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What will happen in Milan’s real estate market? Will prices go up or down? Is Milan still a hotspot for foreign investors? How is Italy’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Milan, we’ve gained 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) Short-term rental prices will rise as tourism picks up after the pandemic
Milan's tourism hit a record high in 2023 with 8.5 million visitors flocking to the city.
This influx of tourists is a clear sign of tourism bouncing back strongly post-pandemic, which is boosting the demand for short-term rentals. Imagine the bustling streets filled with travelers eager to explore Milan's rich culture and history.
Short-term rentals are seeing a boom, with a typical listing being booked for 255 nights a year. This means that properties are occupied about 70% of the time, showing that tourists are increasingly opting for these accommodations over traditional hotels.
With such high occupancy, it's no surprise that the average daily rate for these rentals is €116. As more tourists choose short-term rentals, this rate is likely to climb, making it a lucrative market for property owners.
Tourists are not just visiting; they are spending, and this economic activity is likely to push rental rates even higher. The vibrant atmosphere of Milan, with its fashion, art, and cuisine, is a magnet for visitors, further driving up demand.
Sources: Airbtics, Statista, Comune di Milano
2) Luxury rents in Milan will rise as wealthy individuals look for exclusive homes
The luxury property market in Milan is buzzing with activity, thanks to a surge in demand from both local and international buyers.
In Milan, rental prices for luxury properties are climbing as more people seek out these exclusive homes. This trend is especially noticeable in the luxury villa segment, where regions like Tuscany and the Amalfi Coast are also catching the eye of potential buyers.
Globally, the number of High Net-Worth Individuals (HNWIs) is on the rise, with a 4.7% increase in 2024 according to the World Wealth Report. Among these wealthy individuals, 19% of HNWIs and 22% of UHNWIs are eyeing luxury real estate investments, which is expected to further fuel the demand for Milan's exclusive properties.
However, there's a catch: the supply of luxury properties in Milan is limited. This scarcity means that as more high-net-worth individuals compete for these prime locations, rental prices are pushed even higher.
Looking at the numbers, luxury rental prices in Milan have been steadily increasing. In 2023, there was a 2.2% rise, and forecasts suggest a further 0.6% growth in 2024.
With this backdrop, it's clear that high-net-worth individuals are driving the market, seeking out Milan's most exclusive properties and pushing rents upward.
Sources: Mordor Intelligence, Proven Partners, Savills
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Italy versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Rents in central Milan will rise as the city becomes more popular with expats
Rents in central Milan are on the rise as the city becomes increasingly popular with expatriates.
In 2023, Milan was bustling with 475,171 foreign citizens, many from Egypt, Romania, the Philippines, and China. This diverse crowd is drawn to the vibrant lifestyle and opportunities, especially in the heart of the city where housing demand is high.
The arrival of affluent expatriates has led to a 43% jump in real estate prices over the past five years. In just the last two years, rental costs have surged by 20%, a trend fueled by the limited housing supply in central Milan.
Adding to the mix, the flat tax on foreign income for new residents will double in August 2024. This move is expected to further drive up real estate prices and rental costs, as it tries to balance the allure for wealthy expats with local needs.
Milan's allure as a global city, coupled with its strategic location, makes it a magnet for expatriates who often prefer the city center. The presence of around 5,000 multinationals employing 520,000 people boosts the demand for housing and rentals.
Real estate experts foresee a continued demand for housing in Milan, driven by its growing popularity among expatriates and international businesses. The city's dynamic environment and opportunities make it a top choice for many.
Sources: Statista, Nestmann, FDI Intelligence
4) Demand for sustainable properties will rise due to new tax incentives for eco-friendly buildings
New tax incentives for eco-friendly buildings are set to boost demand for sustainable properties.
In Italy, there's already a buzz around green "retrofitted" buildings, with over 60% of investors eyeing these properties. This shows a clear shift towards sustainability, and these tax breaks could really speed things up.
Milan is getting a big push from the European Investment Bank, which is pouring funds into energy efficiency and renewable energy projects. This aligns perfectly with the new tax incentives, making sustainable projects even more appealing to investors and developers.
The market for green building materials in Italy is on the rise, driven by both environmental concerns and government support. This growth indicates that the market is well-prepared to meet the rising demand for eco-friendly properties.
With these incentives, Italy is not just following a trend but is poised to become a leader in sustainable real estate. The combination of financial backing and market readiness suggests a bright future for eco-friendly investments.
As more investors and developers jump on board, the landscape of Italian real estate is likely to change, with sustainability becoming a key focus.
Sources: Sofialocks, EIB, Bonafide Research
5) More Asian buyers will invest in Milan’s real estate market seeking stable European assets
Milan is buzzing with foreign investment, especially from Asian buyers.
In 2024, 34% of the €3.5 billion invested in Italy's commercial real estate was funneled into Milan, marking a significant uptick. Asian investors are particularly drawn to Milan, thanks to its reputation as a business and fashion hub. Despite the challenges posed by rising interest rates, Milan's stable economy and strategic location make it a top choice.
Asian currencies have a favorable exchange rate against the Euro, which sweetens the deal for investors eyeing Milan. The Italian government has also rolled out incentives to lure foreign property buyers, adding to the city's allure. This has likely played a part in the growing interest from Asian investors.
The luxury real estate market in Milan is thriving, with high demand for premium spaces that align with the tastes of luxury-focused Asian investors. The city's appeal is further boosted by its vibrant cultural scene and high-quality lifestyle offerings.
Insider knowledge suggests that Milan's real estate market is not just about business; it's also about lifestyle. The city's blend of historic charm and modern amenities makes it a unique investment opportunity. Investors are not just buying properties; they're buying into a lifestyle that combines the best of both worlds.
With these factors in play, it's no wonder that Milan is on the radar of Asian investors looking for stable European assets. The city's dynamic environment and strategic advantages make it a compelling choice for those seeking to diversify their portfolios.
Sources: Savills Italy Investment Report, Savills Prospects, Credit Agricole International Support
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6) Luxury property yields will drop as purchase prices outpace rental rates
The luxury property market in Milan is seeing some interesting changes.
In 2023 and 2024, purchase prices for luxury homes in Milan have surged, with the average price hitting nearly 12,000 euros per square meter. This marks a 7.2% increase from 2021, making it a hot topic among potential buyers.
While rental prices are also climbing, they aren't keeping up with the purchase prices. In 2023, rental prices rose by 3.0%, and in the first half of 2024, they went up by 5.2%. This slower pace in rental growth is crucial because it affects the overall return on investment for these properties.
Traditionally, the average annual gross rental yield in Milan has been stable at 5.1%. However, with purchase prices rising faster than rental rates, this yield is expected to decline. This means that while property values are increasing, the income from renting them out isn't growing at the same rate.
For those considering investing in Milan's luxury real estate, it's important to note this widening gap. As purchase prices continue to outpace rental growth, the return on investment from renting out these properties is likely to decrease.
Understanding these dynamics can help potential buyers make informed decisions in this evolving market.
Sources: Savills, Milano Style, Agenzia Nova
7) Property prices on Milan's outskirts will drop moderately as more people choose central areas
Central Milan is becoming increasingly popular for property buyers.
In 2023 and 2024, rental prices in central Milan jumped by about eight percent, making it a hot spot for both residents and investors. The city's vibrant events and booming tourism scene have fueled a surge in short-term rentals, drawing more people to the heart of Milan.
Central Milan is not just about high prices; it's about lifestyle. The Citylife residential district, with its modern amenities and chic reputation, is a prime example of why people are flocking to these areas. According to the "Vincenzo Monti Prestige Prime Residential 2024" report, homebuyers are showing a clear preference for central locations, even with the rising costs.
Public transportation improvements have made central Milan even more accessible. For those who value convenience, being close to transport hubs is a big draw. Milan's well-developed public transport system is a key factor in this trend.
Meanwhile, the outskirts of Milan are seeing a different story. Real estate market reports highlight a slowdown in sales and price growth in these areas. In the third quarter of 2024, there was a noticeable contraction in residential sales, indicating a shift in buyer preferences.
As more people opt for central locations, property prices in the outskirts are expected to decline moderately. This shift reflects a broader trend of urban living becoming more desirable.
Sources: Engel & Völkers, Dils
8) Demand for diverse housing in the city will grow as the international community expands
Milan's international community is booming, driving a demand for diverse housing options.
In 2023, Milan welcomed 475,171 foreign citizens, including a notable 66,000 Egyptian nationals. This melting pot of cultures naturally calls for housing that suits various lifestyles and preferences.
The city's international schools, like the American School of Milan, are seeing a surge in enrollment, with students from over 70 nationalities. Families moving here often look for homes near schools and community amenities to fit their unique needs.
Milan is also a hub for foreign-owned businesses, with 4,700 headquarters of companies like IBM and Lenovo. This influx of international employees shapes the real estate market, pushing for a variety of housing styles.
These corporate giants not only bring in a diverse workforce but also influence the local housing scene, making it more dynamic and varied.
As Milan continues to grow as a global city, the demand for housing that reflects its international flair is only set to increase.
Sources: Statista, American School of Milan, Yes Milano
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.
9) Rental yields in Milan will rise as rental demand exceeds supply
Rental yields in Milan are climbing as the demand for rental properties continues to outstrip supply.
In recent years, rental rates in Milan have surged, with the average rent for a two-room apartment in the city center jumping from €1,200 in 2018 to €1,500 by mid-2023. This spike is fueled by the return of international tourism and bustling cultural events, making larger, well-connected homes more desirable.
Milan's charm is drawing in more people, especially international students and professionals. From 2020 to 2021, the city saw a 13% increase in international students, with over 80% attending local universities. This influx is pushing up demand for rentals, especially in central areas where students often seek short-term leases.
Adding to the pressure, Milan is seeing limited new housing developments. High construction costs are a major factor, with prices in the city center hitting €7,000 per square meter by mid-2023. This steep cost means fewer new homes, which in turn drives up rental prices.
Government policies might also be playing a role in the housing crunch, potentially limiting the supply of new properties. This shortage is making it tough for renters to find available homes, further boosting rental prices.
Sources: Roomless Rent Blog, Agenzia Nova, Global Property Guide
10) Demand for smaller apartments in Milan will grow as single-person households increase
Milan is seeing a big rise in single-person households.
In Italy, 16% of households were single-person by December 2023, according to EUROSTAT. This trend is expected to grow, with ISTAT predicting that by 2042, over 37.5% of Italian households will be just one person. This shift is largely due to cultural changes, like people marrying later and planning families differently.
Economic factors also play a role. With strong job growth and better consumer confidence, more people can afford to live alone. In Milan, this means a higher demand for smaller apartments, as they are more affordable than larger ones.
Rental prices are climbing, pushing people towards one-bedroom or studio apartments. Real estate reports show a surge in demand for these compact living spaces. Architects are also designing more efficient and smaller homes to meet this demand.
These trends are reshaping Milan's housing market, making it a hotspot for those seeking smaller, more efficient homes. The city's vibrant job market and cultural shifts are key drivers in this transformation.
Sources: EUROSTAT, ISTAT, RealPage
11) More young professionals moving to Milan for tech jobs will shift the city's demographics
Milan is quickly becoming a hotspot for young tech professionals.
With a 27% increase in tech job openings expected in 2024, the city is drawing in talent with competitive salaries ranging from €55,000 to €75,000 annually. Major players like Google, Microsoft, and Amazon are expanding their presence, creating a wealth of opportunities. Since 2021, 11 overseas companies have set up shop in Milan’s Fintech District, adding to the buzz.
The Lombardy region, home to Milan, is recognized as a “strong innovator” by the European Commission, which means there's solid backing for tech growth. The government is also stepping up, offering legal advisory services to foreign fintechs, making Milan even more appealing for tech professionals.
As more young professionals flock to the city, the real estate market is feeling the heat. There's a noticeable uptick in demand for housing, especially in areas favored by this demographic. This shift is a clear sign of the changing face of Milan.
Universities in Milan are seeing a surge in enrollment for tech-related programs, which is another indicator of the growing interest in tech careers. This trend is feeding the influx of young professionals, further transforming the city.
Sources: Nucamp, FDI Intelligence, Nucamp
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12) Property values in San Siro will drop as stadium redevelopment causes temporary disruptions
When big construction projects kick off in Milan, like the Porta Romana redevelopment, property values often take a temporary hit.
It's not just Milan; other cities see this too. Take London, for instance. During the Emirates Stadium redevelopment, nearby property values dipped a bit. This happens because construction can be a real hassle, with all the noise and traffic making life less pleasant.
Experts in urban planning and real estate are saying the same thing about the San Siro redevelopment. They predict short-term economic impacts, like businesses having to close or move, which could push property values down.
Local media have been buzzing about community worries. People are concerned about noise pollution and traffic congestion, which are known to drag down property values during construction.
In the San Siro area, expect some temporary disruptions. The construction phase might lead to business closures and relocations, adding to the dip in property values.
So, if you're thinking about buying property around San Siro, keep in mind that values might drop temporarily as the stadium gets its makeover.
Sources: Sempre Inter, Coliseum Online, Milan Reports
13) Property prices in Isola will rise as more young professionals move in for the nightlife and tech scene
The Isola district in Milan is becoming a hotspot for young professionals.
In November 2024, property prices in Isola hit €6,384 per square meter, reflecting its growing allure. This steady rise in prices shows a strong demand for housing, making it a sought-after area for those looking to invest in real estate.
Isola's tech scene is booming, with companies like Velasca and Yoox leading the charge. Milan hosts 228 startups with a combined funding of $2.8 billion, drawing in young professionals eager for opportunities in innovative fields.
Beyond work, Isola offers a vibrant lifestyle. Known for its lively nightlife, especially along Via Borsieri, the area is a magnet for artists and musicians. This cultural buzz makes it a favorite among young professionals who crave a dynamic living environment.
Surveys show that young professionals are drawn to neighborhoods with a rich cultural scene, and Isola fits the bill perfectly. The media often highlights Isola as a trendy spot, further boosting its reputation as a desirable place to live.
With its mix of career opportunities and cultural attractions, Isola is set to continue attracting young talent, driving up property demand and prices.
Sources: Immobiliare.it, Seedtable, Italy on Foot
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.