Short-term rentals in Milan: from 30 euros in Forlanini to 60 in Brera, what makes a room a day

Short-term rentals in Milan: from 30 euros in Forlanini to 60 in Brera, what makes a room a day

from Gianni Santucci

The waves of Covid-19 have almost halved the average revenue per room, from about 55 to just under 30 euros per night. Not only that: the variable “distance from the city center” is less decisive, with a greater distribution on the territory

About 7,000 homes in Milan are used for short-term rentals, or holiday homes (as it was said years ago), which appear stably between 2020 and 2021 in the announcements of the main platforms. A city within a city, which generates an economy that is difficult to estimate as a whole, and which is experiencing the adjustments of the post-pandemic recovery. The progressive waves of Covid-19 have almost halved the average revenue per room (parameter usually used by industry analysts), which went from about 55 to just under 30 euros per night. But the pandemic, beyond the obvious consequences on revenues, has nevertheless generated effects that experts still find now: in particular that the variable “distance from the city center” has become less decisive, with a greater distribution on the territory in the choices of those who rent. If these are the results of an extensive research developed in collaboration between the IULM Universities of Milan and the Spanish University of Granada on data that stop at 2021, the experts in the sector recount the next phase, the last year: the demand for apartments in Milan (hence the arrival of tourists and travelers business) boomed after the reopening last summer and is still very buoyant, while average revenues are around 75-80 percent compared to the pre-Covid period.

Capillary network

The researchers explain (in the article just published in the scientific journal Annals of tourism research): «The effect of the pandemic in Milan was not only to reduce the rental value of an apartment, but also to expand the area in which an apartment could improve the yield. The advantage of being close to the center has been reduced ». The researchers took just over 7,200 apartments offered in the city for short-term rentals as the basis for the studycomparing their “behavior” between January 2020 and March 2021. Over this period of time, 80 per cent of apartments reduced their income, while 20 per cent even increased itand these are precisely apartments in peripheral areas that in the months of the pandemic were probably used for isolation in the early periods, or as a studio to work in smart-working.

Vehicles and bicycles

Reading the changes in the “Airbnb economy” can help interpret some trends in the urban transformations of the city. An interesting example, even if it is a “minor” variable, is that of bike sharing. In the overall analysis of transport factors, if obviously the subway remains decisive, it was found that proximity to shared bicycle stations has a positive impactprobably because the trend towards responsible tourism is increasing more and more among travelers, especially for a city where even a tourist can easily move around by bicycle.

Waves of recovery

The analysis of the flows of guests in homes for short-term rentals also tells us how Milan is recovering its attractiveness. «The first massive effect we noticed – explains Simone Monaco, managing director of the BetterPlazed company – was a real boom in August last year, the summer of reopening in which Milan showed a truly impressive force of attraction, much more than expected. The demand for apartments remained buoyant in the following months as well, and it is still buoyant now, but that “rebound” effect has gradually faded. In general, however, even in recent months in Milan we have been on a level of occupancy of the apartments higher than what we expected ». It was therefore a sort of “wave” recovery in tourism and business travel. From the point of view of revenues, on the other hand, the recovery has been more linear and according to some analysts, at the moment the annuities are about 75-80 percent of what they were before the pandemic.. Simone Monaco continues: «Revenues are rising more slowly than the demand curve. On this, for example, the fact that some shows were still done online has a weight. More generally, guests are a little more attentive to shopping, and therefore are willing to stay a little further from the center for a slightly lower price ».

Bubble risk

Finally, there is another trend that is manifesting itself in the city, this time between the short-term rental economy and the broader one of the real estate market. Because both in rents and in sales, this phase of recovery is creating hope in the owners of very high revenues, which at the moment appear to be partly inflated. On this scenario it weighs that some large international funds are investing and buying a lot in Milan, obviously above all in the center and in prestigious areas, because the city offers great investment opportunities in the highest range of real estate compared to other European metropolises.

August 25, 2022 (change August 25, 2022 | 08:22)

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