Industrial production increases, boding well for real estate
Increase in industrial production in June. According to Istat, the Italian State Statistics Institute, the seasonally adjusted index rose 1.1% from May, adjusted for calendar effects. In June 2017, the index increased in trend terms by 5.3% (working days are 21, as in June 2016), at the upper end since the end of last year. On average for the quarter of April to June 2017, production increased by 1.1% compared to the previous three months. On average, for the first six months of the year, production increased by 2.2% compared to the same period last year. The positive trend continues for the Italian industry, after positive data were also recorded in May. The recovery is already influencing the real estate market Indeed, if we look at the property prices of the last 24 months, we note that the stabilization of the Italian real estate market is confirmed, as is the economic recovery. Prices remain at fairly low levels compared to the pre-crisis level of 2008, so we can do good business by buying real estate in Italy. The automotive industry is doing particularly well The acquisition of Chrysler and Jeep by Fiat is bearing its fruits Leap of production in particular in the automotive industry. Italian car production in June increased by 19.9% over the previous year, according to Istat. The average growth in the second quarter, compared to the previous period, is 4.4%. “This is the sector that drives industrial production this month,” said the Institute of Statistics.
Houses to be restructured in Italy, real estate investment opportunities
How the housing market changes due to redevelopment and urban restructuring In Italy, no new houses are being built, while the Italian housing stock is outdated, as it was mostly built before 1990. The demand for rental and purchase of real estate changes, as 2 million square meters of housing remain empty in Italy. But if at first sight this may seem a critical problem, on the other hand, it represents a huge opportunity. The renovation of real estate is the opportunity for the whole industry and for foreign or Italian investors Italy is a country of 20 million home owners. However, the properties are often empty, blocked by the small number of real estate transactions. In this scenario, the renovation of Italian real estate is the future of construction and industry. Already, in fact, 19 percent of sales involve renovated homes. Gaetano Courage, from Paspartu Italy explains how the market evolves and how to meet the new demands of transformation today. A connected, modern house. But also effective The beautiful home is a healthy one, and online. The revival of Italian real estate is an opportunity for the entire industry. Today already, in fact, 19 percent of sales relate to the renovation of homes. Environmental sustainability and energy savings are some of the key requirements According to the “first report on the resumption of construction in Italy”, produced by Scenari Immobiliari (real estate scenarios) in collaboration with Paspartu Italy and presented in Milan, 62.2 per cent of the properties were built before 1990 (30.1 per cent even before 1970). An outdated, energy-consuming heritage, often insufficient to answer the question that has been raised in recent years. On the other hand, there are at least 147 million square meters of empty and ready-to-sell properties, compared to the 123 million square meters of inadequate and unresolvable housing. With this framework, it is clear that the recovery and restoration of real estate assets could represent today one of the best opportunities for the whole sector: a market potential of 50 billion euros. “We have to create a new market,” explains Mario Breglia, president of Scenari Immobiliari. “And this role can be played by the restructuring of existing assets. Interventions that can render homes more comfortable, more pleasant, more beautiful. We can no longer consume land, so we have to take action on buildings, not just on individual apartments. “
Real estate foreign investments boom in Italy in 1st half 2017
Why foreign investors invest in real estate in Italy Six main reasons for investing in real estate in Italy if you are a foreigner There are plenty of creative Italian companies that are exporting a lot, at relatively competitive prices. These same companies are often bought by foreigners at reasonable prices Italy is beautiful, rich in artistic and cultural heritage, dotted with tourist springs and cities of art, having magnificent beaches. The purchasing power of the Italians, affected by the crisis more than in the rest of Europe, has brought down the price of real estate in Italy, which are now relatively cheap. There are many judicial auctions where you can get bargains Its climate is mild and temperate Its population has the reputation of being cheerful and friendly Italian real estate market boosted by foreign investment in second quarter of 2017 During the second quarter of 2017, nearly € 4 billion was invested in the Italian real estate market, representing € 5.8 billion for the first half of the year, with a 58% increase compared to the same period last year – and thus establishing the largest volume of real estate investment ever recorded in a period in Italy. Interest in the sector is therefore very strong in the first half of the year, with dynamic activity “plus” and growth in both the average value and the number of transactions compared to the first half of 2016. This is what emerges from the analysis of CBRE, the leading real estate consulting firm. 80% of investments in Italian real estate came from abroad Foreign capital accounted for 80% of total investment in the first half of the year, at around € 4.5 billion, an increase of 67% compared with the first half of 2016. The share of Italian investment continues To improve with more than 1 billion euros invested in the first six months of 2017. In terms of sectors, offices still have the largest share of investments: 2 billion in the first half of 2017 (+ 30% compared with the first half of 2016), followed by retail sales totaling 1, 2 billion (+ 76% compared with the first half of 2016). The volume of replacement investments is high at 992 million, almost twice as high as the first half-year 2016. Logistics, which began this year, continued to attract investors’ interest in To reach a total of approximately 800 million investment (+ 291% compared to the same period in 2016). Even the hotel sector, with 770 million (+ 49% in the first half of 2016), continues to attract more and more investments. As regards geographical areas, there is an improvement in the Roman market, with € 1 billion invested in the first half of 2017, an increase of 30% compared with the same period in 2016. Milan reached an investment volume of 1.8 billion euros, 25% more than in 2016; of these, 48% relates to the office sector. Milan and Rome then confirm that they are the most attractive places for investors, accounting for 50% of total investments in the first half of this year.
What attracts foreign investment to Italy
Foreign investment in Italy, latest trends There are several factors that could have a positive effect on the attractiveness of Italy, but the necessary reforms must be carried out. Italy is becoming less and less attractive to foreign investors. The country loses positions in international rankings, and the AIBE index, developed by Censis (the National Research Institute) with the Association of Foreign Banks, is down to 40.3, from 47.8 in 2016. Being given that 100 is the maximum value, Italy is therefore considered to be a country where investing is not very practical: among the main causes are the tax burden, the slow times of the civil and regulatory bureaucracy and the justice. The most attractive are China and Germany, followed by the United States and India. Nevertheless, we can remain optimistic However, there are several factors that could have a positive effect on the attractiveness of Italy, from the Industry Program 4.0. Even Brexit could favor Italy, while the Trump Presidency is seen as a negative factor, as well as domestic political instability. Strengths remain for fashion and luxury investors (91.3%), food (60.9%) and mechanics (60.9%). They are followed by tourism and pharmaceuticals. Among the internal factors, of great importance is the quality of human resources. The main mode of investment is indicated in the merger and acquisition, for the prestige of its brands, the quality of products and services and the acquisition price considered relatively low. It is hardly the case to note that even real estate prices are relatively cheap, especially in some areas. Residences on the sea front can be found around 1000 € per square meter, especially in the south of the peninsula. In short, Censis concludes, Italy’s external perception is better for the country’s structural aspects such as human resources, infrastructure, the banking system and the flexibility of the labor market. While investors remain chilly in view of the aspects that involve the public administration. What slows down investment may disappear in the long run If we look at the last administrative elections in mid-June, the extremist parties lost ground. This could allow the governing parties to carry out the reforms that Italy needs. On what Italy should bet to improve their “convenience framework”, as defined by the Censis survey? For the vast majority of respondents (who are entrepreneurs, managers, banks and foreign correspondents), it is essential to continue the reforms: 72% declare it. The reform of public administration, the simplification and certainty of a more effective fiscal policy, the reform of the civil justice, continue to return to the center of the concerns of the foreign investors.
Unemployment rate falls in Italy, which is expected to stabilize house prices
The unemployment rate drops to 11.1% in April: minimum since 2012 To celebrate these are above all those who are over 50 years old: compared with the year 2016, there are 277 thousand more employees, thanks to the growth of 362,000 at work. The unemployment rate is stable among young people at 34 per cent. Net decrease in the unemployment rate in Italy: in April the figure of unemployed is down to 11.1 percent, down 0.4 percentage point in one month and 0, 6 points over the year, reaching a trough In September 2012. The annual decline is 4.8%, in the amount of -146,000. Among youth, the unemployment rate remains at 34%. Last month, the Italian labor market saw employment growth of 94,000 people. + 0.4% compared to March at 57.9% and the highest since 2009. But the statistics highlight a phenomenon that marked the resumption of work in Italy in recent times: the increase in employees – particularly for men, affects people over the age of 50, and to a lesser extent, those aged 25-34, while there is a decline in other age groups. Still on an annual basis, in April, the unemployed (-4.8%, equal to -146,000) and inactive (-1.4%, equal to -196,000) were reduced. Consequences for the real estate market If there are more workers, there are more people who can borrow to buy real estate. The real estate market can only benefit from a decrease in the unemployment rate. The chart below shows a decline in real estate prices in Milan from 2015, which had already begun to stabilize somewhat in recent months. Now let’s look at the chart showing the evolution of rent prices in Milan, again for the same period: the constant increase predicts that sales prices will soon follow the same direction of rent prices, because rents increase only when there is a corresponding increase in purchasing power. Increase that will benefit the price of real estate. Conclusion: it’s a good time to invest in real estate in Italy Indeed, given the economic recovery that seems to be consolidating, everything predicts that real estate prices have reached their bottom, and will start to rise, albeit slowly.
The student housing industry grows in Italy
The student housing industry grows in Italy: it’s a real estate investment opportunity The student housing industry is mature throughout continental Europe: France, Germany, Ireland, Italy, the Netherlands and Spain are the six main markets identified for sustained growth over the next 10 years. Main trends in the student housing sector in Europe The real estate sector, which sees the student as a resource, is growing rapidly in Europe. Among the European markets, where the market is ripe and ready for sustained growth, there is also Italy, flanked by other countries of the old continent, such as France, Germany, Ireland, Netherlands and Spain. Housing for university students in European markets outside the UK is a real estate investment that is attracting more and more, especially institutional funds, private equity and established market players who want to diversify their portfolio In new markets. An interesting fact that drives interest in investment in this real estate sector is tied to the school curriculum entirely in English in countries where English is not the main language: the offer has gone from the 500 courses available 10 Years ago to the 6000 university courses of the current year. For example at the University of Ancona, in the picture above, there are several courses in English. This means that Italian universities are able to obtain an ever larger share of the international student market, currently dominated by the United States and the United Kingdom. Another fact to bear in mind in order to understand the interest in the university housing sector, is the rapid increase in the student population that requires quality accommodation. Such strong demand will only encourage more competition, so the number of international students worldwide is expected to reach 7 million worldwide by 2020, up from 4.1 million in 2014, with growing expectations for quality accommodations.
Real estate prices in Italy in February 2017, a bargain
Map of real estate prices in Italy The map shows the prices quoted for houses, apartments and in general residential property in Italy. These are the average prices of the properties listed on the site Immobiliare.it, probably the main site of classifieds real estate in Italy, the reference period is February 2017. In February, the price per square meter for property sales was highest in the Val d’Aosta region compared to the rest of Italy. On average, in fact, the cost of a property for sale in the Val d’Aosta area per square meter amounted to € 3286. On the contrary, for a property for sale in the charming region Calabria, the price is only € 1,066 per square meter, the lowest value of the whole of Italy. Why a second home in southern Italy is a soundly profitable and enjoyable investment If we consider that in Calabria, Apulia (Puglia) and southern Italy in general, that is to say, south of Rome, the prices per square meter for an apartment with a sea view or even few meters from the beach can cost less than € 1000 per square meter, one can quickly understand that it is a profitable investment in an awesome place. Indeed, the beaches are beautiful, the sea is beautiful, the food very tasty and inexpensive, the people friendly and welcoming, the airports quite handy, with cheap highways. Ask your friends who have been on holiday in southern Italy, they will tell you. Price of rental properties As for rental properties, the highest average price was detected in the region of Sardinia with a price per square meter of € 12.15 per month. The lowest average price of rental housing was in the Calabria region, with only € 4.58 per month per square meter, the lowest value at the national level.
Tourism: Italy continues to woo huge crowds
Euromonitor ranking of the most visited cities by international guests Hong Kong, the most visited, Rome 14th, London is second Asia continues to dominate, but the British capital returns second, to the detriment of the city-state. Italy out of the top ten, but with encouraging signs of growth. But it is a partial picture and a bit ‘misleading, because the boom in tourism in the Far East, although real, is largely the product of a geographical proximity, huge population and economic growth that allows for the first time a new Asian middle class to travel for tourism and business. The semi-state Chinese city, now associated with the People’s Republic, it is also often visited like a transit destination, in order to fly to other destinations in Asia or Australia. A more truthful regard on the list indicates that London moved up to second place in the world and remains the first in Europe, in fact maintaining the status of number one tourist destination in the world and Italy, without having any single city in the ” top 10 “, has four among the top 100 – the “usual jewels”, Rome, Milan, Venice and Florence – collectively overcoming several other nations of the earth. If the “big four” were considered as a single entity, and in a way they are because the average tourist visits them in order, one after another, then this “Italian tour” would be the second most visited destination in the world, with nearly 25 million visitors per year, behind only Hong Kongs, if not the absolute number one, since the Chinese city is just one more step rather than a point of arrival. Tourism, the most visited cities in the world, Hong Kong won, Rome first among Italian cities The crown should therefore be in Hong Kong for the sixth consecutive year, with 27 million 700 thousand visitors, 8 percent more than last year, the prolonged effect of the boom in China and in general throughout the Far East: a region full of relatively contiguous megacities, a piece of the world in which live – about 3,.5 billion people, half of humanity. So it is not surprising that Hong Kong continues to be the most visited place of the globe, not least because, stresses the analysis of Euromonitor, statistics indicate that many of these visitors come to Hong Kong, maybe from Beijing or Shanghai to spend a week- end and then fly to Australia, America or Europe. They follow in the order, to complete the “top 5”, Singapore (17 million visitors), Bangkok (16 million) and Paris (14 million and 900 thousand), but each with a decline in attendance over last year; and New York is in eighth place (12 million) but visits are up. Of all the 100 cities, Asian ones represent a third of the total, and six of the top ten. China and the United States dominate the rankings with seven city each. Italian cities do remarkably well Rome is the fourteenth, with 8 million 700 thousand visitors, followed by Milan (24th with 6 million), Venice (30th with over 5 million) and Florence (40th with more than 4,000,000), all four experiencing growth compared to 2013. says Wouter Geerts, travel analyst at Euromonitor: “Italy has no city among the top ten most visited of the planet, but if taken together its four city in the ranking make it one of the most popular destinations in the world.” Agrees Angelo Rossini, Italian analyst at Euromonitor: “Our country has a strong potential for further growth in the coming years, thanks to art, shopping, catering and lifestyle, the four factors that are now the engines of world tourism. Improve direct flights, facilitate the granting of visas, and increase promotion in emerging markets, particularly in Asia, and you could certainly bring more benefits to Italy. ” Yet another reason making real estate investing in Italy all the more attractive.
Italy is the 12th best loved country in the world
The 2016 country reputation ranking The countries with the highest reputation worldwide have been ranked by the Reputation Institute in its annual Country RepTrak index. A ranking to be proud of According to the Reputation Institute, Italy ranks 12th. This is great, if you are to consider that there are about 200 countries in the world and Italy ranks better than Germany (18th), France (15th), United Kingdom (13th) and Japan (14th) to name a few. The attractiveness of its touristic resorts and the quality of his exports are the two factors that most contributed to Italy’s top ranking. However, Italy’s ranking is average if you consider the European countries altogether. Indeed, among the ten top ranking countries, seven are European. They are mostly northern countries with high per capita income and standard of living. I would say that Scandinavia is a top performer, since all the countries of this peninsula rank among the top 10, with Sweden ranking first. This comes to no surprise for anybody who knows these countries. You can look at the complete rankings below, with the United States ranking rather poorly, and the 28th place. The criteria for evaluating the reputation of a country Contributor to global culture • High quality products & services • Well-educated and reliable workforce • Well-known brands • Values education • Technologically advanced.
Debt laden Italian banks render Italian real estate cheaper
The weakness of Italian banks, an opportunity for foreign investors? Italian banks have an estimated $360 billion worth of bad credit. Those are loans that will be hard to be rebate by the doors, since their financial or economic recitation doesn’t allow the stipulated payments. It is calculated that about $200 billion worth of loans will never be paid back. So, despite extremely low interest rates, the volume of real estate trading in Italy is way lower than precrisis levels, about 40% lower. Prices have stabilized at a low level. Indeed, the average is 2100 dollars per square meter. At some beautiful resorts, especially in Southern Italy and on the East Coast, in central and southern Italy, you could buy apartments at the seaside for around $1000 per square meter. Consider that Italy is a beautiful country which has drawn investors over the centuries. It is densely populated: its 310,000 km² host roughly the same population as France (around 65 million people), which has more than 500,000 km². But in Italy, the country is so full of steep hills, mountains, and semi-desertic areas, especially in the South, that human settlements can take place in roughly half of the country. This population density provides for the value of Italian real estate, which can never dramatically plummet. Since Italians care a lot for housing, the quality of Italian real estate is often outstanding, never too low. Conclusion: in my humble opinion, the Italian real estate market should have bottomed, is a good time for foreigners to take advantage, investing in one of the world’s most beautiful countries. The last real estate Observatory of Nomisma, one of Italy’s most prestigious think tanks, evidences that the interest of Italians is no longer limited to the residential sector in recent months: investment in real estate for companies has also grown. While noting a slight recovery in the housing market, in place for several years and confirmed in early 2016, Nomisma still urges caution. Certain factors – the Observatory cites the outcome of the British referendum, which sealed the release of the UK from the European Union – could undermine the stability of the macro-economic environment, with inevitable repercussions on the Italian real estate market, still far from the levels prior to the economic crisis. In fact, the increase in purchased and sold properties registered in recent years – the trades have increased as well 2014 (+ 3.6%) as in 2015 (+ 6.5%) – it was not large enough to allow a return to pre-crisis levels. Nomisma, which provides for an increase of 7.6% of trade for 2016, points out that the market trades in 13 major Italian cities were reduced by 40% in the residential sector and 50% in the non-residential. Further confirmation the modest recovery in the housing market is coming from the Observatory of casa.it, which certifies a growing interest in the residential homes. In the first half of 2016, the demand for housing has increased (+ 2.6%) – the analysis reveals that Italians are mainly seeking apartments (29%) and three-room apartments (26%) in semi-central or remote areas. But this has not been accompanied by a simultaneous increase in prices: a square meter costs on average 2,010 euro, down 0.1%.