Urban economists and planners have been debating the possibility of using innovative methods and tools in managing urban plans to increase their effectiveness. According to many theoretical contributions, a major step would lie in shifting from the use of authoritative tools towards market-based ones. The institution of a development rights market in order to implement urban plans represents a major attempt to transfer into the practical urban government such a theoretical perspective. Several significant elements emerge from an analysis of the major case studies of development rights markets in Italy. First, markets for development rights do not replace the command-and-control tools traditionally used in planning. In reality, the success of the new markets seems to depend significantly on their integration with the latter. Furthermore, markets for development rights have not proved to be automatic devices led by an invisible hand: the visible hands of the administrations take steps to establish market rules and to promote them, reducing transaction costs as much as possible.

The construction industry is the world’s largest consumer of energy and producer of greenhouse gases. For this reason, there is a broad debate on how to make the built environment more sustainable. Although the positive externalities of energy-efficient retrofitting and new construction are known, the economic effects that green building has on the real estate sector in Italy are less evident. The aim of this paper is to analyze the Italian real estate market to investigate if, and to what extent, demand appreciates the supply of green real estate assets. The research focused on the analysis of 55 development projects of office buildings (with and without environmental certification) located in Milan, at present the most dynamic and flourishing real estate market in Italy. Through these case studies the authors investigated the premium price that is generated in certified real estate development projects. The results highlight a premium price, especially for high levels of sustainability. Similarly, the rate of absorption of certified assets reflects a preference for green properties, which are absorbed by the real estate market in less than half of the time foreseen for real estate without an environmental certification.

Enhancing public real-estate assets has been at the centre of a lively debate in Italy. Public policies have focused on the supply-side, assuming that private demand was ready to develop assets. Yet with the decline in the real-estate market, conditions have greatly changed. Italian authorities begun to experiment new approaches to enhance public assets by supporting the grass-roots participation. The aim of this research is to determine the conditions that can predict the successful outcome of bottom-up value creation dynamics in public real-estate properties. Through a multivariate statistical analysis, the study proposes an interpretation of the elements that determine the successful outcome of bottom-up processes.

Local administrators and private investors rely on various urban redevelopment strategies, the choice of which depends on the economic expectations of property owners and investors. Some of these options foresee replacing obsolete buildings with new constructions; others prefer the reuse of existing assets. This study examines the conditions that make these different strategies feasible, bringing to light the aspects that favor demolition and reconstruction processes over interventions based on the redevelopment of existing assets. The analysis focuses on the variables that determine the choice between these two options. The model that has been developed highlights, on one hand, the role of urban planning tools and urban densification and, on the other, the relationship between the land market and the value of existing assets. The model has been tested on five cities in northern Italy, which fall into three territorial categories—large metropolitan cities, medium-sized cities, and cities of limited rank—to test how different social and economic contexts affect the feasibility of the strategies we evaluated. The results of the study underscore the extent to which the demolition and reconstruction of existing assets is only viable in certain limited areas and under particular market and settlement conditions. While large metropolitan areas seem to have the option of radically replacing existing real estate assets, medium-sized cities and especially small cities are constrained in redeveloping existing urban assets and must forego demolition and reconstruction projects, which do not prove to be economically feasible.

The paper presents the analysis of the statistical data on population and real estate in 20 small-to-medium-sized cities in Northern Italy and shows a high rate of vacancy of housing and significant shrinkage of businesses and institutions in the historic centres, where urban heritage is concentrated. Given these findings, the paper analyses the official city plans of the cities with the worst underutilisation conditions, to understand how the plans have reacted to the decline of the centre. The result shows the extensive planning and regulation activity has very limitedly registered the phenomenon and failed to propose the empty inner cores as resources to reduce land consumption and recycle valuable assets in a circular economic vision. Combining the statistical data and the findings from the city plans, the paper concludes that Italian historic centres are living paradoxes—a collection of beauty, icon of well-being, model of sustainability, but abandoned—and therefore, the dense regulatory mechanisms that were necessary to conserve urban heritage during the decades of economic and demographic growth must be reframed to implement a circular economy and adapt to new requirements for living conditions.