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What will happen in Florence’s real estate market? Will prices rise or fall? Is Florence still a prime destination for international buyers? How are local government policies and taxes shaping the real estate landscape in 2025?
We’re frequently asked these questions because of our deep involvement in this market. Through our collaborations with notaries, real estate agents, and clients purchasing properties in Florence, we’ve gathered firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Rental yields in Florence's suburbs will rise as more people look for affordable living outside the city center
In recent years, the city center of Florence has become increasingly expensive, with rental prices reaching up to 25.82 euros per square meter in October 2024. This trend has made the city center less affordable for many people, pushing them to look for more budget-friendly options in the suburbs.
Post-pandemic, there has been a noticeable shift in housing preferences, with more people seeking larger living spaces. Suburban areas can offer these larger spaces at a lower cost compared to the city center, making them an attractive option for those looking for affordable housing. This demand for more spacious and affordable living arrangements is expected to continue growing.
Improved transportation links between suburban areas and the city center have also played a crucial role in making suburban living more appealing. With better public transportation and infrastructure, commuting to the city center for work or leisure has become easier, further enhancing the attractiveness of suburban areas for renters.
Rental yield trends in Florence show that suburban areas are already experiencing higher rental yields compared to the city center. For instance, the average gross rental yield across all locations in Florence is 7.50%, with some suburban areas showing even higher yields. This data suggests that suburban areas are becoming more lucrative for rental investments.
Government incentives aimed at promoting suburban development, such as the Community Development Block Grant (CDBG) program, provide additional support for affordable housing initiatives in suburban areas. These incentives can further boost the appeal of suburban living, attracting more renters and increasing rental yields.
Real estate market reports have indicated an increased interest in suburban properties in Florence. This trend is driven by rising property prices in the city center, the growing demand for affordable housing, and improved transportation links, all of which contribute to the attractiveness of suburban living.
Sources: Statista, Global Property Guide, City of Florence
2) Property prices in Rifredi will drop moderately as it competes with more central areas
The Rifredi district is facing a moderate decline in property prices, and there are a few key reasons for this trend. First, the number of property listings in Rifredi has increased, and these properties are staying on the market longer than those in more central districts. This suggests that fewer people are interested in buying homes in Rifredi compared to central areas like Oltrarno and Michelangelo.
Another important factor is the difference in property prices between Rifredi and central districts. In November 2024, the average price per square meter in Oltrarno was €5,800, while in Rifredi, it was only €3,100. This significant price gap indicates that central locations are more desirable and can command higher prices.
Additionally, rental yields in Rifredi are lower than in central districts. For example, in November 2024, Oltrarno had the highest rental yield at €25.55 per month per square meter, whereas Rifredi's yield was just €13.27. Lower rental yields make Rifredi less attractive to investors looking for profitable rental properties.
Sources: Statista, Immobiliare.it
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3) Mid-range property prices in Florence will remain stable with slight variations
The mid-range property market in Florence is set for stable prices with minor fluctuations.
Florence has a history of steady property prices, with a 3.38% increase in October 2024, reaching 4,279 euros per square meter. This trend reflects the city's enduring appeal and the consistent demand from both local and international buyers. Florence's charm, with its rich cultural and historical backdrop, continues to attract long-term residents.
The city's UNESCO World Heritage status limits new construction, which helps keep the property supply balanced. This is crucial for maintaining stable prices. The local real estate market has shown low volatility over the past decade, thanks to this controlled supply and steady demand.
Florence's economy is on solid ground, with stable employment rates providing residents the financial means to invest in property. The government's Golden Visa program further encourages foreign investment, adding another layer of support to the mid-range market.
Market surveys show a balanced ratio of buyers to sellers, a strong indicator of price stability. This balance is essential in ensuring that the market remains steady, without dramatic price swings.
Florence's strong tourism industry also plays a role, as it fuels demand for properties from those looking to settle in this vibrant city. The combination of these factors makes Florence's mid-range property market a reliable investment.
Sources: Get Golden Visa, Immobiliare.it
4) Luxury property prices in Florence will rise significantly due to growing international interest
The luxury real estate market in Florence is seeing a significant price increase driven by international interest.
In 2023, the interest from foreign homebuyers in Florence surged by 126.65% compared to pre-pandemic figures. Tuscan homes, including those in Florence, accounted for 23.24% of all inquiries, making them the most popular destination in Italy for international buyers. This trend is largely fueled by the allure of Florence's rich history, art, and culture, which continue to captivate global investors.
The market is moving faster than ever, with luxury properties in Florence now spending an average of 5.8 months on the market, down from 8 months in 2019. This indicates a more dynamic market with quicker transactions. By the end of 2023, demand had rebounded by 18%, showing a 9% increase compared to the previous year, despite some fluctuations in the monetary value of stock and surface area over the past five years.
Non-EU buyers, especially from the United States, are playing a big role in this trend. Inquiries from U.S. investors were 223% higher than in 2019. The strong dollar against the euro has made Italian homes more affordable for these buyers, giving them a currency exchange rate advantage that has further fueled their interest in Florence's luxury market.
Florence's appeal is not just about its properties; it's about the lifestyle. The city offers a unique blend of Renaissance art, exquisite cuisine, and a vibrant cultural scene, making it a dream destination for many. This cultural richness is a key factor attracting international buyers who are looking for more than just a home; they are seeking an experience.
Sources: Columbus International, Benoit Properties
5) Luxury rental yields will stay stable due to strong demand from wealthy tenants
Rental yields in luxury properties are expected to remain stable due to the high demand from affluent tenants. In Florence, rental prices in the luxury property market have been on the rise. For instance, the average cost of rents per square meter is projected to increase by 18% in 2024, reaching nearly 29 euros per square meter. This significant increase highlights the strong demand for luxury rentals.
Moreover, the consistent occupancy rates in high-end rental properties further support this stability. Despite a slight increase in vacancy rates in the multifamily sector due to new supply, the overall trend suggests that high-end rentals will maintain occupancy rates. Predictions indicate that the average multifamily vacancy rate will reach 4.9% by 2025, which is still relatively low and indicates consistent demand.
Additionally, the increasing number of affluent expatriates and international students in Florence contributes to the growing demand for luxury accommodations. The University of Florence, for example, has welcomed a significant number of international students, which adds to the demand for high-end living spaces. This demographic shift, along with the limited supply of luxury properties in prime locations, allows landlords to maintain higher rental prices, ensuring stable or increasing rental yields.
Sources: The Florentine, CaliberCo, NSS Magazine
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6) Florence’s property prices will rise moderately as demand exceeds supply
Florence is seeing a surge in property demand, especially from investors.
In 2023, 23% of property purchases in Florence were for investment, outpacing the national average of 19.5%. This shows a strong interest in the city's real estate market.
One reason for rising property prices is the limited space for new housing. Florence's restricted land area means fewer new developments, making existing homes more valuable.
Florence's property prices have been on the rise for years, with prices surpassing 4,000 euros per square meter in October 2023. This trend suggests continued growth in the market.
Investors are drawn to Florence not just for its charm but also for its consistent property value appreciation. The city's historical allure adds to its real estate appeal.
With demand outpacing supply, Florence is likely to see a moderate increase in property prices as the market remains competitive.
Sources: Statista, Columbus International, Global Property Guide
7) Affordable housing prices in Florence will drop slightly as new developments boost supply
In 2023 and 2024, Florence saw a significant increase in new housing developments. For instance, there were 18 new apartments at Via Locatelli and 36 at Nuovo Conventino, with only a few units left for sale. This surge in new housing projects is a clear indicator of an expanding supply in the market.
The City of Florence has been proactive in enhancing affordable housing through projects like the Stackley Street Redevelopment Project and the North Pointe Subdivision. These initiatives aim to provide quality, affordable housing for low-to-moderate-income residents, further contributing to the increase in housing supply.
Real estate market analysis from the past years showed that while property prices in Florence have generally increased, the growing inventory of homes due to new developments could lead to a slight decline in prices. Historical data supports this, as increased supply often results in price stabilization or a slight decrease.
Sources: Piero Lorenzo Realtor, City of Florence Community Services, Statista
8) Property prices in Florence's historic center will stay high, but growth will slow as buyers look for cheaper options
The historic center of Florence has always been a desirable location, which is why property prices have been high. In the past, specifically in 2023, prices in areas like Michelangelo and Porta Romana reached up to 5,700 euros per square meter. This is significantly higher than in suburban areas, where prices were around 3,867 euros per square meter.
However, the rate at which these prices are increasing is expected to slow down. Market projections for 2025 show a range of possible price increases, with the most optimistic scenario predicting a 17.9% rise, while the more cautious outlook suggests only a 2.7% increase. This indicates that while prices will remain high, the rapid growth seen in the past may not continue at the same pace.
One reason for this slowdown is the changing preferences of buyers. Many are now looking for more affordable options, especially as interest rates stabilize. This shift is also driven by the increasing demand for suburban properties, where larger and more affordable homes are available. The trend towards remote work has made suburban living more appealing, further reducing the pressure on the historic center's property market.
Sources: Norada Real Estate, Statista, Acacia Firenze
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9) Property values in Campo di Marte will drop as new developments draw interest to other areas
In recent years, the Campo di Marte area has not kept pace with the overall growth in Florence's real estate market. While Florence has seen an increase in property sales, Campo di Marte experienced a decline in house prices by 8.1% in 2024, with only 1,225 transactions.
Meanwhile, other neighborhoods like Oltrarno and Bolognese have witnessed significant increases in property values. For instance, in November 2024, Oltrarno properties averaged €5,800 per square meter, and Bolognese properties were at €4,388 per square meter. This indicates a shift in buyer interest towards these areas.
Additionally, the Florence City Council has approved new development projects, such as the one along Gunpowder Road, which includes 264 condos and 26 single-family homes. These developments are part of a larger plan to attract buyers, offering improved infrastructure and amenities like additional parking and a pool.
Demographic shifts also show population growth in neighborhoods with new developments, further drawing interest away from Campo di Marte. Surveys and real estate trends indicate a growing preference for these newly developed areas, supported by media coverage highlighting their appeal.
Sources: Immobiliare.it, Link NKY, Idealista
10) Property values will rise in Florence as the tram network expands to new areas
The expansion of Florence's tram network is set to increase property values in newly connected areas due to several key factors. Historically, areas like Bagno a Ripoli and Gavinana have already seen a 10% rise in property values following tram expansions in 2023 and 2024. This trend is expected to continue with the upcoming Line 4, which is projected to boost property values by up to 15% in areas such as Piagge and Campi Bisenzio.
Studies have shown a strong link between public transportation access and higher property values. A joint study by the American Public Transportation Association and the National Association of Realtors found that properties near public transit stations experienced a median sales price increase of four to 24 percentage points higher than those farther away. This supports the idea that the new tram lines will enhance property values in Florence.
Real estate market reports from 2023 and 2024 highlighted increased demand in newly connected areas. For instance, areas along the future Line 4 have already garnered significant interest, with Statuto and Careggi experiencing a 10% increase in property value. This demand is expected to continue as the tram network expands, making these areas more attractive to potential buyers.
Sources: Columbus International, AASHTO Journal, Magenta Florence
11) Investment will shift to long-term leasing due to stricter short-term rental regulations
Florence has recently tightened its grip on short-term rental regulations, especially in its historic center.
In 2023, the city council decided to ban new Airbnb openings in the UNESCO area, aiming to preserve the cultural integrity and tackle housing affordability for locals. This means fewer short-term rental licenses are available, making it tougher for investors to jump into this market.
With these new rules, investors face hefty fines and penalties if they don't comply. The city now requires short-term rental operators to register their properties and get approval from local authorities. This has made short-term rentals less appealing, pushing investors to think about other options.
One popular alternative is long-term leasing. With property prices rising in Florence, especially in central areas, long-term leasing is becoming more attractive. It offers the potential for stable income and consistent rental yields, which is a safer bet in a market with growing regulatory hurdles.
Long-term leases also tend to have higher occupancy rates, making them a more reliable investment choice. Investors are finding that this strategy aligns better with the current market dynamics and regulatory environment.
Sources: The Florentine, Firenze Idee Immobili
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12) More foreign buyers will invest in Florence's outskirts because of lower entry costs
Property prices in Central Florence have been climbing steadily, making it tougher for foreign buyers to invest there.
In November 2024, home prices in Central Florence jumped by 12.2% from the previous year, with a median sale price hitting $230K. This surge is pushing many potential buyers to look elsewhere.
The outskirts of Florence are becoming a hotspot for foreign investors. Here, entry costs are significantly lower, offering better value for money. Projects like the Florence Greenway are drawing attention due to their promising growth potential.
Infrastructure improvements in these suburban areas, such as urban framework loan projects, are making them even more attractive. These projects aim to enhance public buildings and urban infrastructure, boosting the appeal of the outskirts.
Real estate trends show a rise in suburban property sales, indicating that buyers are increasingly seeking affordable options outside the city center. This shift is a clear sign of changing preferences among investors.
Foreign buyers are likely to continue targeting the outskirts of Florence for investment opportunities, driven by lower entry costs and promising growth. The combination of affordability and development is hard to resist.
Sources: Redfin, Panorama Solutions, European Investment Bank
13) European buyers will remain key in Florence’s real estate market, but their dominance will lessen as global interest diversifies
European buyers have traditionally led the Florence real estate market, thanks to their close ties and proximity.
But things are changing. In 2023 and 2024, interest from North American and Asian investors surged. For instance, U.S. interest in Italian homes jumped by 223% compared to 2019. This is largely because the strong dollar makes Italian properties more appealing to North Americans.
Investors are also looking to diversify their portfolios, and Florence is catching their eye. Italy's friendly policies towards foreign investment make it a hot spot for non-European buyers seeking new opportunities.
Media buzz and international real estate agencies have put Florence on the map, making it a must-see for global investors. As more non-European investors join the fray, the European share is expected to shrink.
Florence's charm and investment potential are no longer a secret. Global wealth distribution trends are pushing investors to explore new markets, and Florence is a top pick.
With all eyes on Florence, the city's real estate market is becoming more diverse, attracting a wider range of international buyers.
Sources: Benoit Properties, Ardian, MSCI, Boston Fed
14) Student rental yields in Florence will rise slightly as more international students arrive
The student rental market in Florence is set to see a slight boost in yields thanks to more international students coming to the city.
Florence is becoming a hotspot for students from around the globe, with 36,000 international students now calling it home. This surge is largely driven by the University of Florence, which attracts a mix of Italian and international students.
Finding a place to live in Florence is getting trickier as the city tries to keep up with the growing student population. Luxury student hotels and other accommodations are in high demand, hinting at a potential rise in rental yields for property owners who can meet this demand.
The University of Florence plays a big role in this trend with its extensive international mobility partnerships and Erasmus agreements. These programs, along with unique offerings from places like the CEA CAPA Florence Center, draw students from all over, increasing the need for student housing.
Florence's charm and educational opportunities are a big draw, but the city is feeling the pressure to provide enough housing. Property owners are likely to benefit from this high demand, as more students look for places to stay.
With more students arriving each year, the rental market is poised for change. Property owners who can offer quality accommodations stand to gain as the city continues to attract international students.
Sources: Higher Ed Dive, CEA Study Abroad, The Florentine
We have made this infographic to give you a quick and clear snapshot of the property market in Italy. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
15) Luxury real estate in San Frediano will attract wealthy buyers as it becomes a hotspot
San Frediano is turning into a prime spot for luxury real estate investments.
Property values here are on the rise, thanks to ongoing gentrification and improved transport links. The neighborhood is buzzing with planned redevelopment projects that promise to boost its appeal even more.
Luxury developments and renovations are popping up all over San Frediano. New office and residential projects are drawing in professionals who crave more space, while urban regeneration is pushing property values higher. This makes the area a magnet for affluent buyers.
There's a growing international interest in San Frediano, especially from American buyers. Inquiries from this market have skyrocketed by 223% since 2019, and the overall interest in Tuscan homes has jumped by 126.65%. The neighborhood's mix of historical charm and modern amenities is a big draw.
San Frediano's transformation is not just about numbers; it's about lifestyle. The area offers a unique blend of old-world charm and contemporary living, making it a coveted destination for luxury seekers.
With its rich history and vibrant culture, San Frediano is becoming a hotspot for those looking to invest in luxury real estate. The neighborhood's appeal is only set to grow, attracting more affluent buyers eager to be part of its story.
Sources: Benoit Properties, Columbus International
16) Young professionals will be drawn to co-living spaces for affordable, community-focused housing
The rise of co-living spaces is drawing in young professionals who are on the lookout for affordable and community-focused housing.
In cities like Florence, rental prices are climbing, making traditional housing tough to afford for many. This is largely due to retirees and newcomers moving in, which is pushing young folks to explore co-living as a cheaper option. Surveys show that millennials and Gen Z love the idea of community living, and co-living fits right into that vibe.
Co-living isn't just about saving money; it's about flexibility and building connections. Media outlets are buzzing about these benefits, and young professionals are taking note. They want a place that's not just a roof over their heads but also a social hub.
Social media is also playing a big role here. Shared living experiences are trending, and this is nudging more young people to give co-living a shot. It's not just about where you live, but how you live, and co-living offers a lifestyle that many find appealing.
With the global co-living market booming, hitting nearly $2 billion in 2023, it's clear that this isn't just a passing trend. Young professionals are budget-conscious, and co-living offers a way to live affordably without sacrificing community.
So, if you're a young professional looking for a place that offers both affordability and a sense of belonging, co-living might just be the perfect fit. It's a growing trend that's reshaping how we think about housing.
Sources: Precision Reports, HUD Archives, World Economic Forum
17) More American buyers will invest in Florence as it becomes a popular expat destination
Florence is becoming a top choice for American expatriates, and the number of buyers from the U.S. is on the rise.
In recent years, the number of Americans moving to Italy has jumped significantly, with registrations increasing from 3,951 in 2019 to 6,813 in 2022. This surge is reflected in the growing interest from American clients, as reported by real estate agencies in Florence. The city's charm and relaxed lifestyle are major draws for those considering a move.
Another factor making Florence attractive is the strong dollar, which has made buying property in Tuscany more affordable for Americans. This financial edge, along with the development of American expatriate communities, creates a welcoming environment for newcomers. Social media and media coverage have also played a role, showcasing Florence as a desirable place to live.
Florence's appeal is further enhanced by its rich cultural heritage and vibrant arts scene, which resonate with many Americans seeking a change of pace. The city's historic architecture and world-renowned museums offer a unique living experience that is hard to find elsewhere.
Moreover, the local cuisine and wine culture are significant attractions, providing a taste of the authentic Italian lifestyle. Many Americans are drawn to the idea of enjoying fresh, locally-sourced food and the opportunity to explore the picturesque Tuscan countryside.
With these factors in play, it's no surprise that Florence is becoming a favored destination for American expatriates, and the trend is expected to continue as more people discover the city's unique offerings.
Sources: Business Insider, Discover Tuscany, Statista
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.