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By Gabriele Torchiani, Senior Partner and Sales Director, Tirelli & Partners
In the second half of 2024 and the beginning of 2025, Milan’s exclusive residential market confirmed an already well-established trend: a clear separation between the high-end and mid-range segments, with divergent demand dynamics and pricing.
On the one hand, the Top segment (€3-6 million) and the Luxury segment (above €6 million) experienced strong demand growth, partly driven by the impending expiration of the United Kingdom’s “non-dom” (non-domiciled) tax benefits (April 2025). This phenomenon has brought many international families to Italy, with Milan being the preferred destination for approximately 80 percent of them. The already limited supply has shrunk even further, and the few high-quality properties available quickly find buyers willing to pay the asking prices, often with no room for negotiation.
Conversely, in the €1-3 million Mid-range segment, composed mainly of Italian buyers looking to upgrade, demand has remained more cautious. Without any urgent need, many potential buyers are postponing their decisions, discouraged by the difficulty in finding properties that offer a true improvement over their current situations.
One factor holding back buyers is the fear of a price decline in the medium term. However, this concern appears unfounded: The values of high-quality residences in Milan’s exclusive areas have now stabilized well above €10,000 per square meter (/sqm) and will continue to rise in the long term, driven by the chronic shortage of supply in a very small city.
Further confirmation of the market’s solidity comes from the UBS Global Real Estate Bubble Index, which in its 2024 report ranked Milan as the most balanced real-estate market with the lowest bubble risk in Europe and second only to São Paulo, Brazil, globally.
The average absorption rate—the percentage of properties sold during the semester relative to the total available supply—has recorded a slight increase of 0.6 percent, settling just above 20 percent. While this indicates a sign of recovery, it remains far from the historical peak of 27.5 percent reached in the first half of 2022.
A key factor influencing absorption speed is the initial listing price: Many properties enter the market with overestimated valuations compared to their actual characteristics. This phenomenon is mainly driven by owners being influenced by the transaction values of the Top or new-development segments, leading them to set unrealistic prices.
In line with observed trends, the average time to close sales continues to increase slightly, reaching almost seven months (6.8). At the same time, the gap between the asking price and the actual selling price has widened further by 0.5 percent, reaching 7.2 percent—a one-percentage-point increase year-over-year.
Despite these signals, the market remains dynamic, with outstanding performances in the Top segment for high-end properties. However, over the past two years, properties in the Mid-range segment (€1-3 million) have experienced longer sales timelines and greater negotiation margins. The average time that unsold residences remain on the market has decreased by more than a month, but this is mainly due to the withdrawals of “exhausted” properties—those that have lingered on the market too long without finding a buyer. Nevertheless, the absolute figure remains very high, exceeding two years.
Asking prices continue to show moderate increases, with a 0.8-percent rise in the average price and a 1-percent jump in the highest average price. The last significant increase in actual selling prices occurred in 2019 (5.5 percent) compared to the previous year. Over the past five years, however, growth has been more gradual and stable, indicating a healthy market with no speculative risks.
However, behind this overall trend lies a significant phenomenon: In the Luxury segment (above €6 million), maximum prices per square meter have risen sharply, driven by strong demand from international buyers, particularly UHNWIs (ultra-high-net-worth individuals) leaving the UK for tax reasons. This “tax migration” has affected all areas of the city, leading to a nearly 50-percent increase in values since 2020. The most striking example is in the Quadrilatero della modadistrict, historically the most sought-after residential location in Milan, where the top price per square meter surged from €25,000 in 2021 to nearly €39,000 in 2024.
The overall average price level does not raise major concerns. This is because growth follows a healthy and sustainable trajectory, with no signs of excessive speculation. Additionally, Milan continues to strengthen its appeal, both for those choosing to settle in the city and for investors seeking solid assets capable of ensuring adequate returns and maintaining their values in the medium-to-long term.
The primary-residence component has decreased to 49 percent, while replacement purchases account for 42 percent of the total. Meanwhile, the investment share has slightly increased to 9 percent.
Interest from foreign investors in Milan remains extremely high, confirming the city as the most sought-after destination for those relocating to Italy for tax reasons. The increase in the flat tax amount to €200,000 has had no impact on the number of applications from Europe (particularly the UK) and the rest of the world. This is because the effect of the increase on the average wealth of UHNWIs is negligible compared to the overall tax advantages offered by Italian residency.
What is the forecast?
In the Mid-range segment (€1-3 million), the demand and transaction volume are expected to remain stable. The financial environment, with stock markets at record highs and declining interest rates, could encourage capital inflows into this sector for investment purposes.
The Top segment (€3-6 million) will continue to be influenced by uncertainty stemming from rising global economic and political turbulence. This scenario may lead buyers to adopt a more cautious approach, slowing market activity for the rest of 2025.
In the Luxury segment (above €6 million), characterized by strong international demand and an extremely limited supply, further increases in asking prices are likely. However, since transactions in this segment account for only a small share of the overall market, any price hikes will not significantly impact general price averages.
Looking at the market as a whole, the quantity and quality of available properties will remain the key determining factors. For this reason, we expect transaction volumes to remain largely stable in the short term.
ABOUT THE AUTHOR
Gabriele Torchiani has been the Senior Partner and Sales Director at Tirelli & Partners since 2010. He is also the Project Manager for the publication Milan Luxury Residences Report. Prior to his current post, he was a Senior Manager at Andersen and Deloitte Consulting.
