Over the course of 5 years, housing prices in the city of Milan have increased by over 40% (precisely 43.2%), compared to a metropolitan average of 8.8%. This surge has been driven, in particular, by a shift in purchases from central areas to more accessible peripheral zones, which have seen a rise of 50.3%. Specifically, three macro-areas of the city, aided by redevelopment initiatives, have performed exceptionally well: at the top is Fiera-San Siro, with the most significant price increase at +59.2%, followed by Bovisa-Sempione (+55.8%), and Lodi-Corsica (+48.4%), which benefits from the redevelopment of the Porta Romana district, and the effects of projects related to the Winter Olympics.
All this information comes from analyses by the research office of the Tecnocasa Group. In light of this upward trend, what should one do now? Should one continue to invest in Milan’s real estate or wait? We Wealth posed this question to Fabiana Megliola, Head of Research at the Tecnocasa Group.
What to Do Now: Invest in Milan’s Real Estate Market or Wait?
“The price increase experienced by Milan in recent years has been most noticeable in areas undergoing redevelopment and the expansion of metro lines, especially where these were previously absent. At present, the city still has several projects (Scalo Farini and Porta Romana) that will further revitalize the city, attracting investors,” commented Megliola. She added, “Even peripheral areas, where prices are still affordable despite the increase, if well-connected and serviced, can be kept under consideration as an investment.”
Buying Property for Rental Income and Short-Term Rentals: Where to Invest
Looking more broadly at the entire Italian real estate market, what are the emerging trends? “The first part of 2023 has seen a significant increase in property purchases for investment purposes, rising from 16.8% to 19.6%. In various cities, we have noticed a strong increase in purchases aimed at generating rental income or simply to protect capital from high inflation,” explained Megliola, highlighting that the real boost to investment purchases is coming from short-term rentals, as has been evident for several years now. “There are increasingly more people buying for this purpose not only in tourist destinations but also in metropolitan areas, which are experiencing significant tourist flows. In addition, university areas (even in smaller provincial capitals) and areas undergoing redevelopment, especially when bolstered by transportation links (railway, metro, etc.), making them more attractive.”
Regarding tourist destinations, be it by the sea, in the mountains, or by a lake, the investment can be in either vacation homes or properties meant for generating rental income, as seasonal rentals are increasingly shifting towards shorter durations (one to two weeks at most, rather than the entire season).
Rental Yields
What can be the yield of a property given for rent? “In the first part of 2023, traditional rental yields are around 5.2% annually gross,” clarified Megliola. She continued by saying that from the analyses of the Tecnocasa Group’s research office, investment purchases have gained significant importance. “Especially in Milan, Naples, and Verona, but there are also cities like Pesaro, Lecce, Padua, Pavia, Parma where this type of operation is growing due to their appeal to tourists and out-of-town students,” she added. “In terms of seaside and lakeside locations, we have noted a general interest in investment, especially in the trendiest places (such as Riccione, Jesolo, Alghero, to name a few) and in those where the tourist offer is expanding with events, the creation of cycling paths, or opportunities for sports activities.”
