- 81% of properties built after 1945 were built prior to 1990
- 79% of investment volumes for 2021 were made in multifamily (build-to-rent)
- Opt-in flat tax policy means you can pay €100,000 each year instead of ordinary tax rates
“Rome wasn’t built in a day” is a saying that hits uncomfortably close to home as we continue to toil through supply chain challenges, shortages, and just a very tough time for construction in general.
Australia’s first non-stop direct flight to continental Europe recently took off, with QANTAS operating the 16 hour flight from Perth to Rome, and with that, we thought it’s high time, 40,00 feet high, to ponder what a home in Rome might look like – and by Jove is it spectacular…
A rising market
It wouldn’t be right if we didn’t tease you with some facts and statistics before the moon hits your eye.
Italy was named “country of the year, 2021” by The Economist. It’s unsurprising the title was bestowed on the country, Knight Frank’s Prime Italy Report said the era of sensible stewardship by Prime Minister Draghi and the innovative policies developed “… explains why The Economist named Italy as its country of the year in 2021.”
Residential sales for the country have also been on the rise, up 22% in the first half of 2021, compared to 2019, according to the Knight Frank report.
Coming from a different angle, CBRE’s report of the Italian real estate sector found investment volumes into Italian property were driven by institutional portfolios. The multifamily segment, as defined in the report as a building that includes residential apartments for rent, or otherwise known as build-to-rent (BTR), accounted for almost four out of five (79%) of investment volumes for 2021.
Residential investment volume by location, €M
It feels almost as if the market simply picked up where it left off in the second half of 2019, going by the sales numbers from Knight Frank.
Figures were generally trending upward before Covid struck Italy hard. The home to Rome bounced back in the second half of 2020 and the market seems to have been unfettered by the pandemic.
Italian residential sales
When you land in Rome after a refreshing 16 hour flight, you may want to stay there for property – one million euros won’t get you very much in Venice or Milan, but the money spent in Rome will get you 87 square metres.
Relative value of Italian properties
While Italy may have proven unattractive during the harshest days of Covid, what’s become apparent to global buyers is the lifestyle Italy has to offer, history, culture, and so much more.
Knight Frank surveyed over 1,000 global buyers, whom listed Italy in their top five for a second home, and for British and American buyers – Italy was in their top two.
Innovative taxation was also credited as a reason why ultra-high net worths are being attracted to the country, but more on that later, because you’re surely wanting some eye candy by this point.
The eye candy
Sotheby’s International Realty, Italy, has umpteen properties listed in and around Rome, with this charming apartment only a tad above €1 million (A$1.5M) and with an enviable entrance.
Spend around A$4 million and you could score views of the Colosseum or Spanish Steps. Sotheby’s International Realty had some sensational examples of properties that are priced on par with Sydney and Melbourne but are steeped in history, with one modern exception.
More market muses
The Knight Frank report said Italy was “going out of its way to attract inward investment.” Part of that included a flat tax, with the policy implemented in 2017. The scheme sees both domestic and international residents being able to opt into paying a single figure of €100,000 each year on non-Italian sourced income as opposed to paying ordinary tax rates.
Between 2017 and 2019, the report said 683 applicants have sought the benefits of the flat tax scheme.
Discounts on properties are also reducing, the report called on Banca d’Italia figures, which showed the discount fell from 12% in 2019 to 9% in 2021.
The CBRE report found some interesting trends emerge across the pandemic too, including a continued strong interest in rental investments. The multifamily sector (BTR) is attractive to investors due to the stability of the rental sector, a quality arising from low vacancy rates and tenancy risks due to the sheer number of tenants.
Also attractive to investors is the two-fold benefit of diversifying asset classes and meeting ESG goals.
CBRE’s report found that quite a few Italian properties are a little beyond charming and just plain old. over four in five (81%) of homes built after the second world war were built prior to the nineties and building permits issued between 2010 and 2019 were down 70% from the previous decade – it’s clearly an opportunity to rebuild responsibly.