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Italy’s Flat Tax Is Quietly Reshaping Its Real Estate Market
In a move that has flown under the radar of international attention, Italy is undergoing a transformative change in its real estate market. The country’s flat tax regime, first introduced in 2017 and increased to €200,000 in 2024, has created an unprecedented surge in high-net-worth individuals (HNWIs) relocating to Italy. This shift has far-reaching implications for the real estate sector.
According to recent reports, record levels of wealth migration are being observed globally, with over 142,000 millionaires expected to relocate by 2025 alone. In contrast, Italy is poised to welcome approximately 3,600 of these HNWIs, a significant influx that has already started affecting the real estate market.
The impact on Milan’s residential property prices is most pronounced. The city’s prime areas have seen price increases of up to 28% over the past five years, with average prices exceeding €15,000 per square meter. New developments are selling out before completion at an average price of €7,250 per square meter.
The increased demand has also led to a surge in Build-to-Rent (BTR) schemes, renovation projects, and new-build developments designed for long-term use. The focus is shifting from mere lifestyle to liveability – addressing school systems, healthcare facilities, and local services that cater to the needs of these HNWIs.
Furthermore, Italy’s National Recovery and Resilience Plan (NRRP), funded by €71.8 billion in EU grants and €122.6 billion in loans, is now being leveraged to support the growth of the real estate sector. This plan has already allocated €34.5 billion towards sustainable mobility initiatives, €24.7 billion for renewable energy systems and waste management, and €16.9 billion towards energy efficiency upgrades for residential and public buildings.
While Italy’s flat tax regime is not without its challenges, including demand outpacing supply in prime areas and regulatory complexities, the country’s real estate market has been forever changed.
Source: www.forbes.com
