Luxury homes: what are HNWI investors looking for in Italy

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About 15% of HNWI assets are allocated to real estate annually. What are investors (foreign and Italian) looking for, and how much can luxury homes in Italy yield?

The share of purchases by foreign nationals of Italian luxury real estate is more than 70% of the total

A 10 million euro property in the center of Milan can yield 4.5-5% gross

Aggressive rate hikes by central banks that began in 2022 and continued throughout this year are prompting High net-worth individuals, or those with a net worth of $1 million or more (excluding primary residence, collectibles, consumer goods, and durables), to reorganize their portfolios and expand the share in alternative investments and real estate, with a focus on luxury real estate.

"On average, each year, about 15 percent of HNWI assets are allocated in real estate, and although this percentage has not changed over the past few years, the increase in the number of HNWI has meant that the number of residential purchases and sales related to properties worth €1 million or more has increased, even in Italy." This was reported by Fabrizio Prete, president of the Gabetti Group, which on February 7 presented Santandrea Luxury Houses & Top Properties (the division that looks at the luxury market by expanding the offer that was already of the Santandrea Luxury Houses brand) and the new Santandrea Top Rent brand (specializing in the management of short-term rentals in the corporate and luxury segments).

Trends in luxury buying and selling in Italy.

According to notary statistics, over the past five years, the average number of purchases and sales of luxury properties (assets whose value is equal to or greater than €1 million) in Italy was 3,465 units, with an increase of 57% from 2016 to 2021 and 40% from 2020 to 2021, when the peak was reached, for a total of 4,630 units bought and sold. Of these, about 77 percent involved second homes, most purchased by corporations (54 percent).

Origin of buyers of luxury properties

When analyzing the origin of buyers of luxury properties in Italy, "it is estimated that the share of purchases by foreign nationals is more than 70 percent of the total. In particular, the lion's share is from North America, with a 14 percent share, followed by Germany (8 percent), the United Kingdom (7 percent), Switzerland (5 percent), and France (3 percent)," Prete explained. "The target clientele is mostly represented by private clients, soccer and sports players, international artists, and top business people," added Fabio Guglielmi, managing director of Santandrea Luxury Houses.

Target locations: the most popular locations for luxury purchases and sales

Among the tourist locations most sought after by investors (especially foreign ones) are Courmayeur, Santa Margherita, Portofino, Rapallo, Cinque Terre, Lake Maggiore, Lake Como, Lake Garda, Cortina, Forte dei Marmi, the Chianti area (in Tuscany), Capri, Porto Cervo, Positano, Salento, Taormina, and the Sicilian islands.

However, the most popular Italian cities are Turin, Genoa, Milan, Venice, Padua, Verona, Bologna, Florence, Rome, Naples, Bari, Taranto and Palermo.

The growth of HNWI

Over the years, the number of HNWI is steadily increasing. According to data outlined by Capgemini in the World wealth report 2022, from 2020 to 2021, "great wealth" grew by 7.8 percent and came to hold 8 percent of global wealth, totaling about $86 trillion. The countries that saw the greatest growth in HNWI wealth between 2020 and 2021 were North America (+13.8%), Europe (+7.5%), and the Middle East (+6.3%). In Italy, however, this population also increased by 7 percent over the same period, including about 322,000 people.

How much can a luxury property of about 10 million euros yield?

"A 10-million-euro property in the center of Milan can yield 4.5-5% gross. If, on the other hand, it is a villa in a location like Sicily or Capri, but also Santa Margherita or Portofino, the yield drops to about 3 percent gross. This is still a high value if one also considers the period of use by the owner himself. In this case, the owner has exactly the situation he had before, but he also manages to cover the fixed costs of management by making profits that he otherwise would not have made," explained Emiliano di Bartolo, managing director of G Rent.

How much does it cost per week?

"It depends on the value of the property. The villa on the Gulf of Tigullio, in Liguria, has an average weekly fee of 20 thousand euros; the one in Capri, with a view of the Faraglioni rocks, can go up to 35 thousand-50 thousand euros. The villa in St Barts has an average fee of 100-120 thousand euros, with a yacht included that comes with whoever uses the villa. Even the high spenders are divided, in fact, between those who have assets from a million euros up to billionaires: there is everything in between," commented Roberto Busso, managing director of the Gabetti Group.

What does the Gabetti group's innovation consist of?

With the Gabetti group, clients can opt for the sale of luxury assets or even just for the short-rent management service of their prime properties, but when a property enters a portfolio for one particular service (e.g., sale), over time, it could move on to the second (rental) as well. "There are two types of approaches: we offer clients to whom we approach with a sales route the possibility of also using our short rent management service as an additional service, which makes us attractive because this type of asset has a management cost that can also be very heavy, so the fact that we can simplify this management with short rent makes this service innovative since it does not exist in the market. The main luxury competitors do not offer these integrated services," di Bartolo commented.
Director of and editor-in-chief of the magazine. A professional journalist, she holds a law degree from the University of Turin. She has worked at MF, Bloomberg Investments, and Finanza&Mercati. She has contributed to Affari&Finanza (Repubblica) and Advisor.


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