The right time to invest in Milan luxury Real Estate

Milan has experienced a remarkable surge in its luxury real estate market attracting affluent individuals and financial professionals who are keen to live and invest in a city that offers a unique blend of economic growth, cultural allure and a history of robust property prices.

There are several compelling reasons why Milan’s luxury residential real estate market stands out for investors and, in many respects, is more resilient than other cities in Europe.

Milan is establishing itself as an attractive business hub

Many professionals and wealthy individuals are attracted by the competitive tax environment Italy has been offering in the past few years^[1]. “The government introduced generous tax breaks in 2017^[2] and, in some instances, this has made the city more appealing than many other European cities, including London. Moreover, with Brexit prompting numerous wealthy professionals to seek attractive European alternatives, Milan emerges as a perfect fit,” says Lorenzo Belloni, Chief Investment Officer at YELDO.

In addition to tax advantages, Milan is attracting bankers, asset managers and private equity investors^[3] who are relocating to ‘Italy’s financial capital’. The city’s prosperity and recognition as an established financial hub have led local financial institutions and international companies to move their employees to Milan.

The luxury segment of Milan real estate market offers significant growth potential

Research conducted by UBS Real Estate^[4] indicates that Milan, along with cities like Dubai and Warsaw, remains undervalued and poised for further growth. This is mainly because the sector recovered slowly, but steadily, after the global financial crisis in 2008. Unlike many other cities facing a house price correction, Milan has remained unscathed. The luxury residential market, in particular, has proven to be resilient, providing stability and maintaining prices due to increased demand from affluent professionals.

Belloni highlights: “Luxury residential properties are increasingly scarce as wealthy buyers swiftly acquire them for investment purposes or as new residences. Last year, the supply of luxury homes for sale dropped significantly by 13.3% compared to the previous year, accounting for only 8%^[5] of the total sales in the city.

Reflecting this demand, prices for luxury homes in Milan increased YoY by 7.2%^[6] in 2022, reaching EUR 11,750 per square metre. The turnover generated by the sale of prime properties in the historic center also rose by 8.7%, amounting to EUR 855 million in value.

High-end real estate investments are hard to access

Despite the potential of Milan's luxury real estate market, gaining access to high-end real estate investments can be challenging. The combination of high investment thresholds and limited opportunities makes it difficult for investors to gain exposure to this exclusive market. However, companies like YELDO offer a solution by providing facilitated access to real estate investments for professional investors.

Belloni emphasizes: "We believe luxury real estate in Milan is a great opportunity," citing YELDO's recent successful deal, the Rovello 14 luxury project in Brera Milan, sponsored by renowned luxury real estate developer Federico Consolandi (CREA). “While the Rovello 14 deal has closed, YELDO is actively working on a pipeline of 40+ deals worth over EUR 200 million, including a luxury residential building in Milan's city center, which will be advertised as an investment opportunity soon.”

To learn more about investing in luxury residential real estate and capitalizing on Milan's real estate growth, sign into your YELDO account and schedule a call with the investment team today.

Sources:

[1] Efinancialcareers, ‘Goldman Sachs isn’t the only bank adding staff to Milan; November, 2022
[2] Grant Thornton, ‘Italy updates special tax regime for HNWIs and Inbound individuals; February 2021
[3] Bloomberg, ‘Milan Luxury Real Estate Booms as Bankers Leave London for Italy’; January 2023
[4] UBS.com, ‘UBS Global Real Estate Bubble Index; October 2022
[5]Ilsole24ore.com, ‘Milano, crescono prezzi (+7,2%) e domanda su case di lusso. Ma tra le metropoli resta low cost; January 2023
[6] Ilsole24ore.com, ‘Milano, crescono prezzi (+7,2%) e domanda su case di lusso. Ma tra le metropoli resta low cost; January 2023