54 | MARKET SNAPSHOT Italy WORDS | Amit Katwala
SNAPSHOT
www.opp.org.uk | FEBRUARY 2011
Italy off ers beaches, mountains, and historical heritage, but it has not been popular with overseas property investors. Could this be about to change?
I
taly has a wonderful reputation as a holiday destination, with sunny beaches, rustic
countryside and historic art and architecture, as well as the finest in fashion and food. However, other areas of the country’s reputation often deter potential investors, who are discouraged by tales of corruption and bureaucracy. This has been compounded by references to weak rental growth, below average quality, high taxes and unsatisfactory market transparency. However, analysts have said that
there is more than meets the eye in the Italian market, and international players may be missing a trick. Italy is the seventh biggest global economy, and has a broad range of industries, and high export levels. It also has a much lower level of private sector debt, and less exposure to sub-prime mortgages, making its property market much more stable than other European countries. Despite some problems, Italy is an
attractive proposition for many, and was the 6th most sought-after destination in 2010 according to
Primelocation.com. This month’s market snapshot provides you with all the information you need about Italy.
Pricing trends House prices rose by 3% at the beginning of 2009, after falling steadily throughout the last decade having peaked in 2002. Property prices were expected to
drop during 2009 and 2010, but fi gures from the National Statistical Institute show that sales actually increased during the fi nal quarter of 2009.
Interest Rates/Mortgages According to Global Property Guide, the resilience and stability of the market is due to Italy’s small mortgage market, which at 20% of GDP is well below the EU average of 50% of GDP. Interest rates fell to 3.64% in June
2009 after the central bank eased monetary conditions, but the effect of interest rate fl uctuations on property will be small, because of the small mortgage market.
The Rental Market Rental yields in Italy have always been relatively low, at around 3% to 5% according to Global Property
“Italy is the seventh biggest global economy, with low exposure to sub- prime. International players could be missing a trick. ”
Guide fi gures. This is partly due to rent controls keeping rent increases below infl ation. For example, rent can only be increased by 75% of infl ation.
Visitor Trends After two successive years of falling passenger numbers (down 1.8% in 2008, and down 2.3% in 2009), Italy’s airports are fi nally recovering in 2010. Despite the volcanic ash saga in April, demand for air travel at Italy’s airports was up 5.3% in the fi rst half of 2010, with international traffi c (+5.9%) marginally outperforming domestic traffi c (+4.7%). Among the biggest
airports, year-to-date growth has been highest at Bologna (+14.7%), Bergamo (+7.5%), Turin (+6.8%) and Milan Malpensa (+6.7%). After seven successive months of being
the fastest growing major Italian airport, Bologna lost this claim to Turin in April, May and June, but reclaimed the title in July 2010. Among smaller airports reporting
significant growth in the first seven months of 2010 are Trapani (+64.8%), Rimini (+46.2%), Brindisi (41.1%), Pescara (+30.6%), Forli (26.0%) and Bari (17.3%). Airports faring less well in 2010 are Perugia (-10.6%), Alghero (-9.5%), Brescia (-9.5%), Rome Ciampino (-7.2%) and Milan Linate (-5.1%).
Destinations Estate agent conglomerate Tecnocasa identifi ed city centres as areas which are likely to hold their property value, because of short supply and interest
from investors and residential buyers. Looking specifi cally at individual
locations, the Tecnocasa researchers expect the market to do best in a handful of provincial capitals across the country, such as: • Lecce, Avellino, Macerata and Savona (where prices are expected to go up by 1% to 4%) and • Cagliari, Latina, Parma, Pavia, Rimini, Taranto, Udine, Verona and Bergamo (where value increases are likely to be between 0% and 3%). A couple of metropolitan areas are
also set to hold fi rm or increase: • Bari (2-5%) and Turin (0-3%), although neither city centre is expected to do particularly well (Bari -3 to -1%, Turin -2% to 0%). At the opposite end of the market, the outskirts of: • Palermo and Genoa are expected to do worst, with decreases in the region of -5% to -8% and -6% to -9% respectively.
House Price Change Annual (%)
Nominal Real
20 15 10 5 0
-5 -10 ‘91 ‘93 ‘95 ‘97 ‘99 ‘01 ‘03 Source: Banca D’Italia ‘05 ‘07 ‘09
Market Snapshot Italy
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