The gross profitability of investments in residential real estate increased in the first quarter, reaching 8.6%, compared to the 8.2% recorded at the end of 2023. According to the study by idealista, the leading portal for technological development in Italy , this profitability is more than double compared to the rates offered by 10-year government bonds, which stand at 3.2%.
The study, which analyzes the sales and rental prices of various properties to calculate their gross profitability, highlights that commercial premises (shops) remain the most profitable real estate investment. The purchase of a shop in Italy to rent it offers a gross profitability of 12%, stable compared to the same period in the previous quarter. Offices offer a yield of 9.8%, unchanged from a quarter ago, while garages show a profitability of 7.3%, slightly higher than Q4 2023’s 7.1%.
Yields in residential
Among the Italian capitals, Ragusa is the city with the highest profitability, reaching 10.2%, followed by Biella with 9.7% and Trapani with 9.2%. Other capitals that exceed the average for the period include Syracuse (8.9%), Rovigo (8.8%) and Perugia (8.7%). On the contrary, Bolzano records the lowest profitability with 4.1%, followed by Trento (4.5%) and Venice (4.8%). In the main metropolitan markets, Rome has a yield of 6.4%, Naples of 6.2% and Milan of 5.6%.
Box performance
In general, garages are the least profitable investment for investors. However, this assumption does not always apply when analyzing the individual capital cities monitored, where some record more interesting returns than other real estate investments. In Modena, for example, returns for owners reach 10.2%, while in Ferrara they are equal to 8.5%. Even in Rome (8.3%), Bologna (6.7%), Milan (6.2%) and Monza (5.7%) the profitability of garages exceeds that of homes. On the contrary, in the quarter in question, only one capital showed a lower yield than that of BTPs (3.8%): Padua, with 3.2%.
Yields of commercial premises (no warehouses)
The retail sector emerges as the most profitable in most capital cities. The shops in Mantua present the highest return, with a gross profitability of 16.6%, followed by Genoa (16.2%). Followed by Rome (15.9%), then Taranto (15.6%), Varese (15.4%), Trieste (15.4%), Palermo (15.3%) and Milan (15.2%). The majority of the markets analyzed (45 out of 81) present returns above the average of 12%, as highlighted by the study. On the contrary, only 10 markets record a profitability lower than 10%, with values ranging between 9.9% in Andria and 8.4% in Ascoli Piceno.
Office returns
The office sector continues to offer particularly interesting returns for investors, with profitability peaks in Trieste (11.9%), followed by Perugia (10.4%) and Syracuse (10.3%). Monza stands at the average value for the period with 9.8%, while the other centers range from 9.6% in La Spezia to 5.7% in Pescara, which records the lowest profitability for offices. Among the main centres, Rome has a profitability of 9.5%, while Naples and Milan stand at 7.3% and 6.9% respectively. At the bottom of the ranking, the least attractive returns for owners are found in Lecce (6%), Pescara (6.2%) and Lucca (6.3%).
Methodology
To prepare this study, idealista divided the sales price offered by the rental price requested by owners in the different markets by referring to the quarterly indices of houses, commercial premises, garages and offices corresponding to the fourth quarter of 2022. The result obtained is the gross percentage of return a landlord gets for renting out the property. This data facilitates the analysis of the current state of the market and is a basic starting point for all those investors who want to purchase real estate in order to obtain benefits.
