REPORT 1Q-2025 | Economic and RE data

General Overview

During the first quarter of 2025, the global economy entered a transitional phase marked by evolving monetary policies, rising geopolitical tensions, and increased volatility in financial markets.

In January, Donald Trump was sworn in for his second term as President of the United States and promptly adopted bold measures. Alongside diplomatic initiatives aimed at brokering a ceasefire in Gaza and resolving the conflict between Moscow and Kyiv, he also advanced outdated territorial claims, introduced stricter immigration policies, and sharply raised tariffs on imported goods (especially from China) in an effort to rebalance the U.S. trade deficit. These moves fueled financial market volatility and heightened geopolitical instability, prompting the European Parliament to reconsider the EU’s collective security and defense strategies.

With the additional objective of freeing up military spending, the German parliament approved a historic constitutional reform that allows the government to override the debt brake, which, since 2009, had required Germany to maintain a balanced budget and limited its fiscal capacity. This reform is expected to act as a stimulus for the German economy, which has been in recession for two years.

Some Figures

After closing 2024 with GDP growth of 0.7%, a slight upward revision from the preliminary estimate of +0.5%, Italy revised its growth forecast for 2025 down to +0.6%, reflecting concerns over an emerging trade war among the world’s major economies.

Across the EU, U.S. tariffs have raised doubts and concerns for 2025. Inflation, tempered by falling energy prices and a strong euro, has remained contained, allowing the ECB to continue its monetary easing with two 25-basis-point rate cuts in Q1-2025, bringing the main refinancing rate down to 2.65%.

Against a backdrop of uncertainty, with leading investment banks increasing the likelihood of a U.S. recession in 2025, the FED has maintained a cautious stance balancing the need to sustain economic growth with the risk of a resurgence in inflation. Although a 50 bps rate cut is expected later in the year, no policy moves were made during the first quarter.

Real Estate Market

As of December 31, 2024, the Italian real estate market shows diverging trends between the residential and non-residential segments, though both display signs of resilience.

Residential transactions, which had declined by 9.5% between 2022 and 2023, experienced a modest rebound in 2024, increasing by 1.3%. The fourth quarter of 2024 was particularly positive, with a 7.6% increase compared to the same quarter of 2023. Supported by lower interest rates, the number of mortgage borrowers also rose across all three focus areas (Italy, Lombardy, and Milan).

Transactions involving new buildings accounted for 12.8% of the total (source: Osservatorio Immobiliare Agenzia delle Entrate).

On the pricing front, ISTAT’s Housing Price Index (IPAB) recorded a 0.7% increase between 3Q-2024 and 4Q-2024, while Immobiliare.it reported year-on-year growth of 2.9% for asking prices on p

roperties for sale and 8% for rental listings (March 2025 vs March 2024).

Commercial real estate transactions grew more strongly than residential ones in 2024 compared to the previous year. Notably, 4Q-2024 was the best quarter for transactions since at least 2011.

Growth was seen across nearly all property categories of interest to the Darian Group, except for shopping centers. Lombardy accounted for 22% of national transactions, while Milan and its metropolitan area contributed 9.7%. Demand for high-quality office space remains robust.

The current trend in interest rates appears to favor the commercial sector, whose post-pandemic recovery has been steady. The ongoing macroeconomic developments are not expected to have an immediate impact on this segment.

As for residential building permits, 2024 registered a very slight decline compared to the previous year. After the expiry of tax incentives for renovations, figures appear to have stabilized at pre-pandemic levels.

Meanwhile, the surface area covered by permits for new non-residential buildings increased in 2024 (source: ISTAT).

Data Sources: Agenzia delle Entrate, ISTAT, tradingeconomics.com, and immobiliare.it

Data Processing: Darian RE

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