The luxury property market in Italy and Monaco
Il mercato degli immobili di lusso in Italia e nel Principato di Monaco

Despite the negative effects that the Covid 19 pandemic has had on the real estate industry in general, this market has not affected the investment decisions of those with greater financial means, who continue to invest in luxury properties. In Italy, the most interesting areas are undoubtedly Tuscany, Liguria and Sardinia, lake regions such as Lake Maggiore, Lake Como and Lake Garda, and art cities.

Household wealth in the post-Covid era

Several economic studies show that the share of Italian household wealth managed by the financial industry grew to around EUR 862 billion in 2020, up from EUR 844 billion in 2019. Of this, 59% is accounted for by real estate wealth (which amounted to about 56% in 2019).

This growth, given by the combined effects of the increase in the securities component (portfolios of financial assets such as shares, bonds, equity and other categories of alternative investments) and ‘pure’ real estate, shows how the pandemic has not affected the wealth of the richest households, which, by the way, are those who also invest in tourist and luxury properties.

The luxury property market

Compared to movable investment, that in real estate provides a sure guarantee against the risk of the investment’s value falling to zero due to the issuer’s insolvency: in fact, in real estate investment, the only source of risk is that of price fluctuations due to possible financial, economic or pandemic crises, or the creation of new and more onerous forms of taxation (the latter, however, many times announced and never introduced). In this context, therefore, if the ordinary real estate market is secure, that of luxury tourist properties is even more so because it is almost always characterised by a scarcity of supply and therefore a tightness in the level of demand and, ultimately, market prices.

Moreover, from the point of view of returns, luxury tourist real estate, being always traded among a segment of owners with high financial means, tends not to depreciate because potential buyers keep their wealth intact.

On the other hand, looking at the negative aspects, however generalisable to all real estate investments, those in luxury tourist properties are assets with an even thinner demand and, therefore, with a lower level of liquidity and longer absorption times than ordinary properties.

Luxury real estate is, therefore, a long-term investment that can be passed on to future generations, and thus of great relevance for investment choices.

The luxury property market in Italy

Italy certainly plays an important role in the world’s luxury real estate markets. In addition to tourist resorts, such as those for summer tourism (Liguria, Sardinia, some particularly renowned locations in Sicily, etc.) and winter tourism (the Dolomites, Val d’Aosta), there are many cities of art among the timeless ones (Venice, Florence, Rome, etc.) and among the emerging ones (the many urban villages, lakeside resorts, villages in the Tuscan hills, etc.).

Elements such as our millenary history and artistic production, our food and wine traditions, but also our architecture and varied landscapes are just some of the features of our Bel Paese. And they are what bring many Italians but especially many foreigners to buy luxury real estate in Italy.

The luxury property market abroad: the Monegasque market

Undoubtedly known as the place with the highest concentration of wealthy individuals, the small Principality of Monaco is not only home to one of the longest-running Formula 1 Grand Prix and one of the most fascinating casinos in the world, but also to a unique real estate market.

Covering an area of approximately two square kilometres, squeezed between French territory behind it and the Mediterranean Sea in front of it, the real estate market in the Principality of Monaco is in fact limited in its supply, an element that has always led to a greater demand than supply and, consequently, a historically constant increase in market values.

In this respect, the purchase of a luxury property in the Principality of Monaco, with a view to a real estate investment and therefore to its income, undoubtedly constitutes a secure and very long-term form of investment, ideal for handing down a heritage to future generations.