Italy

Italy, Real Estate Market Evolution: A New Era of Opportunities for Buyers

By Columbus International,11 July 2024

The real estate sector is undergoing a significant transformation, ushering in a new era of opportunities for prospective homeowners and investors alike. Recent data from the Italian Revenue Agency reveals a market rebalancing that is fostering greater price flexibility and buyer-friendly conditions.

Fabiana Megliola, head of the Tecnocasa Group Research Office, reports an increase in the average discount to 8.3%, marking a shift from the recent period of intense market activity to a more reflective phase. This transition is creating a fertile ground for buyers to negotiate more favorable terms and secure better value for their investments.

A closer look at different property categories unveils intriguing market dynamics:

Used Properties: With an average discount of 8.5%, these offer the most room for negotiation. This presents an excellent opportunity for buyers to acquire properties at competitive prices and invest in custom renovations, potentially increasing long-term value.
Renovated Homes: Offering a 7.5% discount, these properties strike a balance between move-in readiness and value for money.
New Constructions: At a 4.5% discount, these remain attractive for those seeking modern, ready-to-use living spaces with minimal immediate maintenance needs.

Investors stand to benefit significantly in the current market, with discounts of up to 12% on investment properties. This trend could stimulate the rental market and provide more housing options in urban areas.

The market is also becoming more attuned to diverse buyer preferences. Ground floor apartments now come with more substantial discounts (8.5%), catering to those prioritizing accessibility or outdoor space. Top floor units, with a 7.7% discount, continue to appeal to buyers seeking views or added privacy.

While sales have slowed in the first quarter of 2024, this should be viewed as a market normalization rather than a downturn. This cooling period allows buyers more time to conduct due diligence, evaluate multiple options, and negotiate optimal terms.

In conclusion, the Italian real estate market is evolving towards a more balanced and sustainable model. The current landscape offers a unique confluence of factors – price flexibility, diverse property options, and a buyer-friendly environment – making it an opportune time for both personal home purchases and strategic property investments. As the market continues to adapt, it promises to better align with the changing needs and preferences of a new generation of property owners and investors.

Source: Il Sole 24 Ore

Real Estate Market Rebalancing Offers Buyers Attractive Opportunities

By Columbus International,13 June 20249 November 2024

The real estate market is going through a transitional phase, moving from a period of strong euphoria to one of greater reflection. According to data from the Revenue Agency and the Tecnocasa Group, there is a decrease in residential property sales and an increase in the average discount applied to selling prices. In the second half of 2023, the average discount in Italy was 8.3%, an increase compared to the previous year.

This gap between the price requested by sellers and the price actually paid by buyers is widening, indicating greater caution in the market. The discounts vary depending on the type of property. Used properties suffer greater reductions (8.5%) compared to renovated (7.5%) and new (4.5%) ones, as they often require renovation work that entails additional costs. The most significant discounts, almost 12%, are recorded for properties purchased for investment purposes, where the buyer’s purchasing power carries more weight.

Economical properties and homes sold out of necessity suffer above-average discounts, respectively 10.2% and 9.6%. The position of the property also influences the discount: ground-floor apartments suffer discounts of 8.5%, while for those on the top floors, the discounts are more contained (7.7%). These data confirm the picture of a slowing real estate market. In fact, the Revenue Agency has recorded a sharp decline in residential property sales in the first quarter of 2024, equal to 7.6% compared to the same period in 2023 and 7.2% compared to the last quarter of 2023, affecting all areas of the country.

Source: Il Sole 24 Ore

Rental Price Surge During Milan Design Week

By Columbus International,26 April 202426 April 2024

The Milan Design Week, an event of international renown, has recently rekindled the spotlight on the Lombard capital, attracting a vast and passionate audience of design enthusiasts from every corner of the globe. The record-breaking 62nd edition saw the participation of over 2,600 exhibitors and the influx of 600,000 visitors, registering a 15% increase compared to the previous year. This success was evidently reflected in the city’s rental market, where housing prices experienced a vertiginous surge.

Data provided by the property management company Italianway, specialized in short-term rentals, and reported by Il Sole 24 Ore, reveals that the average daily rate for an apartment in Milan during the 2024 Design Week was €386, with a peak of €414 on the night of April 17th, marking a 7.5% increase compared to 2023. But how much can a week’s rental cost during this event? For a studio apartment, the average cost hovers around €1,354, while for a one-bedroom apartment, the figure rises to €2,030. For larger apartments with three bedrooms or more, the expenditure easily exceeds €2,700. The highest prices are recorded for luxury apartments in the city center, which can reach the considerable sum of €7,000 per week.

A veritable boom that has made fortunes for property owners but has put a significant strain on the wallets of those seeking accommodation during the Design Week period. Several reasons contribute to explaining this surge in rental prices. Firstly, demand significantly exceeds supply. The event attracts visitors from all over the world, many of whom are willing to pay high prices for accommodation situated in the heart of the city, close to exhibition venues and collateral events. Secondly, the supply of available rental apartments is limited. Not all property owners decide to rent out their homes during the Design Week, and those who do often apply higher prices to take advantage of the high demand.

Source: Immobiliare.it

Florence: the heart of real estate investment still beats. Here’s what emerges from a Tecnocasa study

By Columbus International,1 April 20241 April 2024

The real estate market in Florence continues to attract investors, as revealed by a recent study conducted by Tecnocasa. In 2023, 23% of property purchases were made for investment purposes, a figure higher than the national average of 19.5%.

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However, Florence ranks below other Italian cities such as Verona, which boasts a significant 43.1%, followed by Naples (41.2%), Palermo (35.3%), and Milan (35%). The most active age groups in terms of real estate investments are those between 45 and 64 years old, representing 59.2% of the total, with an increasing average age compared to 2022. The two-room apartment remains the preferred housing type for investors, chosen by 38.5% of them, followed by the three-room apartment at 26.9%. The majority of buyers, accounting for 63%, are couples and families, while 37% are single individuals. The latter group has seen a significant increase in market share compared to the previous year, rising from 32.4% to 37%. 81.5% of investors purchase properties paying in cash, while only 18.5% opt for bank financing.

This percentage reflects a further decline compared to previous years, in line with the national trend, attributed by Tecnocasa to the progressive increase in interest rates, prompting investors to avoid bank loans. According to Tecnocasa, in the past year, there has been a further decrease in real estate purchases through mortgages, as the rise in interest rates has encouraged investors to prefer direct purchases without the assistance of financial institutions.

Residential Price Surge in Italy: Arcano Partners Forecasts a Gradual Increase of 1-5% Annually

By Columbus International,17 January 2024

Arcano Research anticipates a steady rise in housing prices in Italy. The recently debuted research firm expects an annual increase of 1% to 5%, driven by recovering demand, improved family purchasing power, and a persistently low housing supply despite the rebound in construction activity.

Compared to other major European countries, the number of new homes constructed in Italy remains relatively low, even with the increase in building permits. This helps to mitigate the rise in raw material costs that typically impacts construction activity. Ignacio de la Torre, Chief Economist at Arcano Partners, highlighted positive signs of recovery in both the sentiment of the construction sector and the activity, which, coupled with the decrease in construction costs, is expected to lead to an acceleration in the initiation of new construction projects in the next twelve months. However, this pace may not be sufficient to close the gap with other major European countries. In the long term, Arcano’s analysis suggests that housing prices tend to follow salary trends and the nominal GDP growth, with Italy well-positioned to narrow the negative gap with the rest of Europe.

According to the analysis, estimates for the next year indicate a real GDP growth of 0.5% in Italy compared to 0.7% in 2023, before accelerating to 1.2% in 2025, a trajectory lower than the expected average European growth for 2025. Medium-term challenges include managing public finances and the labor market, areas that will require further structural reforms to align Italy with high per capita income countries. In the short term, however, Arcano Research suggests that economic growth will slow, but not significantly. Moreover, in the current economic cycle, Italy appears better positioned than other countries like Germany, thanks to less exposure to China’s weakness and a stronger presence in robust service sectors such as tourism.

Private consumption will remain the primary driver of growth in the medium term. Families will have more spending capacity, drawing from excess savings accumulated during the pandemic and benefiting from a partial recovery of their purchasing power, with salaries expected to increase more than inflation in 2024. Structurally, the research notes that the adjusted labor cost for productivity in Italy remains competitive, and there are ample growth opportunities in terms of potential labor supply with the implementation of necessary structural reforms.

Source: Il Sole 24 Ore

The Uncertainty of the Real Estate Market in Italy: A Challenge in a Complex Financial Environment (Source: Monitor Immobiliare)

By Columbus International,31 October 2023

The real estate scenario in 2023, let’s admit it, is not the rosiest one. Mortgage rates are on the rise, short-term rental taxes have been “adjusted” upward, inflation is affecting entire households, and there is a looming specter called “recession.”

The sector that had resiliently weathered the pandemic crisis is now confronted with an unreachable cost of living. Indeed, the Italian real estate sector is grappling with a set of significant challenges in the first nine months of 2023. Key factors driving this situation also include difficult access to credit, increased financing costs, and competition with government bonds. These factors have had a notable impact on the contraction of the real estate investment market, as highlighted by the Real Estate Price Index (Ipi).

Despite an improvement in the macroeconomic context, the data presented in the recent Ipi report reveals a drastic decline in the real estate market, with a 65% contraction compared to the same period in 2022 and a 67% decrease compared to the five-year average. This translates to a total of only 3.16 billion euros in investments. In the third quarter, real estate transactions reached only 1.072 billion euros, in line with what was observed in the first two quarters of the year. When we delve into specific sectors, the Logistics sector emerges as the most resilient, with a total of almost 500 million euros in investments, representing over 46% of the total investments. Investments are primarily concentrated in Northern Italy.

Furthermore, there is a general increase in prime rates and net yields, remaining above 5.25%, showing a 25-basis point increase compared to the first half of the year. In the Living sector, promising results are recorded, with investment volumes in the quarter amounting to 165 million euros, making up 15% of the total for the period and a total of 455 million euros since the beginning of the year. During this quarter, 84% of investments were concentrated in Milan, mainly in residential development and urban revitalization projects, predominantly associated with the “Build to Rent” concept.

The Leisure market has been driven by a significant resurgence in tourist flows and has recorded investment volumes of approximately 107 million euros in the quarter, bringing the total for the year to 387 million euros. The most significant operations have been concentrated in the main tourist destinations in Central Italy. The Office asset class, despite registering transactions totaling 105 million euros in the quarter and 552 million euros since the beginning of 2023, reflects the cautious attitude of investors toward this segment. Milan and Rome represented 79 and 21 million euros of these transactions in the period, while other regional cities, such as Naples, continue to demonstrate good performance.

In the Retail sector, investments amounted to about 94 million euros in the quarter, bringing the total for the first three quarters to 345 million euros. This represents growth compared to the same period in 2022, thanks to various transactions related to shopping centers in regional markets. The remaining investments, around 100 million euros, were distributed among mixed-use properties, the Healthcare sector, and some smaller operations in the Alternative sector, with particular attention to telecommunication infrastructure.

In summary, the Italian real estate sector is navigating a complex financial environment, but it still presents promising opportunities in specific segments, such as logistics, residential, and tourism. Investors remain cautious, but the market shows signs of resilience and adaptation to current challenges.

La Lombardia è la regione con più transazioni in Italia

Milan’s Real Estate Market Soars: Unveiling the Hidden Gems for Affordable Homebuying!

By Columbus International,26 July 2023

Milan continues its upward trend in the real estate market, firmly securing its position at the top of Italy’s housing price charts, with an average of 5,186 euros per square meter. On a European scale, it ranks third among the most expensive cities for a two-room apartment, trailing only behind Amsterdam and Lisbon. However, there is still hope for those seeking to buy a home below the city’s average and with the potential for future appreciation.

The Immobiliare.it Insights Observatory, featured and reworked by Fanpage.it, has examined neighborhoods that have experienced significant price growth compared to pre-Covid times, while still offering accessible costs compared to Milan’s most coveted areas. These neighborhoods are primarily situated in the North/Northeastern part of the city, often well-connected to the metro network and undergoing a new wave of gentrification. Among the intriguing locations are Cimiano-Crescenzago-Adriano, Viale Certosa-Cascina Merlata, Pasteur-Rovereto, Affori-Bovisa, and Precotto-Turro. In these areas, the average price per square meter remains below the city’s 5,186 euros. Cimiano-Crescenzago stands out as the neighborhood with the highest price growth in the last three years, boasting a 30% increase and a current average price of 3,495 euros per square meter. Following closely are Viale Certosa-Cascina Merlata, experiencing a 29.8% surge and an average cost of 3,798 euros per square meter, and Pasteur-Rovereto, with a remarkable 28.5% growth and an average price of 4,579 euros per square meter. Affori-Bovisa and Precotto-Turro are also on the rise, with respective increases of 26.9% and 25.3%, and average costs per square meter of 3,425 euros and 3,996 euros.

Honorable mentions go to the area served by the brand-new M4 Forlanini metro line, where the average price per square meter stands at “only” 3,191 euros for a house, yet witnessed a notable 24.9% increase recently. Similarly, Udine-Lambrate is a pricier district, with an average of 4,136 euros per square meter, but still experienced a substantial 24.1% growth in recent years. These emerging neighborhoods present intriguing opportunities for homebuyers looking to acquire a property in Milan at a more affordable price while holding the potential for short-term appreciation.