Gucci owner splashes out €1.3 billion for building on Milan’s iconic shopping street

Gucci owner Kering SA is spending €1.3 billion ($1.41 billion) for a property on Milan’s toniest shopping street. 

The French luxury group said Thursday that it’s buying Via Monte Napoleone 8 from a unit of Blackstone Property Partners Europe.

The 18th-century property covers five floors and boasts more than 5,000 square meters of retail space, making it one of the largest on the famed street, according to Kering.

The building already hosts a location of Cova, the high-end Italian cafe brand owned by LVMH Moet Hennessy Louis Vuitton SE, as well as fashion label Prada.

Via Monte Napoleone, known as one of the most expensive streets in the world, has an impressive roster of top-end fashion, jewelry and footwear sales locations. 

The announcement Thursday follows Kering’s January move to purchase a building on Manhattan’s Fifth Avenue for $963 million, as luxury retail real estate purchases heat up.

Paris-based Kering, which derives two-thirds of its profit from the Gucci brand, called the Milan investment part of a “selective real estate strategy, aimed at securing key highly desirable locations” for its labels.

The firm said it wants to manage its real estate portfolio with “the short- to medium-term objective of retaining a stake in prime assets alongside co-investors in dedicated vehicles.”

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Kering will only purchase “exceptional” buildings in a limited number of cities if they create value for the group’s labels, Deputy Chief Executive Officer Jean-Marc Duplaix said in February. Duplaix said that Kering had about 1,800 selling points yet owned only about three flagships. 

The group’s objective is to own up to 15 buildings, the executive said at the time. “We’re talking about 1% of our network,” he said. Duplaix also said the company was exploring partnerships with financial funds to become “more agile” while limiting exposure to real estate. Kering has no plans to become a property developer, CEO Francois-Henri Pinault said at the time.