The market for luxury flats in Milan is booming as bankers, fund managers and private equity investors are flocking to Italy’s financial capital. Thousands of foreigners and Italian nationals have relocated to the country since the government started granting generous tax breaks in 2017 to lure new arrivals. That has helped tilt Milan’s real estate market towards the high-end, especially as the city has become a popular landing spot for finance workers leaving London in the wake of Brexit.
The dynamics position Milan as a rare bright spot in global real estate. Rapidly rising interest rates have put an end to the cheap money that fuelled property markets from Berlin to Beijing. Italy is well-placed to avoid much of the turmoil because its real estate sector recovered only slowly from the fallout of the global financial crisis. “Since Lehman, European real estate market went for a run, while Italy just walked. But it did it steadily,” said Mario Breglia of real estate research firm Scenari Immobiliari.
In the wake of Brexit, some of the world’s biggest banks have been under pressure to move traders out of the UK and into continental Europe. While Italian banks such as UniCredit and Mediobanca were the first to repatriate employees to Milan, their international counterparts are now following suit. Goldman Sachs is shifting traders from London to the northern Italian city, and investment firms Certares, Eisler Capital UK and Andera Partners opened shops in town in the last few years. According to a new report from the European Banking Authority, in 2021, the number of high earners in Italy – defined as individuals earning more than a million euros a year – grew to 351, an 88 per cent increase from the year prior.
These changes could help Milan secure its fledgling status as a global financial hub. Right now, the city still lacks the kind of truly global environment that would put it on par with London or even Frankfurt. According to the Global Financial Centres Index, which rates the competitiveness of international finance capitals, Milan ranked 48th out of 119, lagging behind Paris, Frankfurt, Amsterdam and Geneva.
In Milan, demand for high-end housing is outpacing supply. As in the rest of Italy, owners often “prefer to pass properties through to younger generations instead of selling. That limits opportunities for construction and redevelopment, which drives up prices. “Luxury new-builds on offer in Milan are scarce. Yet across the city, new development projects are underway. Near the Prada Foundation, the Scalo di Porta Romana, an out-of-use railway hub, is set to be transformed into an Olympic Village as the city prepares to host the 2026 Winter Olympics. That site is being designed by several of the architects behind New York’s iconic High Line park. Renzo Piano, the Italian architect behind London’s Shard skyscraper, is at work on the new Bovisa-Goccia campus of Milan’s Politecnico University. The city is also building what it boasts will be the densest network of bicycles lanes in all European cities.
