05.12.2022

Luxury Real Estate in Italy

Continuing our analysis of the luxury real estate sector, this article focuses on the Italian market with an analysis of the first 2022 figures for this sector.

After a boom in 2021, the luxury property market is suffering a setback. According to the ‘Report on residential properties over one million euro’ compiled by Reopla, a company part of the Sprengnetter group specialising in software and solutions for big data analysis and Avm (Automated Valuation Model) for the real estate sector, between 2020 and the first quarter of 2022, 4,163 properties worth over one million euro were sold in Italy.

In particular, however, while there were 2,400 sales in 2021, an increase of about 46% compared to 1,640 in 2020, the number of sales in the first quarter of 2022 was 123. A figure that is down on last year, but not exhaustive to draw conclusions on the trend for the current year.

In the first quarter of 2022, the numbers are low compared to 2021, but it is too early to estimate the annual trend and to assess the impact the current geopolitical situation might have on the real estate market. Firstly, because data on purchases and sales are only available several months after the closing of negotiations, and secondly because the sector has very long ‘reaction’ times, even in the case of major events.

The overall real estate market is expected to slow down over the next 6-12 months due to the combined effect of several factors, such as rising inflation, rising interest rates on mortgages, plus the shortage of chips and raw materials slowing down all the construction sites that have started on the wave of tax incentives for building work on a general real estate stock that largely needs to be renovated.

But luxury real estate seems to hold better cards than the rest of the property market. In fact, this slowdown will be much less noticeable for real estate purchases and sales worth more than one million euros, because in this market segment recourse to mortgages is generally less frequent and the rise in inflation has a more limited impact.

Luxury real estate: regions with the highest high spenders

High spenders in Italy do not all follow the same purchasing patterns. More than 40% of luxury property purchasers are located in Lombardy, with 1,703 properties traded; in second place is Lazio, with 804 purchases and sales, accounting for around 19%, while in third place is Tuscany (588 purchases and sales), with around 14%. Closing out the top 5 regions are Campania (312 sales) and Sardinia (268 sales).

Luxury real estate: the provinces with the highest spenders

The provinces’ rankings punctually follow those of the regions. In first place, with 1,487 properties, is Milan, where almost 36% of total sales take place. Much further behind, in second place, is Rome with 776 properties (around 19% of total sales), located mainly in the city’s historic centre. This is followed by the province of Lucca, with 376 properties sold (9%), the province of Naples, with 280 completed negotiations, and the province of Sassari (244 sales). Milan, with its high concentration of corporations, banks and financial companies, as well as a general average salary almost 17% higher than the national average, is the ideal location in Italy for the wealthiest social classes. Milan also has the most ‘liquid’ real estate market in Italy in the high-value property sector, as also indicated by the smaller gap between properties for sale and properties sold compared to the rest of the country.

Prices per sqm of luxury properties

On average, the price per square metre in Lombardy’s capital city is now over € 5,000 per square metre, with peaks of over € 15,000 per square metre, and so even relatively small properties (100 square metres) are fetching values in excess of one million euros in the city’s central areas. In general, in fact, for a luxury property, the average purchase price in Lombardy is around €1,730,000, a gap that is therefore minimal compared to the average recorded in the other regions, given that in Lazio it is around €1,725,000, in Campania around €1,723,000 and in Tuscany around €1,712,000.