The luxury residential market in Milan is experiencing a period of changing dynamics, according to the recent Savills World Cities Prime Residential Index report. In 2024, forecasts indicate an average growth of 0.6% in luxury property prices, marking a moderate decrease compared to the +2.2% recorded in 2023. Milan emerges in the ranking, placing 13th among the top 30 global luxury residential markets. Regarding the European ranking, it rises to 4th place, a sign of the growing demand and international appeal of the Italian metropolis. “Despite concerns about rising interest rates and the consequent increased price sensitivity,” said Danilo Orlando, Head of Residential at Savills in Italy, “buyers with greater financial availability continue to purchase prime properties in Milan. There has been a surge in the luxury rental market as well. The city continues to attract global capital, thanks to its livability, lifestyle, and lower acquisition costs compared to major world capitals.”
Milan has recorded rising values over the past year, and the trend is expected to continue in 2024. The discrepancy between demand and supply of prime products and new developments continues to support more moderate price growth. On the international scene, Sydney and Dubai have the best forecasts for 2024. Both are expected to benefit from the increasing population of high-net-worth individuals (HNWIs). Sydney, with demand for luxury residences exceeding supply, could see a significant price increase of 8%-9.9%. In the case of Dubai, which already experienced a 17.4% increase in 2023, growth is expected to slow slightly in 2024. “Faced with ongoing economic uncertainty,” said Kelcie Sellers, associate at Savills World Research, “prime residential markets saw subdued changes in 2023, after two years of significant growth. It is expected that the increase will further slow down in 2024 as markets return to more normal conditions, but will remain positive.”
Despite the overall price growth, some major global cities such as Los Angeles, New York, San Francisco, Seoul, London, Singapore, and Hong Kong are projected to experience a decline in 2024. This is attributed to weakened confidence, rising interest rates, and challenging economic conditions. The uncertain macroeconomic context and prospects for higher interest rates could influence buyer and seller sentiment in the luxury residential sector in Milan. However, the prime market appears to be less susceptible to credit access difficulties compared to the overall residential market. “We expect 2024 to be an interesting year in the Milan residential market,” concludes Sellers. “The potential cut in interest rates by central banks, in mid or late 2024, could further support the market.”
Source: Il Sole 24 Ore