I spent much of last year with my Inman articles talking about global affluence, how the real estate process works in different countries and how valuable it is for U.S. luxury agents to understand what is happening around the world.
I’ve been in plenty of conversations with U.S. luxury agents where they do an amazing job in “selling” their market and are able to compare it to other U.S. luxury markets. But when I go a step further and explain that the Russians and Europeans are also looking at similar and competitive markets in Italy, France, Spain, Switzerland and other locations, they are often surprised.
I saw on realtor.com that just about 25 percent of foreign interest in U.S. housing is coming from Europe. I can assure you that many of those same buyers are also considering non-U.S. markets. And their decision is often not based on traditional needs like proximity to jobs and children. It’s a very educated decision. Can you show a worldly view to worldly people?
One of the markets that has emerged — especially for the Europeans — is Milan, which has raised its profile with the affluent. So I visited with my colleagues at Coldwell Banker Italy to learn more.
Milan is more than just fashion
While Rome is the Italian government center, Milan continues to grow as Italy’s world-class business hub and has become more appealing since Brexit. Italy’s Foreign Minister has been aggressive in working to bring firms who are vacating London.
Although he recognizes that Milan ranks behind Paris and Frankfurt as logical destinations for corporate headquarters, the city has made great strides in attracting businesses. Amazon, Samsung, Google and Microsoft chose the city as their Italian headquarters and all have a presence there.
As the home of the Italian stock exchange and two large European banks, Milan has gone far beyond its notoriety as the fashion capital of the world and home to such internationally known companies such ad Dolce & Gabbana, Gucci and Versace.
Milan offers a welcome relief for those used to the high prices of other European cities. According to Expatistan.com, Milan has a cost of living 40 percent and 27 percent cheaper than London and Paris, respectively.
And when it comes to housing, the savings are even better, 60 percent and 50 percent cheaper. But do not think that the homes are not beautiful. They are amazing. Here is an example of an $8.5 million listing.
Italy is one of the most affluent countries in the world. Business Insider recently showed that Italy ranks seventh in the world with 1.1 million millionaires. And Forbes went a step further in reporting that Milan is 20th in the world with its 15 billionaires.
Milan is definitely a cosmopolitan city and home to two of Europe’s oldest and most well-known futbol (soccer) teams, AC Milan and Inter Milan. It’s also a couple of hours from Italian beaches and Swiss ski resorts.
New tax laws having an impact
Along with its proximity to other cities (Milan is just a 75-minute flight from Paris), and its increasingly important impact as a financial center, new Italian tax laws are having an impact on attracting affluent Europeans, including bankers who are making their home in Milan as their firms opt for Paris or Frankfurt.
Beginning in 2017, Italy began a tax program that is highly beneficial to those with money who are new to Italy. By establishing such residency (183 days), no matter how much is earned from investments and/or businesses anywhere in the world, their taxes are limited to 100,000 euros per year along with 25,000 euros per family member establishing residency.
This model is not new in Europe; it follows those already established in such countries as Malta and Portugal. Obviously, the Italian government hopes the panache of Italy is a huge draw.
Italy has gone a step further by also offering relocating skilled workers who meet certain requirements to have 50 percent of their pay tax exempt.
Starting to have an impact
Although I have been to Italy many times before, up until last year I had not seen many of my French clients showing an interest in moving there. The tax laws have changed that.
I believe some of my clients will actually make the move this year now that they have examined how the laws work and are getting used to the idea of becoming Italian, which includes new language and culture.
I am very intrigued with Milan and how the city has risen to such prominence outside of fashion. It’s a great example of how cities work to attract the affluent, and it showcases the borderless world the wealthy live in.
Laurent Demeure is the founder and CEO of Coldwell Banker France & Monaco.