The resilience of the luxury real estate segment in Italy

These past few years have been marked by various events such as the pandemic, the Russian-Ukrainian conflict, inflation, and rising rates, all of which have outlined a macroeconomic picture that is not entirely robust.

However, luxury residential has continued to grow, fueled by the high presence of high-spending individuals who allocate part of their wealth (about 15 percent) to this category of real estate. Global wealth in 2022 remained above $80 trillion (World Report Series 2023, Capgemini), remaining roughly stable, with percentages being distributed more in North America, Europe, and Asia, areas that drive growth and financial indicators internationally.

One might ask why the prime real estate segment manages to withstand market shocks so well. Leone Rignon, managing director of Santandrea Luxury Houses & Top Properties, answers, “For the purchase of this type of property, there is no particular recourse to financial leverage, as is the case with civilian residential properties. In the luxury segment, the potential buyer buys mainly because of the desire to be able to enjoy an exclusive residence, a ‘one of a kind’.”

Hassle-free economic availability and the desire to own a distinctive residence are thus the drivers of purchase. “According to our Santandrea network,” Rignon continues, “the demand for fine properties has been mainly oriented toward purchase (70 percent), compared with 30 percent of requests for rental solutions. The purposes of purchase are mostly related to exclusive use, either as a first home or as a second home. However, acquisitions for investment with alternate use of the property are also growing: for exclusive use of the property at certain times of the year and rented during the remaining periods.”

Who is buying luxury real estate in Italy?

In 2022, according to notary statistics, purchases and sales of luxury residential properties are up 9 percent from the previous year. This is a market that is characterized by the desire to enjoy ownership of an exclusive property and the need to maximize the return on investment. The number of purchases and sales of properties above 1 million euros has mostly involved second homes. Looking at the historical series, we can see that the trend is steadily increasing, and in the last five years, the first home has grown by 92 percent and the second home by 61 percent.

But who buys luxury real estate in Italy? “The catchment area of luxury real estate is mainly international for about 70 percent of buyers, while 30 percent are Italian. In 2023, real estate prices have kept up the pace of growth in 2022, with few cities recording stable values, and in the main cities analyzed, there is a fair balance between demand and supply of properties. Expectations are certainly positive, first of all with respect to the most popular tourist resorts, where people tend to look for second homes; for example, demand is increasing for Santa Margherita Ligure. We also note a renewed interest in large Italian cities, Milan and Rome in primis, but also in secondary cities such as Turin, Naples, and Genoa, which are regaining appeal after the pandemic years.”

The profiles of buyers entering the world of luxury are mostly from Generation X (1965–1979) and Younger Boomers (1955–1964). According to a recent study (Home Buyers and Sellers Generational Trends Report, NAR 2023), the highest-net-worth individuals are concentrated in the 50–70 age group, taking the place of Millennials.

Luxury home prices, city by city

Milan
Milan continues to experience strong dynamism due to major projects and investment opportunities in real estate. Prices, both for newly built homes and those to be renovated, are rising slightly, especially in central areas. The average gap between asking price and actual price stood at around +8.8 percent, with peaks of +10 percent for the Quadrilateral and Palestro-Duse areas. As for the average selling time, it is around 4-6 months; in other more dynamic cases, the selling time can be reduced to 3–4 months, such as in the Historic Center area, Brera, and Magenta-Pagano-Castello. Out of a sample of 828 properties over 1 million euros, the largest size class is between 146 and 200 square meters, followed by the class between 201 and 250 square meters. Looking at prices, in the city of Milan, properties for sale above €1 million are almost all in the range of €1 up to €2.4 million, with the presence of only one property in the top properties category exceeding €9 million. Supply is concentrated in the historic center until it thins out to the semi-central districts.

Rome
Rome remains a dynamic reality thanks to its strategic location and the projects underway or to be started in the coming years, which will create the conditions for possible investments in real estate. Prices in the city of Rome, both for newly built homes and those to be renovated, are rising slightly, especially in central areas. With reference to values, the average gap between the asking price and the actual price stood at around 7.4 percent. As for the average selling time, it is around 5–9 months; in the most vibrant areas, it ends even after 4 months. Out of a sample of 1034 properties over 1 million euros, the distribution of properties with respect to size is varied, with the largest size class being between 251 and 350 square meters, followed equally by the classes from 146 to 200 square meters and 201-250 square meters. Looking at prices, in the city of Rome, properties for sale above 1 million euros are almost all in the range of 1 up to 2.4 million euros. Rome has about 5 properties in the top properties category that exceed 9 million euros. The supply is mainly concentrated in the downtown areas, but smaller numbers are also present in semi-central areas.

Genoa
Genoa is a city in constant evolution, and the real estate market is in line with this trend. Prices, apart from the Quarto/Quinto area, are rising. The average gap between asking price and actual price, citywide, has been around +10.2%, apart from in the Carignano area with +7%. As for average selling times, they are around 3–7 months: faster times are found for Albaro and Carignano (2–6 months), and for the Nervi and Centro area, times are around 3–7 months. Relatively longer times for other areas are 4–8 months. Out of a sample of 33 properties worth over 1 million euros, the supply is mainly distributed in the size classes between 201 and 250 sqm and between 251 and 350 sqm. Looking at prices, in the city of Genoa, the properties for sale above €1 million are almost all in the range of €1 up to €2.4 million, with the presence of only one property in the top properties category exceeding €9 million. Supply is concentrated in the districts of Centro Est, Medio Levante, and Levante.

Naples
Naples is a city full of history, culture, and traditions and shows a strong vibrancy in terms of planning as well. Prices have remained stable compared to last year. As for average selling times, they are around 5–9 months, with Vomero confirming itself as the most dynamic area (3-6 months). In Chiaia and Posillipo, the timelines are lengthening by around 6–10 months. Out of a sample of 161 properties over 1 million euros, the largest size class is between 146 and 200 square meters, followed by the class between 201 and 250 square meters. Looking at prices, in the city of Naples, properties for sale above 1 million are almost all in the range of 1 to 2.4 million euros, with the rest falling into the top luxury category. The supply is concentrated in the neighborhoods of Chiaia, Posillipo, Vomero, San Giuseppe, and San Ferdinando.

Turin
Turin has considerable potential and is confirmed as strongly attractive and dynamic for real estate investors. Prices are unchanged, remaining stable in all areas. Regarding values, the average gap between asking price and actual price, citywide, was around +10% stable compared to what was recorded in the previous six months. The average selling time is around 4–8 months. Out of a sample of 95 properties over 1 million euros, the distribution according to size is concentrated in the higher square footage, whereby the main size class is between 251 and 350 square meters, followed by properties over 500 square meters. Looking at prices, in the city of Turin, properties for sale above 1 million euros are almost all in the range of 1 to 2.4 million euros, while the rest fall into the top luxury category. Supply is concentrated more in the Centro/Crocetta and Borgo Po/San Salvario neighborhoods.

Bari
Bari is a city on the move and has a rich and diverse cultural offering. Prices vary and rise in the Murat, Madonnella, and Marconi areas and fall in the Libertà and Japigia areas. Prices relative to the city of Bari remain in line with those of last year, rising slightly in the most sought-after areas such as Murat and Poggiofranco. The average time to sell is 6–12 months. Out of a sample of 11 properties above 1 million euros, the main size classes range from 201-250 sqm, 251-350 sqm, and over 500 sqm. Looking at prices, in the city of Bari, properties for sale above 1 million are all in the range of 1 to 2.4 million euros. The supply is concentrated in the Picone-Poggiofranco and Murat-San Nicola neighborhoods.

Florence
Florence is a city of art and culture that attracts tourists from all over the world, especially Americans. Prices for the city of Florence remain in line with those of last year, with a slight increase found in higher prices for new renovations and solutions to be renovated. The areas with the highest ranges is Lungarni, followed by the Historic Center and Oltrarno. The average selling time is around 3–8 months. Out of a sample of 225 properties over 1 million euros, the distribution with respect to size is diverse, with the largest size class being between 251 and 350 square meters, followed by the class between 351 and 500 square meters. Looking at prices, in the city of Florence, the properties for sale above 1 million are almost all in the range of 1 up to 2.4 million euros, while the rest fall into the top luxury category. The supply is mainly concentrated in the historic center.