Luxury Residences Report - II half 2019 - Press release
Milan, exclusive residences: new ones are sold-out; top ones too.
Tirelli & Partners today released theExclusive Residences Observatory with data for the second half of 2019.
The report analyzes the highest segment of the housing market for the city of Milan.
Exclusive residences are defined as dwellings located in these areas:
- Quadrilateral
- Old Town
- Brera - Garibaldi
- Magenta
- Venice- Manin - Giardini - Duse
- Residual zone (residences that match the above parameters but are not located in the above zones)
That meet one of these requirements:
- Purchase and sale value per square meter greater than 7,000 euros or total value greater than 1 million euros
- Rent exceeding 200euro/sqm per year or total annual rent exceeding 40,000
Exclusive residences, growing market in Milan. Top quality and new shine.
The second half of 2019 confirms Milan's particularly bright moment in terms of demand for exclusive housing: theaverage absorption index, i.e., the share of houses sold to those on offer, reaches 22%. In H1 2013, the index was 2.8%. "If 6.5 years ago 3 out of every 100 houses on the market were not being sold, today almost 8 times as many are being sold," declares Gabriele Torchiani.
Increasing the number of those who, unable to find homes in the classic addresses of Brera, Magenta or the Quadrilateral, decide to buy in central or semi-central areas traditionally considered less valuable, appreciating the positive features of the apartment, building or neighborhood of reference.
While high-quality properties, however, are meeting demand that is willing to pay premium prices, medium- and lower-medium quality used properties are struggling to find buyers. Indeed: average inventory times, which have risen to 23 months, indicate that homes that do not sell right away often do not sell. The latter category also includes homes given to multiple brokers, who confuse potential customers with often contradictory data and push them to negotiate down on price.
Huge successes are found instead in new housing. Most sites are sold-out long before construction is finished.
Rising prices
Upward trend for prices, which rise an average of 2.9 percent over the previous six months.
In the second half of 2019, average discounts drop to 6 percent.
Average selling times also drop, to under 7 months. However, the most valued homes sell very quickly, frequently without officially entering the market even when brokered by licensed brokers.
"Minimal discounts and rapidly decreasing average selling times are unmistakable signs that we are facing what Anglo-Saxons calla sellers' market, or a market where sellers dictate," says Marco E. Tirelli.
The most expensive properties: prices and areas
In the six-month period, the most significant buying and selling occurred on one of the most exclusive streets in the Quadrilateral, at a value paria 20,000 euros per square meter net of the price of boxes.
Characteristics of the highest overall value homes being bought and sold in Milan (II semester2019)
Leases: a great ferment
The rental market also performed very well in the second half of the year.
All indicators are very positive:
- absorption index exceeds 30 percent for the first time in 10 years;
- the average discount falls below 6 percent for the first time;
- the average lease time is close to 6 months (it was almost 8 in the first half of the year).
"It is the fruit that the owners can continuously reap thanks to the investments made in renovation and endowment of basic furnishings," says Torchiani.
Forecast
"The Milan market had solid foundations both in terms of the scarcity of quality product supply and the variety of demand that is no longer limited to the Milanese alone," says Tirelli. "It is clear that we are experiencing a very difficult time, and in the coming months we expect a great impact on the market in terms of a slowdown in sales and rentals. However, we are convinced that the outlook remains good and that the market will recover serenity and confidence during the second half of the year."