REPORT 2Q-2025 | Economic and RE data

General Overview

Tariffs, tariffs, and more tariffs. The second quarter was dominated by threats and economic policy measures that sparked a full-blown trade war between the United States and many of the world’s major economies. A “war,” in fact, that adds to those conflicts that have been reshaping global geopolitical dynamics for years.

The quarter opened with the newly elected U.S. President announcing on April 2, “Liberation Day”, the imposition of outdated customs tariffs aimed at protecting the American economy and undoing decades of globalization and flexible, market-oriented policies. While today’s circumstances are indeed the product of a globalization process that unfolded too quickly and at times too superficially, this sudden wave of nostalgic protectionism risks generating new and even more complex problems.

At first, tariffs seemed to target the U.S.’s closest neighbors and modern rivals (Canada, Mexico, and China), culminating in a frenzied escalation to duties as high as 145% on Chinese goods. The situation later appeared to ease, though a climate of uncertainty persisted—hardly favorable for financial markets, which suffered heavy losses in the days following the Liberation Day announcement before stabilizing at levels similar to those seen at the end of the first quarter. This reaction suggests that President Trump’s threats do not fully convince markets themselves. Meanwhile, the Federal Reserve once again postponed an interest rate cut, while the euro appreciated by 12.6% against the dollar between early March and early July.

Some Figures

Global growth forecasts have been revised downward, reflecting the impact of the trade war. However, the euro area economy has shown resilience, with inflation stabilizing. The ECB has implemented two 25-basis-point rate cuts, lowering the main refinancing rate to 2.15%. The Bank of England also cut by a quarter-point during the quarter, while the Fed chose not to act, citing the underlying strength of the U.S. economy. With labor market and consumption data still keeping core inflation above 3%, the Fed Chair’s keyword remains caution.

In Italy, the unemployment rate remains stable, GDP growth for the year is in line with that of the euro area, and industrial production continues to show a slight decline. The most significant source of concern and potential instability remains the ongoing negotiations over tariffs to and from the United States.

Real Estate Market

In recent quarters, the ECB has followed through on the commitments it made during the 2022 inflation crisis. With inflation showing signs of stability, the goal of restoring the policy rate to around 2% is nearly achieved. Among the primary beneficiaries of this more accommodative monetary stance is the real estate market, which in Italy is experiencing an increase in transactions, particularly mortgage-backed residential transactions.

According to the latest available data, comparing residential sales recorded in the first quarters of the past four years shows that 1Q-2025 falls short only against 1Q-2022, when the rate hike cycle was beginning (the FED started raising rates in mid-March 2022, followed by the ECB in July).

Transactions involving new builds accounted for 5.5% of total sales.

As for residential property prices, ISTAT’s Housing Price Index (IPAB) registered a slight decline of 0.2% between 4Q-2024 and 1Q-2025 (+0.7% year-on-year). Meanwhile, immobiliare.it reported a 1.8% increase in asking prices for sales and a 6.5% rise in asking rents between June 2025 and June 2024.

Turning to commercial properties of interest to the Darian Group (offices, banks, shops and shopping centers, hotels, and industrial buildings), performance has been less uniform: steady growth nationwide, more volatile at the regional level, and an evident decline in the Milan metropolitan area.

Compared to twelve months ago, office transactions have decreased nationally, while sales of shops and shopping centers have increased, and industrial properties have remained stable.

Residential building permits fell by 19% in 1Q-2025 compared to the same period in 2024. Permits for non-residential building areas also decreased, though less sharply (-14%).

The paralysis of Milan’s municipal technical office—ongoing for more than a year—likely contributed to these figures, given the city’s central role in real estate development over the past decade.

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

Data Processing: Darian RE

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