Despite potential buyers waiting to see what taxes changes may come out of the new Italian government enquiries from wealthy buyers are strong, especially from Scandinavia and the Benelux countries, according to the latest Italy insight report from international property company Knight Frank.
It says that Italy remains firmly on the radar of super rich buyers with a number of sales above €6 million agreed in 2012/13 and Liguria and Venice seeing prices rise by 5% in the first three months of the year.
The report says that mainstream house prices in Italy have fallen by 12.3% since their peak in the second quarter of 2008, weaker than the average for the Eurozone which fell by 8% over the same period but still outperforming Spain, Greece and Portugal.
The new Italian government has already agreed to postpone the June payment of the controversial IMU tax which was introduced by his predecessor Mario Monti. The tax is based on an outdated cadastral value of a property and applies to both Italians and non-resident second home owners alike.
‘Italy’s new government will, it is hoped, provide some clarity on the issues of tax and austerity for prime buyers but it is the economic landscape rather than the political one which will have the greatest bearing on buyer activity,’ said Kate Everett-Allen, head of international research at Knight Frank.
Despite the economic malaise, Knight Frank’s Italian team agreed a record number of sales in 2012/13, up by 50% year on year. Everett-Allen said that sales volumes have strengthened because more buyers are seeking a long term lifestyle purchase rather than a short term investment gain.
‘Vendors are increasingly taking stock of market sentiment when deciding on price. This has helped encourage prime second home buyers back to the market, many of whom perceive that properties are now better value than the previous year,’ explained Everett-Allen.
‘Furthermore, it is now six years since the financial crisis took hold and there is a general acceptance of the current, slow changing economic scenario and an unwillingness to delay purchase decisions any longer. Italy remains firmly on the radar of super rich buyers,’ she added.
she pointed out that for British buyers requiring finance the weak pound may cancel out some of the positives associated with the European Central Bank’s latest interest rate cut, but for wealthy Scandinavian and Benelux buyers it has been a motivating factor.
According to the Scenari Immobiliari research institute, second home sales to overseas buyers increased 14% in 2012 suggesting a growing number of international purchasers have been willing to make the trade off between currency swings and sliding property prices in recent years.
Liguria and Venice have been the strongest prime markets in terms of price performance in 2013. Liguria, or the Italian Riviera as it is known, bordering France and only 30 minutes from Monaco is attracting interest from Swiss, German, Russian and Monégasque buyers.
Since the financial downturn, prices at the eastern end of the Riviera have proved more resilient particularly in the sought after towns of Santa Margherita Ligure, Rapallo and Portofino. In the west, the stretch of coastline from Bordighera to Imperia is popular, with views across to Monaco highly desirable.
The best properties along the narrow strip of Liguria’s coastline have risen 5% in value in the year to May 2013. Tight planning rules, along with the steep terrain, restrict new development.
In 2012 demand was strongest in the €500,000 to €1.5 million bracket but this has shifted in 2013 to the €1.5 million to €3 million price band.
In Venice prime prices softened last year but, as Knight Frank predicted, have started to recover since the end of 2012. Better quality properties are coming to the market and decisions are being made more quickly by buyers.
International buyers, which include French, British, Russian and German nationals, are typically seeking a two bedroom apartment that has been fully restored in the city centre and ideally one that overlooks the Grand Canal or is located in the sestieres of San Marco or Dorsoduro.
Demand is strongest in the €800,000 to €1.5 million price bracket and a growing number of buyers are looking to rent their second home between visits and there is evidence of more interest from Asian buyers. The number of searches for Venetian homes on Knight Frank’s website by Chinese web users increased by 64% year on year in 2012.
Prices have been flat in the Italians lakes. An hour from Milan’s Malpensa airport, Lake Como and Lake Maggiore are the key centres of demand. A healthy level of enquiries has been recorded across all price bands in the last year.
Lake views are a prerequisite for most luxury buyers but with a finite supply of stock around the Lakes prices have held firm in the last year. A waterside home on Lake Como remains top of many wealthy Italians’ wish lists making them a key component of demand. There is also demand from Russian, British, German and US purchasers.
Prices have also remained unchanged in Umbria but the volume of enquiries increased by 30% year on year in 2012 as buyers recognised the region’s property represents value for money compared to more expensive parts of Tuscany. The average price of online property searches in Umbria was €1.7 million in the first quarter of 2013, compared to €2.7million in Tuscany.
Prime property prices have fallen by around 35% since the financial crisis but are starting to flatten out. The market is most competitive between €800,000 and €1.5 million with some cash buyers evident, but above this threshold properties are staying on the market for longer.
Online property searches in Umbria increased by 86% between January and April 2013 compared to the same period a year earlier. Properties in Orvieto, Lake Corbara and the area surrounding Perugia generated a large volume of searches and Tuscany remains Italy’s most popular region with international buyers. In 2012, 34% of all Italian property searches undertaken on Knight Frank’s website related to homes in Tuscany.
Chianti and the picturesque Val d’Orcia are the focus of many searches and prices have dipped by around 10% in the last 12 months due to an increase in stock levels. Cortona has also proved popular with northern European buyers in recent months.
Prime international buyers in the region in 2013 tend to be British, American, Benelux and Scandinavian nationals along with some Russians who are more focussed on the Tuscan coast.
The apartment market in the region’s capital city, Florence, is sluggish but enquiries for Palazzo Tournabuoni from US and globally based UK expats are strong.
In Sardinia the price of luxury property fell by around 11% in 2012 and sales volumes in at the end of 2012 and beginning of 2013 have been quiet but it is a highly seasonal market with online searches peaking between July and October.
Porto Cervo and the surrounding Costa Smeralda are the location of choice for most prime international buyers. Russian buyers, although still evident, are not as active as they were. Instead, Scandinavian and British buyers are growing in number.
The typical requirement is for an already restored beachfront villa between €5 million and €10 million. Knight Frank predicts that the number of Middle Eastern buyers will increase once the Qatari funded Smeralda Holdings launches sales of it Pevero Golf Club and the marina.
The volume of sales has stayed relatively flat in Rome band prime prices fell by around 14% in 2012. The key change is that vendors are now more willing to acknowledge the impact the economic downturn has had on prices and adjust accordingly.
Prime buyers continue to target the Centro Storico with the areas surrounding Piazza Navona and Piazza di Spagna highly popular. Most international purchasers are looking for a property between €800,000 and €1.5 million but within this price bracket they face competition from local Italian purchasers.
Online searches for properties in Rome increased 34% in the year to April 2013 compared to a year earlier with Russian, US and British interest on the rise.
