Exclusive residences in Milan: never so good in seven years

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The Exclusive Residences Observatory, an analysis of the highest segment of the real estate market for the city of Milan, now in its 15th year, was presented today at the offices of Tirelli & Partners at 2 ViaLeopardi.

"Remarkable first part of 2018! Undoubtedly the best half-year in the last seven years in terms of buying and selling" - Marco Tirelli began.

All key indicators show positive signs; the boost in demand is mighty in all segments and for all types of use: for first-time homebuyers, for replacement and for investment. In fact, the absorption index is flying at 19.1 percent, close to physiological values for this market.

"Ithas taken a good five years to return, very gradually, to a tonic and promising market for the future" - Tirelli continues.

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Average asking prices over the six-month period show an increase that touches an average of 1.5% mala dynamic favors the highest average prices (the most expensive houses, in the first quartile), which mark +2.4%. Quality is increasingly making a difference!

"The discounts average obtained compared to the asking price in completed transactions continue to decline, averaging 7.8 percent. It is interesting to point out that on average the discount applied to renovated houses exceeds that obtained for those to be renovated. This is a strong signal that the market does not always recognize the value of renovation work carried out by the owner according to his personal taste, which in the intentions would like to be incorporated into the asking price." - says Gabriele Torchiani. On average, purchases and sales that are finalized within four months-increasingly frequent-report discounts of less than 3 percent. There is no shortage of examples of zero discount. "The sudden decrease in selling time, which have now dropped below 10 months, is the most striking and significant figure in this report and," Torchiani continues, " marks a psychological threshold as well that reinforces the conviction that Milan's exclusive residences segment has made the definitive, long-awaited turnaround. The relationship of this trend with the average stock times of unsold properties, which on the contrary are growing fractionally, shows that demand rewards new quality homes placed on the market in the last two semesters, while penalizing those on offer for more than a year and a half.

For the highest end of the segment, the one represented by the most valuable residences, the situation has been recreated in the city characterized by a supply that is largely insufficient compared to a demand that is ready to close quickly and with "light" negotiations when faced with houses that it deems valuable and at the moment "unrepeatable."

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The combination of price increase and discount decrease generated an increase of +1.8% in average actual sale prices compared to 2017. The 3 most important transactions of the period took place in Centro Storico, Quadrilatero and Magenta, with a total value of about 16 million. "It is interesting to note ," Torchiani concludes, " that in the Quadrilateral, a transaction took place at a price per square meter above €20,000.

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Renting continues the positive trend of the past three semesters. Demand remains very active both from the Milanese, who are struggling to find the ideal solution in purchase and are deciding on a transient rental, and from the impact of the foreign component, which continues to enliven the market. "The average quality of the properties offered continues to progressively improve," Tirelli resumes, " in terms of redevelopment and immediate habitability: a substantial portion of owners are now well aware of the need to offer 'ready-made' homes, properly renovated." The intersection of consistent demand and continuously improving supply results in a new increase in theabsorption index, close to 25 percent.

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Asking rents show further increases. Once again driving the trend is the dynamics of average maximum rents, that is, of homes more in line with landlords' expectations, rents that on an annual basis have risen by more than 4 percent. Average potential profitability levels of Milan's prime residences continue the upward trend of the past two and a half years, reaching new highs for the past five years. Despite the increase recorded in sales prices, an average yield close to3.3 percent can be achieved today.

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Both the average rental time (8.9 months) and the average storage time of unrented properties (11.8) still decrease. The average discount falls by 0.2 percent from the previous six months to 7 percent, the lowest value in six years.