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Milan’s Luxury Real Estate Market Reaches New Heights Despite Supply Constraints

By Columbus International,30 October 2024

Based on the latest Exclusive Residences Observatory by Tirelli & Partners, Milan’s luxury real estate sector is exhibiting exceptional resilience. The prestigious Quadrilatero district has achieved unprecedented valuations, reaching €37,000 per square meter in 2024—representing a remarkable 40% appreciation since 2020. This trajectory has solidified Milan’s position as a premier destination for global real estate investment.

From our vantage point at Columbus International—a boutique real estate firm strategically located at Via San Raffaele 1, 20121, Milan—we’ve identified a clear bifurcation in Milan’s luxury market: The ultra-premium sector (above €6 million) maintains robust performance, propelled by international investors and returning Italian expatriates leveraging favorable tax incentives. Meanwhile, the €1-3 million segment demonstrates more conservative growth patterns.

Market Dynamics The premium segment (€3+ million) and ultra-luxury tier (€6+ million) continue attracting substantial interest, predominantly from tax-advantaged international buyers. Supply constraints and stringent quality requirements pose ongoing challenges, though premium properties consistently secure motivated buyers swiftly with minimal price negotiation.

Entry-level luxury (€1-2 million) and mid-tier segments (€2-3 million) reflect more measured domestic demand, characterized by upgrade-oriented rather than expansionary purchases. An increasing quality differential between new developments and existing inventory has emerged, with contemporary technological amenities and architectural innovations diminishing the competitiveness of legacy properties.

Key Performance Metrics

Market absorption rates declined 3.5%, most notably in prime locations like Brera, where quality inventory remains scarce
Sales cycles now exceed 6 months—a threshold unseen in four years
Price negotiations average 6.7%, though premium properties frequently command full asking prices
The Quadrilatero leads value appreciation, while peripheral areas such as Magenta register modest 1% gains

Market Outlook The entry-level luxury segment anticipates stable transaction volume, potentially catalyzed by favorable interest rates and robust equity markets. The ultra-luxury segment is positioned for continued growth, driven by international demand and Milan’s enduring tax advantages, despite recent flat tax modifications.

Columbus International’s strategic position bridging Italian and American real estate markets enables us to serve both international investors and local clientele seeking premium properties. We welcome interested parties to our offices at Via San Raffaele 1, where our expert team provides comprehensive insights into Milan’s evolving luxury real estate landscape.

Rental Price Surge During Milan Design Week

By Columbus International,26 April 202426 April 2024

The Milan Design Week, an event of international renown, has recently rekindled the spotlight on the Lombard capital, attracting a vast and passionate audience of design enthusiasts from every corner of the globe. The record-breaking 62nd edition saw the participation of over 2,600 exhibitors and the influx of 600,000 visitors, registering a 15% increase compared to the previous year. This success was evidently reflected in the city’s rental market, where housing prices experienced a vertiginous surge.

Data provided by the property management company Italianway, specialized in short-term rentals, and reported by Il Sole 24 Ore, reveals that the average daily rate for an apartment in Milan during the 2024 Design Week was €386, with a peak of €414 on the night of April 17th, marking a 7.5% increase compared to 2023. But how much can a week’s rental cost during this event? For a studio apartment, the average cost hovers around €1,354, while for a one-bedroom apartment, the figure rises to €2,030. For larger apartments with three bedrooms or more, the expenditure easily exceeds €2,700. The highest prices are recorded for luxury apartments in the city center, which can reach the considerable sum of €7,000 per week.

A veritable boom that has made fortunes for property owners but has put a significant strain on the wallets of those seeking accommodation during the Design Week period. Several reasons contribute to explaining this surge in rental prices. Firstly, demand significantly exceeds supply. The event attracts visitors from all over the world, many of whom are willing to pay high prices for accommodation situated in the heart of the city, close to exhibition venues and collateral events. Secondly, the supply of available rental apartments is limited. Not all property owners decide to rent out their homes during the Design Week, and those who do often apply higher prices to take advantage of the high demand.

Source: Immobiliare.it

Revitalizing Milan’s Southeast: MCA Unveils €3.5 Billion Milano Santa Giulia Project

By Columbus International,8 April 20248 April 2024

The new urban plan designed by MCA (Mario Cucinella Architects) has been unveiled, marking one of the largest urban regeneration projects in Italy. The central idea is to create a structure resembling a leaf, connecting services, commercial areas, schools, and residences around what aims to become Milan’s third-largest park. Present at the project’s launch were Mayor Giuseppe Sala and Urban Regeneration Assessor Giancarlo Tancredi.

Milano Santa Giulia is set to become a new gateway to the city and a neighborhood featuring residences, services, and retail spaces. It represents one of the major urban revitalization initiatives in Lombardy’s capital, focusing on the Southeast quadrant and the former industrial areas of Montedison. Total estimated investments for the project exceed €3.5 billion. Led by Lendlease, a real estate giant responsible for the area, the project will deliver 3,500 new housing units catering to various market segments, from private residences to student and senior living, to the innovative build-to-rent model. Lendlease will also oversee the development of business, food, and commercial districts. These complexes will be located adjacent to the multifunctional arena of Milano Cortina 2026 and a 260,000 square meter park. The masterplan, signed by MCA – Mario Cucinella Architects, envisions a total development of 1.1 million square meters, with completion targeted for 2032 and a strong emphasis on sustainability. Starting from June 2023, Lendlease, already engaged in the city with the Mind operation, acquired surface and development rights for the entire area, currently managed through the Msg Heartbeat real estate closed-end fund owned by Lendlease Sgr. With this acquisition, the fund becomes the effective promoter of the regeneration of the Northern Area.

Of the total €3.5 billion, €2.7 billion will be invested by the international real estate and urban regeneration group, with additional contributions from other parties, such as the Canadian pension fund PSP Investment, which invested in the Spark Business District. According to Fabrizio Zichichi, executive project director at Lendlease, this investment marks a significant step forward for the city, as highlighted by Mayor Beppe Sala during an event emphasizing the importance of developing Milan’s Southeast quadrant in the coming years. Milano Santa Giulia benefits from its privileged location, with access to Linate Airport, the ring road and highway system, the high-speed FS station at Rogoredo, and metro lines M3 and M4, surrounded by natural areas on the outskirts of the city. The new neighborhood aims to attract over 10 million visitors annually, including residents, students, event spectators at the Arena, athletes, and workers. It will be divided into two main zones, North and South, connected by pedestrian and cycling paths, public transport, and a promenade. The North zone will host commercial spaces and sports and recreational services near the multifunctional Eventim Arena, home to the 2026 Olympic Games.

Residences in the area will focus on the concept of sustainable living. The South zone will feature the Spark Business District, with offices and residences, as well as cultural institutions like the Conservatory of Music and the Spark Food District, dedicated to food and beverage. Manager Zichichi announced the imminent launch of the “Who we are Msg” campaign, which will activate the neighborhood with social, cultural, and sports initiatives, in preparation for the Olympics and beyond.

Image via Lendlease

The effect of luxury neighborhoods on more peripheral ones: the new real estate trend in Milan

By Columbus International,21 March 2024

A recent real estate report, the “Wealth Report 2024” dedicated to Milan and curated by Knight Frank, an international network specialized in luxury property brokerage, has revealed an interesting phenomenon: the rise in real estate values in luxury neighborhoods such as Porta Nuova is directly influencing prices even in traditionally less central areas like Quarto Oggiaro. Although the report does not explicitly mention these neighborhoods, it highlights the significant impact that the strong demand from foreigners in high-end neighborhoods has had on the growth of real estate prices in Milan in recent years.

Initially, it may seem surprising, considering that the study focuses on Uhnwi, i.e., those with exceptionally high net income (generally exceeding 30 million euros), a rather exclusive buyer segment. However, both Knight Frank’s report and the Tirelli & Partner Observatory confirm that the main buyers of luxury real estate in Milan are precisely these extremely high-income individuals, many of whom are foreigners. The choice of Milan as a destination for high-level business activities in the country is well known, while those seeking a quiet place for retirement or holidays tend to prefer regions such as Tuscany or Sardinia. But what makes Milan so attractive for luxury real estate investments? Christian Dominici, a Milanese accountant, explained that in addition to its status as an important international financial center, Milan also offers a high quality of life, with a vibrant cultural scene and excellent gastronomy. From an investment perspective, Milan stands out as the only Italian city capable of guaranteeing stability in values over time. While a villa in Sardinia may not maintain its value significantly over time, a luxury property in Brera or Corso Magenta offers more concrete profit prospects in the long term. A key factor that has contributed to Milan’s attractiveness for Uhnwi is the favorable tax regime offered by Italian legislation.

Those who transfer their residence to Italy can benefit from a reduced tax of 100,000 euros per year, with an additional 25,000 euros for each additional family member, thus avoiding other taxes on foreign income in countries with which Italy has agreements against double taxation. This tax advantage has led to a significant increase in individuals, including high-level athletes, choosing Milan as their tax residence. Even foreigners with more modest incomes find it advantageous to invest in real estate in Milan thanks to the generous tax incentives offered for the renovation and energy efficiency of homes.

Population registry statistics highlight the significant presence of high-income foreign citizens in Milan, mainly from France, Germany, the United Kingdom, the United States, Switzerland, and Japan, many of whom choose to reside in the central districts of the city. These data confirm the increasingly central role of Milan in the international luxury real estate investment landscape.

Source: Corriere Milano