25/03/2024 - Towards a continent of tenants: Europe is increasingly turning to renting. Rental prices have risen by 41.5% over the past ten years and by 5% in 2023. Amsterdam, Milan and Paris are the most expensive cities, while Berlin and Turin are the most affordable. In 2023, Italian families spent over €5.8 billion on rent, up ten percent in five years.
Not only homeownership. In the 21st century, in Europe (with the exception of Germany), the rental market has regained momentum. In Italy, in 2000, 23% of families lived in rental housing, while today the percentage has risen to 26% and continues to grow. “This is not just an economic phenomenon,” says Mario Breglia, President of Scenari Immobiliari, “but also a different way of living that started with the younger generations and is now affecting wider segments of the population, especially in urban areas. Italian families spent over €5.8 billion on rent last year. This figure has grown ten percent in five years — and it does not include the short‑term rental sector.”
Across Europe, renting continues to expand: over the past decade, in the main EU countries (United Kingdom, France, Germany, Italy and Spain), rental prices have risen by an average of 41.5%. In 2023 alone, residential rents increased by around 5%, reaching €18.50 per square meter per month. The average rent for a 60‑square‑meter one‑bedroom apartment in major European capitals reached €26.7 per month in the last quarter of 2023, up 4.5% compared with the same period in 2022. Studios under 50 square meters recorded an average monthly rent of €1,174, with an annual increase of 7.2%. The monthly cost of a single student room rose by 5.3%, approaching €700. These are some of the findings of the report “Rental Housing in Italy and Europe – Focus Milan and Lombardy,” presented today in Milan by Scenari Immobiliari and Abitare Co. during the “RENTAL FORUM – Between Market and Society.”
“In 2023, the increase in housing prices and the rising cost of mortgages,” comments Francesca Zirnstein, Director General of Scenari Immobiliari, “helped strengthen the role of renting as a theoretically more sustainable, temporary, and less binding solution. The figures in our report show that in Europe the rental market is driven, on one side, by strong demand for rental housing and, on the other, by an offer unable to meet this demand — both in quality and quantity — which will lead, in the short term, to a further rise in rental prices. In Italy as well, the market has shown dynamism that has helped overcome challenges such as reduced purchasing power, erosion of savings, rising interest rates, and structural shifts accelerated since late 2019, including the boom in short‑term rentals and the difficulties in mid‑ and long‑term leases. However, various critical issues persist across much of the country due to rising rents, making it increasingly urgent to develop policies and incentives that support the growth of sustainable rental housing.”
“The rising cost of mortgages and increasing home prices are making it harder for households to buy property, pushing demand toward renting and driving rents upward,” adds Giuseppe Crupi, CEO of Abitare Co. “We are witnessing a generational shift, with growing demand from young workers — both Italian and foreign — who move to Milan, as well as new families and single people under 40 who tend to rent thanks to a good income, sometimes higher than average market rents. This market segment seeks top‑quality homes, new or renovated, in welcoming buildings with condominium services that enhance quality of life, social interaction, and environmental sustainability in terms of energy rating and cost efficiency. Today, the supply struggles due to excessive fragmentation and an almost total lack of newly built or fully refurbished properties. This shortage continues to put huge pressure on rents in major cities. Investors interested in the BTR or PRS market are there,” Crupi continues, “and they know this can be a major opportunity not only for portfolio diversification but also for generating sustainable and resilient income. I believe it is necessary, given the strong demand and growing interest from operators, to establish a specific legal and fiscal framework — currently lacking in Italy — which could open substantial development prospects and create a real investment category.”
The ten‑year trend of sale prices and average rents reveals significant differences, starting from Italy. In fact, while home prices have fallen by an average of 6.6% over the past decade, rental prices have risen by 50%. In Spain, rents increased even more dramatically: +70%, compared with a roughly 25‑point increase in home sale prices. Germany shows a strong imbalance as well, with sale prices growing nearly 90% over ten years, despite declining by over ten points in the past year. Over the same period, German rents rose by 44.5%. In the UK, the market is more balanced: average sale prices increased by 38.2%, and rents by 29.8%.
Among major European cities, Madrid recorded the highest rent increases in 2023 (+8.6%), followed by Lisbon (+7.6%), Milan and Vienna (+6.4%), and Rome (+6.3%). Rents rose slightly in Berlin (+1.7%), remained stable in Munich (+0.5%), and declined in Amsterdam (–2.1%). The Dutch capital nevertheless remains the most expensive city for renting, with an average monthly rent of €2,100 for a one‑bedroom apartment, despite a 6.7% decline from 2022. The high rental levels in Amsterdam have also affected the cost of student rooms, which rose by 5.6% to nearly €1,000 (€950). Berlin saw a sharp drop (–6.5%) in average one‑bedroom rents, now standing at €1,570 per month — still more affordable than other capitals. Right behind Amsterdam, we find Milan, with an average monthly rent of €1,980 for a one‑bedroom apartment, followed by Paris at €1,850. The least expensive city for a one‑bedroom apartment is Turin, where rents average just over €1,000 per month (€1,050). Munich has the highest rents for studio apartments after Amsterdam, with €1,550 per month (+5.1% year‑on‑year). Looking at percentage changes across sectors, notable increases include: Rome for student rooms (+11.3%), Lisbon (+18.8% for studios and +15% for rooms), Madrid (+15.4% for one‑bedrooms), Milan (+10.2% for studios), and Berlin (+12.7% for studios).
Regarding European investment in the living sector, 2023 saw a 46% decline compared with the previous year. In 2024, however, a substantial recovery to levels seen a few years ago is expected. According to international operators at the recent MIPIM, living is set to be one of the main asset classes in the coming years. An increase of at least 25% is expected this year, with an even stronger rebound in 2025. In Italy, the RENTAL FORUM – A Home for All is expected to surpass €1 billion in investments, although various fiscal and operational challenges remain for the sector’s growth.
Rental housing in Italy
In Italy, in 2023, new rental contracts reached 1.14 million, up 4.1% compared to 2022, generating an additional €7.7 billion in rental income and covering a residential surface area of over 96.5 million square meters. Rental homes have an average size of just under 85 square meters and an average monthly rent of just under €570. Demand continues to concentrate in major urban centers, as reflected in price trends. The highest annual average rent is found in Milan (€176/m²/year), followed by Rome (€151/m²/year), Bologna (€120/m²/year), Naples (just above €100/m²/year), and finally Genoa (€85/m²/year). Forecasts for 2024 indicate a stabilization of this trend, with a slight national increase of about 1.5%, bringing the average reference value to €82/m²/year.
Regarding the type of new leases signed in Italy in 2023, “agreed rent” contracts account for just over a quarter, while standard long‑term contracts account for more than half. Student rental agreements, despite the growing number of out‑of‑town university students, still represent less than 5% of the total.
Rental housing in major urban centers
The report by Scenari Immobiliari and Abitare Co. also examines the residential rental market in major urban centers, which are characterized by unique features: job opportunities, cultural offerings, discerning demand, the presence of specialized real‑estate operators and investors, the involvement of local stakeholders in territorial development, and the experimentation with new rental housing models.
Since 2015, rental activity in Bologna, Genoa, Milan, Naples, and Rome has grown by just over 10%. Over the same period, rents (across entire municipal areas) increased by more than 5%, with stronger variations in semi‑central districts.
In 2023, Bologna’s rental market reached around 21,000 new leases (+8% year‑on‑year). Genoa recorded more than 16,000 new leases (+6%). Milan, with around 64,000 new rental units in 2023, remains more dynamic than many other Italian cities, as shown by both the increase in new contracts and rising average rents, although with strong differences across neighborhoods. In Naples, rental activity grew by 2% in 2023, with 19,000 new leases, while Rome reached more than 74,000 (+almost 3% year‑on‑year).
Rome and Milan stand far above other cities in terms of new rental contracts signed annually: Rome consistently exceeds 70,000, while Milan fluctuates between 55,000 and 65,000. The other cities remain under 21,000, with Genoa having the lowest volume. Combined, Rome and Milan account for 13% of Italy’s total rental activity (7% Rome, 6% Milan).
A closer look at the micro‑areas of these cities shows that the highest rents are generally found in the city centers, followed by semi‑central areas and, lastly, peripheral areas.
However, in some cities this hierarchy changes. In Bologna, for example, the semi‑central Colli district shows higher average rents than the city center. A similar situation occurs in Genoa, where the high‑rent central micro‑area of S. Francesco Albaro has values equal to the semi‑central Sturla–Quarto dei Mille. In Naples, the peripheral district of Fuorigrotta has higher rents than the most expensive semi‑central areas.
Comparing current rents with those of 2015, the most dynamic areas are the peripheral districts, which show increases between 45% and 50% in many cases. Declines are less dynamic but still significant, ranging from –30% to –35%.
In semi‑central districts, the most dynamic micro‑areas show increases between 25% and 30%, with exceptions such as Naples and Milan, where variations approach +50%. In Milan, the semi‑central Nigra/Jenner area saw rents for used properties rise by more than 70% compared to 2015. As in the periphery, declines are more contained, between –15% and –25%.
City centers are the least dynamic areas, with the most active micro‑areas showing increases between 15% and 30%. Declines are also more moderate, between –5% and –20%, except in Genoa, where drops exceeded 40% for used properties and around 30% for new ones.
