Italy has weathered the most turbulent year in recent property history relatively well. Other countries saw dramatic drops in both sales volumes and prices, but the Bel Paese ended 2008 with an estimated decline of 14% in transactions and 1%–4.8% in prices (depending on the source).
Despite the market taking a decided turn for the worse in the second half of 2008, Italians continued to believe in property investment, which they perceived as more robust than the volatile stock exchange, say economic analysts Nomisma. But a very specific segment of Italian housing demand the one driven by foreign purchasers changed significantly as a result of the global turmoil, and (for what concerns the British) the pound’s growing weakness against the Euro.
Although foreign buyers kept faith with Italy, they became more prudent, more selective and more conservative. Many remain prepared to spend ‘the market that’s holding up best is the one that’s more than €350,000,’ says Linda Travella of Casa Travella but only as long as they feel confident in the quality of their investment. Safeguarding equity is top of the agenda, so buyers ‘are looking for places that will keep their value in the long term’, adds Rupert Fawcett of Knight Frank.
Chianti remains robust
Among the markets that offer the greatest reassurance is Tuscany particularly the Chianti, the Florentine hills and the countryside around Cortona. ‘I think the Chianti is one of the first on the list,’ says Mr Fawcett. ‘It’s the first area of choice for the English and for other nationalities, and it’s very much on the map.’
Excellent transport links add to the appeal of the Chianti’s sinuous hills, medieval villages and sun-flooded vineyards. ‘With Pisa airport and the Florence entrances to the A1 within easy reach, and the new superstrada link to the A1 below Siena for quick trips to Rome, this area will remain pretty robust even in the current trying times,’ agrees Edward Mayhew of Aylesford International.
Plus, adds Roger Coombes of Cluttons, ‘it may be problematic to put a monetary value on the fact that Michelangelo once stayed in your house, but for connoisseurs, the value is very real and not subject to the ravages of changing fashions.’ Of course, the Chianti is also one of Italy’s priciest second-home Locations the Borsino Immobiliare Toscano, a property index set up by the region’s chambers of commerce, reports prices of up to €740 per square foot for case coloniche near Greve in Chianti. However, says Mr Fawcett, ‘prices traditionally maintain themselves in this area’.
Although they ‘have come off a bit just now, Chianti is historically robust’. The same applies to the Florentine hills, where foreign requests for prestigious second homes meet local demand for exclusive villas. Places such as Fiesole are not cheap villa prices reach easily into €560–€700 per square foot but they are traditionally resilient.
Value for money in Cortona
For a mix of (marginally) more affordable prices and solid long-term values, Jason Jones and Kevin Park of Italian Property Sales & Restorations suggest looking further south, around Cortona, where homes cost €80–€460 per square foot. Always popular among Italians, Cortona has achieved international fame thanks to events such as the Festival del Sole a celebration of music, art, wine, food and literature organised by arts-management superstar and part-time resident Barrett Wissman that brought artists such as Robert Redford to the medieval town.
Second-home purchasers quickly followed suit. ‘We get Italians, Dutch and German buyers, so you’re not limited to the UK market,’ say Mr Jones and Mr Park. ‘You’re certainly not going to lose value here.’
Another region that offers good prospects of a time-proof investment is Lake Como particularly the southern shores around Como and the Centro Lago. Popular with the British since the daysof Queen Victoria, who holidayed here in 1838, Lake Como has long been a second home haven for the rich Milanese.
Later, high-profile buyers like George Clooney, who famously paid about $10m for the beautiful Villa Oleandra in 2002, created international interest, drawing Russians, Germans, Britons and Americans from every affluent walk of life. They appreciate the graceful Art Nouveau architecture of waterside villas, the azure views against the snow-capped Alps and the lake’s long tourist season. ‘On Lake Como, there’s always more demand than accommodation available,’ say Mr Jones and Mr Park. This not only ensures that properties here retain their value over time waterfront ones now cost €650–€930 per square foot but also that they have excellent rental prospects. ‘Lake Como is very good for investment.’
Join the VIP crowd
But perhaps the location where demand most exceeds supply and resale values are safest is Portofino, on the Ligurian Riviera. Portofino has long been popular with both Italians and foreigners Prime Minister Silvio Berlusconi holidays here, as do fashion designers Stefano Dolce and Domenico Gabbana, and society darling Afef.
The handful of villas and former fishermen homes that come up for sale in the tiny village can almost make their own price, say Mr Jones and Mr Park. ‘There are only 10 to 12 properties for sale in Portofino at any one time, and, quite often, two or three bidders per property.’ That said, buyers who can afford a Portofino home probably don’t need to worry about preserving their equity the Agenzia del Territorio reports prices of up to €2,045 per square foot, and Mr Jones quotes €4,645 per square foot for a villa on his books.
The jury is out on the south
By contrast, Mr Park believes that some hitherto popular areas of southern Italy may not offer the same time-proof prospects. ‘From an investment viewpoint, Calabria is still developing and, going on, it may be difficult to resell an apartment. Puglia is slightly different, but there is a lot of property on the market there, and it’s too early to say if it’s a good area to invest. I wouldn’t buy there unless I was prepared to sit on it for a long time.’
Agents at Hamptons International, however, beg to differ: together with Milan and Rome, they believe ‘the south of Italy will do particularly well in 2009 due to the scarcity of good-quality products that are unable to meet a high demand. Bulk mediumto long- term investors will certainly begin to take advantage of market conditions’.
The price is right
In any area, of course, purchasers should pay attention to a property’s micro-location because it has huge impact on resale values it’s pointless to buy in Tuscany if your home is four hours away from the nearest airport and set next to an electricity pylon. Buying at the right price is also crucial to making a time-proof investment. So is now a good time to buy an Italian property?
‘It’s definitely a buyer’s market,’ says Mr Coombes. ‘Although there is no generalisedslide in selling prices, we’re seeing more and more cases where vendors who are selling up to return to the UK or the USA are reducing their Euro asking price in line with the devaluation of the sterling or the dollar.’ Italian vendors are somewhat more resistant to lowering their prices, but may be willing to negotiate when presented with a firm offer. ‘There is flexibility in the market and there are some good buys, especially if you have cash in your pocket,’ says Mr Jones. ‘Vendors are realistic now they know they have to consider every offer.’ And if you negotiate wisely and choose your location carefully, says Mr Jones, your investment is secure’.
This article was orginally published in Country Life International Spring 2009. In it, the contact details for Buriano were incorrect. Anyone wishing to find out more information about the Tuscan development should visit www.buriano.co.uk