Renting a luxury home in Milan: an evolving market

Despite the changes in the rental market in recent years, the luxury residential segment is holding its own in Milan. According to an analysis by Tirelli and Partners, rental demand for luxury homes in the Lombard capital differs and rents remain high mainly due to a lack of supply, which is unable to meet demand. Here are the main trends in the luxury rental market in Milan and the 2024 forecast.

Luxury home rentals in Milan

According to Tirelli and Partners, the market for high-end rentals in Milan continues to be driven by a strong demand that often has characteristics of immediate need. In addition to the primary demand dictated by medium-long term housing needs, there is a secondary demand, linked to covering the temporary needs of those who are looking to purchase a home, but are unable to satisfy this need in the immediate term due to both the lack of supply and, for some, the burden of access to credit. 

Demand comes as much from Italians already resident as from foreigners or expats who choose to return to Italy for work or tax reasons. In the high-end sector - over 100,000 euros per year (plus expenses) - requests significantly exceed the available supply, and the situation worsens for flats with rents over 15,000 euros per month (Top bracket). In both cases, requests are for residences in an immediately habitable condition. Even in the low and medium bands, the rental offer remains largely insufficient, partly due to the shift of some newly renovated properties towards the short and mid-term segment of furnished homes, potentially attractive in terms of expected yield.

Rent in Milan: new homes are more popular

The percentage of rented properties out of the total number of properties on the market continued to rise in the first half of the year: according to Tirelli and Partners, the average figure is 35.5%. In Brera and the "Other areas" absorption is well above 40%. Lower values are recorded in the other areas surveyed, mainly due to the persistence in stock of a substantial proportion of unrenovated houses.

In fact, many of the houses that do not find a tenant remain on the market not so much because of the level of the asking rent, but rather because of the inadequate state of maintenance. The increased mobility of tenants, who often terminate their contracts before the end of the first four-year period, even though they have 4+4 contracts (duration is fixed for four years but the contract is renewable for an additional four years), has directed demand only towards houses that have been renovated, whitewashed and with newly furnished bathrooms and kitchens.

Foreign tenants in Milan

The relative share of demand from abroad currently accounts for around 30% of the total. For residences over 250 square metres with highly prestigious features, this percentage is predominant. Three out of four houses in the highest market segment are rented by foreign tenants or expats returning to Italy after spending long periods abroad.

Outlook for rental demand in Milan

Demand will remain robust and probably grow further, especially in the secondary component, driven by the transitory needs of potential buyers who cannot find their new residence. With an already meagre and gradually emptying supply, it will be difficult to observe an increase in the number of leases.

Rents may rise further, especially for furnished units, driven both by the scarcity effect and by the trend already underway towards convergence towards those required for mid-term leases.

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