A new INREV study reveals how policy uncertainty across Europe is freezing real estate investment. Here’s why Italy stands apart — and what it means for international buyers.
The latest research published by INREV in March 2026 — Institutional Investment in European PRS: Strategies, Barriers and Pathways to Supply — paints a sobering picture of the European residential real estate landscape. Based on in-depth interviews with twelve major global investors and fund managers representing approximately €770 billion in assets under management, the study identifies political and regulatory uncertainty as the single greatest risk for institutional capital across the continent.
The findings are clear: while residential real estate has been Europe’s top-performing sector for the third consecutive year — with the INREV Living Fund Index delivering a total annual return of 7.03% in 2025, outperforming the broader INREV Fund Index by 260 basis points — a growing misalignment between policy objectives and investor needs is creating a stagnant or two-tier housing market in many parts of Europe.
Unpredictable rent caps, inconsistent building standards across jurisdictions, abrupt changes in regulatory frameworks, and political opportunism are deterring the very capital Europe needs to address its chronic housing shortage. The Dutch market is cited as a striking example: well-intentioned tenant-protection regulation led to significant financial losses for institutional owners and triggered a two-year freeze in new housing supply.
The core message from INREV is unequivocal: Europe cannot solve its housing crisis without private capital, yet policymakers are often failing to consider the impact of regulatory changes on institutional investors’ fiduciary duties and long-term business plans.
Our point of view: why Italy offers a different Narrative
Against this backdrop of continental instability, Italy presents a compelling counter-narrative for international investors — particularly high-net-worth individuals and family offices looking at European real estate with a long-term perspective.
Several structural and policy factors set Italy apart:
Macroeconomic stability and investor confidence. Italy enters 2026 in a phase of solid macroeconomic fundamentals. A strengthening labour market, rising real incomes, and easing interest rates are creating favourable conditions for real estate investment. Total investment volumes reached €12.5 billion in 2025 — the second-best result ever recorded — with foreign capital accounting for 58% of the total.
A booming living sector. The residential segment in Italy, encompassing build-to-rent, student housing, co-living, and senior living, is one of the most dynamic in Europe. Structural undersupply in metropolitan areas — Milan foremost among them — continues to push rents and values to historic highs, offering strong income prospects for investors willing to take a medium- to long-term view.
Luxury real estate resilience. Italy’s prime markets — Milan, Rome, Florence, Lake Como, the Amalfi Coast, Tuscany, Sardinia, and Puglia — continue to attract international buyers seeking both lifestyle assets and portfolio diversification. Limited supply of high-quality properties in these locations supports consistent value appreciation.
A competitive fiscal framework. Italy’s flat-tax regime for new residents (updated to €300,000 per year in 2026), renovation bonuses, energy-efficiency incentives, and the investor visa programme make the country one of the most tax-efficient destinations in Europe for HNWI relocation and real estate investment — especially now that the UK has abolished its Res Non-Dom regime and Spain has ended its Golden Visa programme.
Major event-driven growth catalysts. The Milan-Cortina 2026 Winter Olympics and the Rome Jubilee are accelerating urban regeneration, infrastructure development, and international visibility — all of which create tangible upside for strategically positioned real estate investments.
Predictable regulatory environment for foreign buyers. Unlike several Northern European markets flagged in the INREV report for regulatory volatility, Italy’s legal framework for property acquisition by foreign nationals is well-established, transparent, and — with proper legal guidance — highly navigable. Italian law does not impose specific restrictions on foreign ownership of real estate, and the transaction process, while requiring careful due diligence, offers strong protections for buyers.
What this means for international investors
The INREV study is a wake-up call for anyone considering European real estate: not all markets are created equal. Where some jurisdictions are driving capital away through unpredictable regulation, Italy is actively attracting it — through fiscal incentives, infrastructure investment, and a deep, diversified property market that rewards informed, long-term investors.
However, capturing these opportunities requires more than enthusiasm. Foreign investors need a trusted legal partner on the ground — one who understands the intricacies of Italian property law, tax optimisation, corporate structuring, and cross-border compliance.
That is exactly what we do.
Ready to explore Italian real estate opportunities with confidence? Contact us for a confidential consultation and discover how we can guide your investment from due diligence to closing — and beyond.
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