According to data by Engel & Völkers and Santandrea Luxury Houses.
The vulnerable economic situation in Italy hasn’t compromised the Italian real estate market, especially the luxury property market. It particularly hasn’t been affected by the crisis in Milan and Rome. This is shown by the high volume of sales, such as the gradual improvement of the main economic indicators. According to a study Engel & Völkers and Nomisma (Study of the market in Milan/Rome H1 2019’, Milan reaches up to 18 thousand euros per square meter and in Rome it can reaches 12 thousand euros.
Luxury Properties in Milan
A race can be witnessed in Milan with regards to building quality properties especially with the 2026 Olympics Games on the horizon. The real estate market is enjoying a very healthy run being the first national market to offer dynamism, absorption rates and price recovery. In 2018 around 24,500 transactions were carried out, an increase of 3.4%. While in the first half of 2019 the growing trend is seen with an 8.5% increase. This increase was not seen in the expected central and prestigious areas but more so in urban areas.
Due to the attractive Milanese market for investors and buyers, sale periods are reducing with an average of 1-2 months for medium sized properties (less than 80 m2), 1 – 3.5 months for larger properties (80-160 m2) and 2-6 months for very large properties (over 160 m2). In fact, more valuable, new or renovated properties sale or rent time periods are nearly immediate.
A study carried out by Santandrea Luxury Houses, on prestigious residences, confirms the increase of prices for luxury properties, particularly in the areas of Brera, Magenta and Centro Storico. When it comes to used properties the average difference between the initial price and the real price was around 11%, which is in line with the previous semester. With regards to the average time period for selling the figures were more dynamic. For example, Brera (3-5 months) and Magenta and Centro Storico (4-6 months), with up to 8 months in other areas.
For new or renovated properties, Santandrea recorded prices from 7,700 euros per m2 in Centro Storico and Magenta-Pagano-Castello, up to 13,800 euros per m2 in Quadrilatero. These figures demonstrate the high value in the market for sales and rent.
With regards to used or restored properties the prices were between 5,700 euros per m2 in Magenta-Pagano-Castello and 11,000 euros per m2 in Quadrilatero.
In the rental sector, the average rentals increased by 2.7% with a notable increase in the three more popular areas.
Luxury real estate in Rome
Rome is in first position in the Italian market for number of sales, according to Engel & Völkers, with a 3.4% annual increase totalling 7.3 billion euros. This is more than confirmed in the first semester of 2019 with a rise of 6.9%.
The demand for investment is increasing in Rome, especially in the old town, for small to medium properties, prestigious properties and properties with views to monuments. Outside of the historic centre the demand for buying and renting of a first home in more ecological residential areas continues to be helped by the transport network and services nearby.
According to Santandrea Luxury houses, sales in Rome remained stable as well as prices in areas with signs of falling such as Prati and Trastever and an increase in Pinciano-Veneto.
There have been some prices changes compared to the second half of 2018, for example in prestigious areas there was a light decrease of 0.4%. The difference between sale price and real price was 13%. The sale time periods varied between 7-11 months. In the areas of Aventino, Pinciano-Veneto, Prati, Salario-Trieste and Trastevere it was possible to negotiate as of 6 months, while other areas recorded an average of 8 months. With regards to rentals, there were more differences between areas. The discount after negotiation was around 8% on average, within a range of 5-10% in more attractive areas. Rental time periods reached up to 2-3 months. In Rome 65% of the demand was for buying and 35% for renting.
Forecast for the Luxury Real Estate Market in 2019
According to Engel & Völkers, the global business tensions and overall worsening of growth has affected the performance of the Italian economy and potentially the real estate market. In general, it suffers a prognosis of modest prices and sales for the next three years. However, this doesn’t seem to affect the good performance of the prestigious Milanese market and to a lesser extent the market in Rome.
Therefore, over the next 12 months, Engel & Völkers hopes that Milan will increase its contract in better locations with rising values and quicker absorption rates. A stable tendency is expected in Rome for buying and renting, with a rise in demand for properties for accommodative use in the Centro Storico and well communicated areas.
