Barracks, hospitals, Olympic Villages: the real business of urban regeneration

In today’s property market, a building can stand perfectly sound yet already have lost its economic rationale.

This kind of thing happens (to give just a few examples) when barracks are left empty, when a hospital is replaced by a different facility or when a rail yard loses the logistics function that created it. To be clear, this is exactly what is happening in Bologna right now.

On 8 September 2026, the Agenzia del Demanio, the Municipality and C40 presented the winning project for the former Caserma Perotti and the new call for the former Caserma STAMOTO, a candidate for Reinventing Cities. For STAMOTO, the plans envisage student housing, services and green spaces (Agenzia del Demanio).

In Milan, the conversion had been planned in advance. After the Milano Cortina 2026 Games, the Porta Romana Olympic Village began its conversion into student housing with over 1,700 beds, scheduled to open in August 2026 (COIMA).

Two different cases that reveal a new trend from opposite directions. In Bologna, the search is on for a new function for assets that have lost theirs. In Milan, the “after” was built into the “before”.

Real estate value, today more than ever, must therefore be read on two levels: (i) what the current use is worth and (ii) what the ability to change use is worth when the current one stops being the best.

The future of construction in Italy is urban regeneration; there is no getting around it. Here is why.

Conversion value: the second life is priced in

A stabilised asset makes rents, occupancy, costs and returns readable. The most visible part of its value is already observable.

In regeneration, by contrast, part of the value depends on what does not yet exist: a different use, a different density, new services, future demand or a neighbourhood that changes function.

It is this second component that makes many seemingly obsolete portfolios interesting. A building can be old yet retain a location, a scale or a planning potential that would be hard to replicate from scratch.

Regeneration starts from function

Refurbishing improves a building. Regenerating requires understanding who it will serve and why someone will be willing to pay for that new utility.

In the first half of 2026, the Italian Living sector attracted around €264 million of investment. CBRE notes that, although volumes were lower than the previous year, transactions are still concentrated on projects with high value-creation potential, and development and urban regeneration remain the focus of interest. Land acquisitions in the sector generated around €235 million (CBRE).

Capital, then, is not only looking for stabilised properties. Part of it seeks assets where value has yet to be built.

Porta Romana: designing optionality before you need it

The Olympic Village case is interesting because conversion there was not an afterthought. The student configuration was built into the design, and the spaces were conceived to reduce the time and cost of the transformation.

COIMA set a four-month timeline for the post-Games conversion; by April 2026, 65% of the places had already been allocated and opening was scheduled for August (COIMA).

For a board, the principle reaches beyond any single project: a property’s physical life is often far longer than the strategy that justifies its use today. Designing an asset that can change function also means buying options on the future.

Buying what is there, or buying what could be there

Core strategies seek more visible cash flows and lower risk. Core+ and value-add accept a greater share of transformation in exchange for the opportunity to create value.

In its Italian Investor Intentions Survey 2026, CBRE finds that core+ and value-add remain among the most sought-after opportunities and that around 70% of investors expect to maintain or increase their activity in Italy. Milan, Rome and the main emerging cities continue to attract interest, including in regeneration projects (CBRE).

Part of the return therefore stems from a decision made ahead of the market: seeing a possible function where today there is only an underused building.

Real estate risk also includes rigidity

For years, the solidity of bricks and mortar was associated with permanence. Today, permanence can become a risk when the city changes faster than the building.

Mobility, work, housing demand, logistics, tourism, services and digital infrastructure are all changing. Some uses become more attractive; others build up a surplus. The property stays in the same place.

The ability to convert it therefore becomes part of the investment’s resilience. An asset that is highly efficient for a single function can be less robust than one that is slightly less optimised but more adaptable.

The real game is played before construction begins

Zoning designations, permits, remediation, infrastructure, accessibility and development timelines can radically change the economics.

A project’s future value must therefore be discounted for the time needed to realise it and for the conditions that must be met for it to truly exist.

When a neighbourhood changes, value extends beyond the project’s boundaries

Regeneration alters flows, services, perception and accessibility. The value created can therefore also spread to surrounding properties.

Those who enter early take on more risk, but can take a more direct part in the transformation. Those who arrive later buy into a context that has already changed in the meantime.

It is also why the public and private sectors must strike a balance: a transformation that fails to deliver benefits for the area may meet political and social resistance; a project without sufficient returns, on the other hand, risks remaining a masterplan.

The next good asset may be the one that looks wrong today

A barracks may have lost value as a barracks and gained it as a piece of the city. A rail yard may stop being efficient for the railway and become valuable for Living. An Olympic Village can be designed knowing that its Olympic function will last a few weeks and its residential one decades.

The question to bring to the board, then, goes beyond “what is it worth today?”. It is worth adding a second: “how much value remains available if tomorrow this asset had to serve another purpose?”.

In the real estate emerging from urban regeneration, owning a good building matters. Also owning the ability to change it may matter more.

If you would like weekly analysis on capital, urban transformation and strategic decisions, the Bliss newsletter brings together the latest editorials from the blog.