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, jewellery and footwear sales locations.

The deal represents “the single largest asset sale in the Italian real estate market,” said Luigi Caruso, senior managing director with Blackstone in London, underscoring “exceptional investor demand for high quality real estate in the strongest markets.”

Milan’s property sector has seen a renaissance in recent years as revitalisation projects have helped transform several run-down neighbourhoods into upscale landmark zones.

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.”

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. Kering has about 1,800 selling points yet doesn’t intend to own or co-own more than a handful of key exclusive locations.

Duplaix also said at the time that 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.

By Antonio Vanuzzo and Angelina Rascouet

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