Private Equity Executives in London Move to Milan, Frightened by Labour’s Tax Plan
A Bloomberg article from July 3, 2024, highlights a growing trend: more and more private equity fund managers in London are considering Milan as their preferred destination to escape the anticipated tax increase in the UK.
This situation could have significant and positive effects on the Milan real estate market.
Increasing Interest in Milan
The growing interest in moving to Milan by London fund managers is linked to the expected increase in taxation on the so-called “carried interest“- a form of compensation primarily used in private equity (PE) and venture capital (VC) funds, representing the share of profits that fund managers receive as an incentive for achieving good results for investors.
The British Labour Party, poised to win the upcoming elections, proposes to treat carried interest compensation as ordinary income with a tax rate of up to 45%. Under the current tax regime, these capital gains are taxed at 28%.
Opportunities for the Real Estate Market
Milan is already benefiting from the arrival of several investment firms, such as Capstone Investment Advisors, Eisler Capital, Certares Management, and Point72 Asset Management.
An influx of private equity fund managers could further increase the demand for high-end real estate in the city.
The greater presence of wealthy investors can lead to an increase in property values and growth in the real estate market, especially in luxury neighbourhoods and redeveloped areas of the city.
Political Stability and Tax Benefits
Italy is now preferred over other cities like Paris and Frankfurt, which had previously benefited from Brexit.
The reasons are varied.
Italy offers a relatively stable political environment, with the Meloni government maintaining the annual flat rate of €100,000 on income earned abroad, despite some reductions in incentives for newcomers.
This makes Milan an attractive destination for those seeking fiscal and political stability, a crucial factor for international investors.
Quality of Life and Urban Redevelopment
In addition to the fiscal aspects, Milan also offers a high quality of life.
The city has undergone significant urban transformation, with numerous redevelopment projects making some neighbourhoods more modern and livable.
The presence of international schools, exclusive social clubs, and luxury restaurants further enhances Milan’s appeal.
Proximity to renowned tourist destinations such as the Alps, lakes, and seaside resorts makes the city even more desirable for newcomers who can easily reach these destinations on weekends.
A New Chapter for the Milan Real Estate Market
The increase in transfer requests to Milan, although currently in the preliminary phase, represents a unique opportunity for the real estate market. Forecasts indicate that the number of people moving to Italy to benefit from the flat tax could increase by 50% in the next year, from 4,000 to 6,000 individuals.
In conclusion, the British Labour Party’s tax plan and political instability in other European cities are pushing more and more private equity fund managers to consider Milan as their new operational base. This trend could have a significant positive impact on the Milan real estate market, offering new opportunities for investors and further stimulating the city’s economic growth.
We at Agedi welcome this trend and are available to offer high-quality residential and commercial solutions aimed at meeting the needs of new investors and international professionals arriving in Milan.