Market Report – Italy 2010
2008 OverviewMarket resilience
According to the most recent market report from FIAIP (one of the largest federations of real estate agents in Italy) for residential property bought for holiday use in Italy, values rose for top-end holiday properties by between 9 and 27% between 2004 and 2009. Looking at 2008 in isolation the same kind of properties fell by only –0.6%, this in a year when many property markets went west. The first half of 2009 saw a drop of between 0.85% to 1.25%, again for the same kind of property, that is quality residential property for holiday use. The conclusion would seem to be that if this market can prove so robust during the worst economic downturn in living memory then it is a resilient market indeed. The message ‘buy in Italy and you won’t lose your money’ would not be, in ‘normal’ times, a very captivating line, however in today’s context it actually is. FIMAA, a national association of estate agents founded in 1945, in its study of annual variations in prices for holiday homes in all regions of Italy published in August 2009, in some regions prices have even risen ever so slightly (+0.1% to 0.3%), others have remained stationary and the ones where prices have fallen have been in the region of maximum 1.1%.
In the last quarter of 2008, we were advising that quality homes in areas like Tuscany, Venice and the northern lakes were not going to see a wholesale collapse in price, and, at best, buyers could hope for slightly more leverage on discounts once negotiations began. However, UK and US buyers were not, as a rule, to be persuaded. What has actually occurred during the course of 2009? As an example, one top-end property broker in Florence found that in Q2 of 2009 buyers started to realize the market wasn’t going to collapse and in fact Q3 proved very busy, but not with UK/US buyers, who started the year expecting a collapse and have not been seen since in any great numbers. Nonetheless, buyers from Russia or Germany, for example, have been active. Therefore the market has not collapsed in terms of price although sales volumes have diminished overall, but in areas such as Tuscany there continues to be healthy activity.
Nomisma, an Italian economic research institute founded in Bologna in 1981, in its latest report on the Italian property market, published 27th November 2009, indicates that March-April saw the market hit bottom, and that while sales volumes are still low (down 15% compared to 2008), things are ever so slightly improving. Overall, prices for residential property fell by 1.6% in the last six months, which for the year is placed at –4.1%, contrast that with –30% for the US and UK in the same period.
So, what’s the message here? Basically, if the residential market, and especially the holiday home market, have proved so robust during the last 12 months, Italy remains a sound place to buy a holiday home from a numbers point of view. Leverage on price is there, although don’t expect sellers to knock 30-40% off the moment you leap out of your rental car. Industry operators are feeling a little more confident about 2010, expecting improved volumes and prices dipping no more than 1 or 2% before starting to increase again in 2011 (the latest Nomisma report forecasts between 1.1% and 2.5-2.7% for the next 12 months), all of which suggests that the next 12 months could be an attractive moment to buy.
Where to buy
The key places for foreign investors to buy are in what can be termed ‘cities of art and culture’, for example Florence or Venice, but also the capoluoghii such as Como, Bergamo or Siena. The average age of foreign buyers is put at between50-60yrs; the British are the number one property buyers in Italy, followed by the Germans and then Americans. The average property for British or American buyers is estimated at 80 m2 in size and costing between €300,000 - €500,000.
The most frequently requested type of property for this region or the most sought after is either in a città d’arte, for example Venice, or a single-family house with land. Additionally, properties in tourist areas or by the sea are popular requests.
Foreigners are not buying in any noticeable degree in Lombardy, but should be, due to the wide variety of attractions the region has to offer, from skiing to the lakes through to its città d’arte, as well as being served by excellent infrastructure.
Places to watch
- Oltrepò Pavese is described by locals as a ‘little Tuscany’: An area where the only thing grown is grapes. With tiny hamlets and rolling hills covered in vines, along with the odd castle here and there, it presents an attractive alternative to Tuscany. Very popular with, above all, the Milanese, who have traditionally been the main second homebuyers, the northern edge of the area could well become a commuter belt for Milan as improved infrastructure means the city is 45 minutes away by car. In this case expect property prices to move. Currently, at a conservative estimate, prices are easily half of those in Tuscany.
- Bergamo was not so long ago one of those almost unheard of medieval walled towns, now more firmly on the international map with the development of its airport, Milano-Orio, flights come in from 52 European destinations in the UK & Ireland, Germany, Scandinavia, Holland, Spain, Portugal, France and eastern Europe, principally with Ryanair, who view it as their Italian hub and will be opening up new routes from here in 2010, and Jet2. And whereas once visitors only ever saw the airport, now the town itself has become a popular holiday destination. The historic centre, the città alta, is not only beautiful but offers real long-term investment prospects where sellers are still determining the selling price even in the current global crisis.
- San Pellegrino Terme, home to the famous mineral water, is witnessing a grand regeneration already underway and scheduled to be completed in time for the Expo 2015 in nearby Milan. The project is funded primarily by private investment together with some public money, and more importantly the full support of the regional, provincial and town authorities and will turn the Liberty-style resort into a world-class spa and leisure retreat, boasting one of only three 7-star hotels in the world. Interestingly, the majority of the Milanese, for over a century the traditional buyers of holiday property in the area, are still unaware of the project and hence prices outside of the town remain, at least for the moment, unaffected, whereas in the town itself the little property that there is on the market has seen values jump by 30-40% since the project was announced, with villas in the centre, on the rare occasions they are sold, exchanging hands off-market.
- Lake Iseo while everybody has heard of Lake Como and Lake Garda, this slightly smaller lake, sitting between its two bigger sisters, offers the same for less and up until now doesn’t suffer from the same rush of summer tourists, although it is popular with the locals. Compared to top locations on Lake Garda, such as the town of Sirmione for example, prices are as much as 50% less on this lake. The lake also boasts the largest island on a lake in Europe, which itself is home to a beautiful town, officially recognised as one of the most beautiful borghi in Italy. Prices here have been rising, Iseo along with Como being the only lakes which have witnessed a continued rise in values.
- Milan is busy preparing for Expo 2015, with an expected 159,000 visitors a day for 6 months expected and enormous projects, including new metropolitan lines and road infrastructure, underway. Year-on-year, Q2 of 2009 saw sales volumes rise by 3.9% in the city, demand rising in particular in the areas of Cenisio-Procaccini, Sempione and Citta Studi-Romagna, whereas in top-end locations such as Monte Napoleone-Babila both supply and demand remain stable, with average prices at around euro 12,000/m2 for quality property. Prices have overall remained stable in the major cities, Milan being no exception, and with Expo 2015 on the distant horizon, the financial and fashion capital offers healthy prospects.
- Bormio Terme and Santa Caterina Valfurva Bormio is a beautiful spa town with outside hot pools in use even in the winter, close to Livigno for tax-free shopping. With its old historic centre, and positioned on the edge of Lombardy and Trentino alto Adige, it’s within easy reach of the slopes. Santa Caterina Valfurva is hotly tipped due to its altitude, excellent ski facilities and proximity to Bormio; expect this location to become more popular with a consequent rise in property values.
©Paul Hudson
Paul Hudson
italy@thepropertyfinders.com
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