Disclaimer: The information contained in this guide is for informational purposes only and does not constitute a solicitation to the public or personalized financial advice.

Looking at the 2025 figures, one statistic stands out above all others: 767,000 real estate transactions recorded in Italy during the year. A number that tells a precise story.

In an economic context where uncertainty should discourage purchases, people continue to buy homes. Not because they are naive, but because they know that real estate is one of the few assets that truly protects wealth.

And this is what is happening in the Italian real estate market in 2026 as well. Inflation is finally stabilizing, interest rates are falling, and consequently purchase demand is rising vigorously again.

All this creates a real opportunity for those who want to invest in real estate, but only if they know where to look. Because not all cities offer the same opportunities.

Is It Worth Investing in Real Estate Today? The Market Scenario in 2026

The question “is it worth investing?” is too vague. More accurate is to ask: “In which city is it worth investing, and with what strategy?”

Because the 2026 real estate market is not monolithic. While Milan and Rome remain expensive and stable, other cities offer completely different returns. While Florence’s historic center has reached stratospheric prices, the periphery still offers interesting opportunities. It is a complex scenario, and requires intelligent navigation.

First of all, before making any decision, it is important to understand the general context. Real estate transactions in Italy are accelerating: 767,000 sales at the end of 2025, with a 6.5% increase compared to the previous year. This means the market is moving, buyers are there, and prices are finding purchasers. It is not a stagnant or crisis market. On the contrary, it is a dynamic market where those who know where to position themselves find opportunities.

Rental rates, meanwhile, are rising in virtually all major cities. The reason is simple: demand for rental housing remains extremely high, especially from university students and young workers who cannot accumulate the capital needed for a down payment. This creates a robust rental market, with available tenants and rising rents.

The crucial point is this: investing in real estate in 2026 is worthwhile if you are looking for a concrete way to protect your capital from inflation and generate a steady cash flow. It is not like investing in the stock market, where trends are unpredictable and volatile. A property is not a piece of paper. It is a physical asset that someone needs to inhabit, that can potentially generate income every month, and that tends to appreciate over time.

Better to Invest in Real Estate or in Banks? Comparison with BTPs and Financial Markets

In 2026, 10-year Treasury Bonds (BTPs) offer a gross annual yield of 3.5-3.8%. It is guaranteed by the State, predictable, with no default risk. It is the conservative choice par excellence.

On the other hand, the real estate market, according to the Nomisma Observatory updated to April 2026, offers an average gross yield for Italian two-room apartments of 5.7%. Already at the pure gross yield level, real estate beats BTPs by about 2 percentage points annually.

But the real advantage emerges from capital appreciation. In 2025, average residential property prices in Italy rose 2.2% year-on-year. While with BTPs the capital remains unchanged, with a property the value of the asset itself increases. This creates a double gain: 5.8% from rental income plus 2.2% appreciation in property value.

This means a property generates returns simultaneously from two sources: monthly cash flow (rent) and asset appreciation. BTPs, on the other hand, generate returns from only one source. This combination is why real estate investments remain an authentic shield against inflation, especially in uncertain economic contexts.

What Are the Real Rental Yields by City in 2026

Here we arrive at the decisive point of the strategy. The return you can obtain from your real estate investment varies enormously depending on where you decide to buy. And this is not a marginal variation: we are talking about differences between 4% and 7.5% annually.

The rule is this: where entry prices are lower, gross rental yield is higher. Where prices are high (because the city is desirable and important), immediate yield is lower, but appreciation over time is more robust.

Here is an overview of the main data:

Table of Gross Rental Yields by City (updated to 2026 for an average two-room apartment)

City	Gross Annual Yield	Average Price per m²
Genoa	7,5%	€2,150
Palermo	7,1%	€2,380
Verona	6,6%	€2,950
Meadow	6,0-7,0%	€2,359
Florence	4,6%	€4,100
Milan	4,5%	€5,800

These percentages represent the initial cap rate: the gross annual rental income divided by the purchase price.

Be careful, however, of a crucial detail: these are gross figures. When you calculate your actual profit, you will need to subtract taxes, IMU, condominium fees, and provisions for extraordinary maintenance. The real net yield will be lower: on average between 1.5% and 3.5% depending on the city and how you manage the property.

High-Yield Markets: Genoa, Palermo, and Verona

Genoa leads the national ranking with a gross yield of 7.5%. Palermo follows at 7.1%, Verona at 6.6%.

Why are yields so high? Because entry prices are extremely low compared to national averages. In Genoa, an 80-square-meter two-room apartment costs you €172,000 (€2,150/m²). In Palermo, €190,400. In Verona, €236,000. These prices are almost a third of what you would pay in Milan (€464,000) or Rome (€380,000).

But here is the interesting detail: rental rates in these cities are not proportionally lower. In Genoa, a two-room apartment for rent costs €550-600 per month. In Palermo, €560-620. In Verona, €650-750. This means that if you buy at a low price but manage to rent at rates close to national averages, the price-to-yield ratio becomes incredibly advantageous.

The drawback of this strategy is fairly predictable: appreciation over time is slower. While a property in Milan appreciates 2-3% annually (because it always remains desirable), in Genoa or Palermo appreciation is more modest: 1-1.5% annually. But if your goal is to generate stable income in the short to medium term, these markets are unbeatable.

Large Cities with Steady Growth: Milan, Rome, and Florence

Milan and Rome are different and absorb enormous capital (institutional investors, funds buy here continuously). Florence, with its historic and tourist appeal, attracts investors from around the world.

Immediate yields are lower: Milan 4.5%, Rome about 4.0%, Florence 4.6%. Reading these numbers, investing here might seem like an irrational choice. But it is not, because the value does not lie in immediate yield, but rather in the long-term investment thesis.

When you buy in Milan, Florence, or Rome, you accept a lower gross yield (4-4.5%) in exchange for two advantages that Genoa or Palermo cannot offer you. First: property appreciation is robust and predictable. An apartment in Milan over 10-15 years maintains value and appreciates. In Palermo, appreciation is slow, and the risk that the local market remains stagnant is higher. Second: the risk of vacancy is virtually non-existent.

Furthermore, in Milan, Florence, and Rome, housing demand consistently exceeds supply. It is a permanent housing pressure generated by the fact that these cities attract students, workers, investors from all over Europe. If you own an apartment in these cities, you will always find a tenant. In Palermo or Genoa, where the cost of living is lower and the population is stable, the risk of having the apartment empty for months is real (although still contained).

The profile of the investor who chooses this strategy is therefore different: they do not aim for maximum annual yield, but want a stable and appreciable asset over time, with almost guaranteed tenants and the possibility of reselling easily in case of need. It is a long-term choice, not speculation.

Investing in Real Estate in Tuscany: The Strength of Emerging Markets

Those looking at the Italian real estate market tend to focus on Florence as the main destination in Tuscany. It is understandable: Florence is the reference city, historic and globally recognized. But this concentration creates a problem for investors seeking real ROI: Florence is expensive and largely saturated.

In 2026, to maximize returns in the Tuscan context, it is advisable to look beyond the capital and focus on intermediate markets. In this regard, Prato and Sesto Fiorentino represent a concrete investment opportunity for those who know where to look. They are not isolated economic periphery, but territory with their own dynamics, constant flows of housing demand, and still competitive prices.

The investment thesis is simple: these municipalities benefit from Florence’s unsatisfied housing demand, but with significantly lower prices.

Prato: The Push of the Industrial District and University Attraction

Prato represents a city with interesting economic dynamics for real estate investors. In recent years, alongside the historic textile district, it has attracted investments in the research and university education sector. This has generated new housing demand from students, researchers, and professionals in the sector.

A two-room apartment in Prato costs on average €168,700 (€2,359/m² in May 2026), about half the price in Florence. Rental rates, however, do not drop proportionally: they range between €480-550 per month. This price-to-yield ratio generates an estimated profitability of 6-7% gross, much higher than Florence.

Furthermore, housing demand remains constant thanks to the continuous rotation of students and workers in the research and innovation sector, thus constituting a market where cash flow is predictable and vacancy risk remains contained.

💡 Regulated rent in Prato: Using regulated rent (a regulated arrangement where landlord and tenant agree on the price according to municipal guidelines) in Prato offers significant tax advantages worth knowing. In fact, with this type of rent, IMU is reduced by 25% and the flat-rate tax drops to 10% instead of 21%. A legal tool that increases investment convenience through more efficient taxation.

Sesto Fiorentino: Constant Demand Linked to the Scientific Hub

Sesto Fiorentino is located a few kilometers from Florence and fully benefits from the activity generated by the University of Florence and Careggi Hospital, the main hospital hub in Tuscany, which brings with it a population of students, researchers, doctors, nurses, and administrative staff constantly seeking rental housing.

The city is only 15-20 minutes from Florence center by public transport, which makes it attractive for those who work in the city but want to save on rent. In addition, in Sesto Fiorentino rents are on average 15-20% lower than in Florence, a significant difference for those working in university or healthcare settings.

Buying a property in Sesto Fiorentino therefore means securing an extremely stable tenant base. The natural rotation of students, researchers, and hospital staff creates a virtually inexhaustible housing demand and the risk of having the property vacant remains very contained.

How to Calculate the Real Yield of a Rental Property

To calculate the actual return on a real estate investment, gross rental income represents the starting point. From this, once the gross annual income is calculated, taxes, management and maintenance costs are subtracted to arrive at the real net yield.

The calculation process follows a fairly simple scheme:

Gross annual rent − Taxes − IMU − Condominium fees − Maintenance provisions − Management commission = Net yield

Each component represents an actual cost that reduces available income. Understanding how these elements are structured is essential to correctly evaluate the investment’s convenience.

Taxation and Costs: Flat-Rate Tax and IMU in 2026

Income from renting a property can be taxed under two different regimes.

• Ordinary regime (IRPEF): In this case, rental income is added to the taxpayer’s total income and is taxed according to marginal IRPEF rates, which range from 23% to 43% depending on total income level. This method is the default rule, but generates a variable tax burden depending on personal economic situation.
• Flat-rate tax: It is an optional tax regime that sets a fixed and invariable rate of 21% for free-market rent contracts, or 10% for regulated rent contracts (where the price is established according to municipal guidelines). The main advantage is predictability: the taxpayer knows exactly how much tax they will pay, regardless of their total income. For those in high IRPEF brackets (38-43%), the flat-rate tax represents a significant reduction in tax burden.

Completely separate from income taxation is IMU (Municipal Property Tax), a tax on property ownership, not on income generated. To calculate it, you need to consult the property’s cadastral record at the Revenue Agency, which certifies the cadastral income. IMU is calculated as a percentage of this cadastral income, with rates set by individual municipalities that generally range between 0.4% and 0.8% of cadastral value.

In addition to direct taxes, condominium properties require payment of annual condominium fees for maintenance of common areas (elevator, roof, stairs, external lighting).

Furthermore, among the costs to consider and subtract from gross annual rent to obtain net yield, we find costs related to extraordinary maintenance (systems, boilers, waterproofing) and any management costs by a real estate agency.

The Energy Factor: How Much Do “Green Homes” Affect Profitability?

The European Green Homes Directive is progressively transforming property values based on energy class. A property in class G or F, characterized by very poor energy efficiency, risks systematic devaluation over the next decade. Tenants avoid properties with high utility bills, and banks are beginning to limit financing availability for inefficient properties.

Conversely, a property in class A or B remains attractive in the market. These assets allow slightly higher rental rates and facilitate future marketing.

From the potential buyer’s perspective, a good energy class opens access to subsidized green mortgages, whose average APR in 2026 stands at 2.19% versus 3.5% for ordinary mortgages. An energy-efficient property is therefore more marketable and represents concrete protection of capital from progressive devaluation dictated by European directives.

Frequently Asked Questions About Investing in Real Estate 2026

How to Choose: The Decision Framework for 2026

The choice of city to invest in for the best yield depends on the investor’s profile.

Those seeking maximum immediate return focus on secondary markets (Genoa, Palermo, Verona) with gross yields of 7-7.5%, accepting slower appreciation over time.

Those who instead prefer to prioritize stability and long-term appreciation choose Milan, Rome, or Florence, where immediate yields are more modest (4-4.5%) but appreciation is robust and vacancy risk is eliminated.

In the Florence area, Prato and Sesto Fiorentino represent a good balance between these two “sides” with a yield of 6-7% (almost double compared to Florence), a solid housing demand base, and gradual appreciation.

In any case, investment evaluation requires precise calculations: analyze the cap rate, verify the energy class, assess local demand stability, and rely on professionals (surveyor, accountant, lawyer) to optimize the tax and legal structure.

Want to plan your next real estate investment in Tuscany without risking unpleasant surprises on net yield? Contact Idee & Immobili consultants for a personalized market analysis and calculate the real ROI of your capital.

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