High-End Buyers Return to Italy

Whether you’re after cosmopolitan convenience or countryside castles, Italy it seems, is becoming a wise investment again.

For lovers of history, art, culture and food, Italy has always had a certain draw. But even the biggest Italophiles often shop around for years before committing to buying a home, while more strategic real estate investors have been known to avoid the country altogether, especially since Europe’s housing crisis. All that, however, is starting to change, as Gemma Bruce MD of Casa & Country explains:

“We have clients we dealt with six, seven, eight years ago who had been on our database and have now suddenly reappeared. They’ve decided that whilst they were nervous to put their money into Italy, as much as they loved it, a few years ago, they’ve come back and [said], ‘Right, now’s the time.’”

The trend it seems is also broader than any one region or type of market.

“We’ve seen a real change, in particular in the last 12 to18 months,” adds Jelena Cvjetkovic, a director at Savills. “It’s across the range of properties - city apartments, but also country properties in some of the old favourites like Tuscany and Umbria. Some of the affiliates that we work with in those areas have reported their best years since the onset of the financial crisis.”

Italy was slow to feel the effects of the housing crisis that swept southern Europe in 2008. It has also been slower to recover. The market hit its lowest point in 2016-17, with prices now starting to climb again over a sustained period.

While most luxury homebuyers still tend to be northern European, especially from Germany, the U.K., France, Switzerland, Belgium, Holland and Scandinavia, more recently, buyers from Eastern Europe and Asia are sharing an interest, as well as from the Middle East and South America. Several agents cite increased interest from Brazil and Argentina.

One major driver is a new tax regime the government rolled out in 2017. It allows individuals who set up residence in Italy an annual flat tax of €100,000 (US$112,886) on foreign-earned income and €25,000 for family members. The new tax scheme has generated foreign interest as well as interest from Italians who have lived as expats abroad and could now return on more favourable terms.

From a pure investment standpoint, major cities such as Milan and Rome are leading the way. This mirrors a Europe-wide trend toward investing in city markets, both for income opportunities via short-term rentals and for the convenience of urban living. But while home prices have spiked in places like Lisbon, Barcelona and Madrid, which are coming off a lower post-crisis base, Italy’s cities still have a lot of room to grow.

Italy is proving attractive on the political front as well. Not only are real estate taxes low compared to neighbours like France, they are unlikely to be raised anytime soon. It’s historically something Italy doesn’t do.

Adds Ms Bruce: “Italy seems to be more resilient to political change than other countries at present where you notice a slowdown in demand and enquiries in a particular location because they’ve got upcoming elections. Italy has fairly regular elections and yet that doesn’t seem to affect appetite as much there. It could be that the Italian government has chosen to pursue its more favorable tax regimes in order to capitalise on political turbulence elsewhere on the continent.”