As more family offices and family holdings adopt strategic approaches to commercial real estate investment, the market is expected to continue its growth trajectory. Key drivers include the need to rebalance the core business related risks, wealth preservation strategies and generational transfer planning.

The trend toward larger investments is expected to persist, indicating increased sophistication and confidence among private investors in the Italian CRE market. As private wealth flows continue to increase, Italy's diverse real estate landscape presents significant opportunities for strategic portfolio diversification beyond major urban centres, particularly in high-potential tourist locations.