Credit: GRI InstituteItalian Living 2026: Unlocking a BTR revolution
Italy’s living sector represented only 7% of total domestic real estate volumes in 2025; industry leaders analyse how to tap into the huge market potential
March 17, 2026Real Estate
Written by:Helen Richards
Key Takeaways
- Living assets became the top EMEA investment class in 2025 at 28% of volume, yet Italy’s market share remains a modest 7%.
- High construction costs and stagnant yields are driving a shift towards refurb-to-rent office conversions to achieve viable returns.
- The transition to institutional residential is hindered by a 150 to 200 basis point leakage between gross and net yields, caused by a lack of experienced local operators and fragmented Italian assets.
In 2025, the EMEA real estate market saw living investments take the lead for the first time, accounting for 28% of total volumes. Yet, in Italy, the sector remains an outlier.
While European neighbours have embraced institutional residential models, the Italian market is navigating a unique path defined by a dominant private culture and an acute undersupply of professional products.
At the GRI Italy BTR & PBSA 2026 roundtable in Milan, industry leaders gathered to dissect the country’s residential gap. Co-hosted by JLL, the session featured Francesca Fantuzzi, Head of Research Italy, who presented a tale of two markets: a burgeoning purpose-built student accommodation (PBSA) sector rapidly outpacing a slower build-to-rent (BTR) landscape.
In contrast, Italy’s living sector represented only 7% of total domestic volumes in 2025. While the EUR 1.2 billion invested in the sector - including conversions - marked a 40% year-on-year increase, the disparity remains stark.
This gap, albeit daunting, represents the sheer volume of potential held in the Italian living market.
Italy currently holds the lowest student bed provision rate in Europe at just 4%, compared to around 30% in the UK. This represents an unmet demand of 200,000 beds, a figure expected to grow by an additional 50,000 by 2030.
While Milan remains the primary focus - set to almost double its supply by 2029 - cities like Rome remain significantly underserved. Secondary university hubs such as Bologna, Padova, and Pavia are emerging as high-opportunity zones due to high student mobility and low current provision.
In cities like Turin, investors are finding success by refurbishing legacy assets rather than building from scratch. This refurb-to-rent model allows for a more palatable yield on cost - around 5.5% to 6% - compared to the high-risk, high-cost nature of new developments.
For Italy to reach a double-digit share of the investment market, the industry must now move beyond the buzzwords and create a true, data-driven asset class.
While European neighbours have embraced institutional residential models, the Italian market is navigating a unique path defined by a dominant private culture and an acute undersupply of professional products.
At the GRI Italy BTR & PBSA 2026 roundtable in Milan, industry leaders gathered to dissect the country’s residential gap. Co-hosted by JLL, the session featured Francesca Fantuzzi, Head of Research Italy, who presented a tale of two markets: a burgeoning purpose-built student accommodation (PBSA) sector rapidly outpacing a slower build-to-rent (BTR) landscape.
The EMEA Context vs the Italian Reality
The broader EMEA region recorded approximately EUR 217 billion in real estate investments in 2025, and for the first time, living surpassed offices and logistics as the top asset class. Within this segment, PBSA saw its share jump from a five-year average of 14% to 24%.In contrast, Italy’s living sector represented only 7% of total domestic volumes in 2025. While the EUR 1.2 billion invested in the sector - including conversions - marked a 40% year-on-year increase, the disparity remains stark.
This gap, albeit daunting, represents the sheer volume of potential held in the Italian living market.
PBSA: The Engine of Growth
Currently, PBSA is the undisputed protagonist of the Italian living market, accounting for around 40% of its total volume. The sector is propelled by two relentless drivers: surging demand from mobile domestic and international students and a chronic lack of supply.Italy currently holds the lowest student bed provision rate in Europe at just 4%, compared to around 30% in the UK. This represents an unmet demand of 200,000 beds, a figure expected to grow by an additional 50,000 by 2030.
While Milan remains the primary focus - set to almost double its supply by 2029 - cities like Rome remain significantly underserved. Secondary university hubs such as Bologna, Padova, and Pavia are emerging as high-opportunity zones due to high student mobility and low current provision.
Francesca Fantuzzi (Head of Research Italy at JLL) presented the outlook for the Italian living sector during the GRI Italy BTR & PBSA 2026 roundtable. (Credit: GRI Institute)
Barriers to the Multi-family Model
If PBSA is thriving, why is the broader multi-family or BTR sector lagging at just 10% of total volumes? Experts identify the following reasons:- Yield Compression and Costs: Developing BTR is extremely expensive. With construction costs in Milan and Turin often exceeding the rental yields achievable by a population with stagnant salaries, the returns - often cited between 3% and 3.5% - are frequently insufficient for international capital.
- Cultural Fragmentation: Italy is a nation of homeowners, with a private residential market worth approximately EUR 100 billion annually. Most buildings are fragmented among multiple owners, making institutional block management difficult.
- Operational Leakage: Investors entering Italy face a lack of experienced operators. The leakage between gross and net yields can be as high as 150 to 200 basis points due to operational costs and management complexities.
The Conversion Strategy
One of the most significant trends identified in 2025 was the pivot toward conversions. With the office sector facing its own structural shifts, a substantial portion of office volume is being redirected towards residential and hospitality uses.In cities like Turin, investors are finding success by refurbishing legacy assets rather than building from scratch. This refurb-to-rent model allows for a more palatable yield on cost - around 5.5% to 6% - compared to the high-risk, high-cost nature of new developments.
Looking Forward: A Demographic Shift
Despite the hurdles, there is optimism. A demographic and cultural shift is underway as the younger generation prioritises flexibility over ownership, and the emergence of staff housing and affordable housing as sub-sectors signals a market that is beginning to verticalise and mature.For Italy to reach a double-digit share of the investment market, the industry must now move beyond the buzzwords and create a true, data-driven asset class.
These insights were shared during GRI Institute’s Italy BTR & PBSA 2026 roundtable, co-hosted by JLL, with participation from Alberico Radice Fossati (JLL - Italy), Antonio Fuoco (Near sgr), Domenico Giusti (Castello), Francesca Fantuzzi (JLL - Italy), Giancarlo Patri (Kervis Asset Management), and Michele Beolchini (Investire SGR).