- Milan has the highest residential property prices for a city at €16,000 per sqm
- In Florence, prime rents in the historic centre are among the highest in Italy at €18 per sqm per week / €78 per sqm per month
- Tuscany is second only to Sardinia for prime residential prices; Lake Como takes third place
- TV and film puts real estate in Sicily in the spotlight
The Savills Report 'Italy Prime Residential Market 2024' published today, analyses the prime residential market in four major cities (Rome, Milan, Florence and Palermo) and the key countrsyide and seaside locations for second homes (Liguria, The Lakes, Tuscany, Umbria, Sicily and Costa Smeralda, Sardinia).
The report reveals that major cities and second home locations in Italy recorded positive rental and capital value growth over 2023, in spite of challenging global economic conditions and a higher interest rate environment.
Year on year, cities saw prime capital values grow by 1.8% and prime rental values by 2.5% whilst second home locations, such as Tuscany and Liguria, saw growth of 6.7% for capital values and 39.3% for rental values.
“As with other global markets, prime rents in Italian cities have outpaced capital value growth”, said Kelcie Sellers, associate, Savills World Research.
“Outside the major cities, rents and capital values have risen even more quickly in prime countryside locations as individuals prioritise greater space and access to nature.These locations will continue to see price growth as sought after trophy assets in these areas offer an escape from the busy cities and an often desirable change of pace.”
Rome experienced a 2.2% increase in prices and rents during 2023, a trend that is set to continue in 2024. Milan holds the record for the highest price per square metre for prime residential property: €16,000/sq m, up 0.9% in 2023, despite a 15.2% decrease in the number of transactions.
Sicily has seen renewed interest, from both domestic and international buyers, thanks to several high-profile television series and films.Palermo remains a sought-after destination for both buyers and renters, with prime prices and rents per square metre among the most affordable in Italian cities: in 2023 the city recorded a growth in transactions (+11.3% compared to 2019) and property prices remained stable, while as far as the rental market is concerned Palermo saw limited growth (+0.9% in 2023).
Despite a decrease in transactions, the real estate market in Costa Smeralda in Sardinia saw a continuous upward trend in prices and rents. During 2023, prime prices in the Costa Smeralda area increased by 18%, recording the second highest growth in Italy after Lake Como (+19.9%). Rents also increased significantly in 2023, doubling compared to the previous year, driven by increasing international demand.
The charm of the countryside, architecture and timeless cities make Tuscany and Umbria the most sought-after markets. Tuscany in particular is the second most expensive market for prime residential property, with an average prime price of just over 12,000 €/sqm, second only to the Costa Smeralda (13,000 €/sqm), while Umbria is at 3,400 €/sqm.
Despite differences in prices, both regions maintained high demand for residential rental properties in rural areas. Tuscany also recorded the highest increase in rents in 2023 (+29.5%), while growth in Umbria was 8.5%.
International buyers account for 40% of the prime market in Florence. At the end of 2023, prime property prices stood at € 9,600 per square metre, an increase of 3.5% compared to 2022. Low supply levels in the market led to a 16.9% drop in property transactions and a 4.0% increase in prime rents.
The Italian lakes, comprising Lake Como, Lake Maggiore and Lake Garda, have long been established second home destinations. Prime prices here are led by Lake Como at €10,300 per sqm, up 19.9% in 2023. Lake Maggiore and Lake Garda have seen the largest gain in rents, up 64.7% and 44.1% respectiviley year on year.
Due to more stable levels of demand, Liguria is the only region that did not see prime capital values increase over the last five years. Prime rents, however, recorded a 44.8% increase in 2023 atrributed to increased demand for rental properties and a sharp decline in supply.
Danilo Orlando, Head of Residential, Savills Italy comment: "The prime Italian real estate market confirms its solid ground in terms of growth and demand, also due to the increasing interest from international buyers. Common trends across the country, such as the boost of the tourism and urbanization phenomenon, coupled with the ever-increasing demand for properties meeting high quality standards, will drive the rise of new areas. Well-connected and rich in green spaces, with new development projects focused on improving the quality of life for residents."
Kelcie Sellers, concludes, “Looking ahead, a continued interest in urban markets and international and domestic interest in prime rural locations will drive growth in 2024.
“Savills expects prime residential price growth of 0.6% across major global cities, lower than the 2.2% recorded last year. Italian cities are set to follow a similar trend, with Milan forecast to see capital value growth of between 0% and 1.9% and residential prices in Rome to grow between 2% and 3.9% over 2024. While forecast growth is below the five-year average, there are opportunities for surprises on the upside should anticipated interest rates over the course of 2024 bring some of the ‘wait and see’ buyers back to the market.”