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%.
The Italian real estate market recovers slightly in the 2Q of 2016
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%) – 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%.
Italian real estate market back on a growth path
In 2015, in Italy, the real estate housing market, after the long, steep descent observed since 2007, seems to be back on a growth path (449,000 standardized transactions), confirming and passing (6.5%), the positive figure of the previous year (421,000). This is what we read in the report of the Revenue Agency for real estate and ABI (Italian Banks Association) for the residential sector. Observatory of the housing market Affordability index rose to 11.9% in March, the historical records No coincidence that in 2015 the “affordability index” developed by ABI, which measures the ability of families to buy a house by borrowing, continues its positive trend. With a significant improvement in the second half of the year, this trend led him to establish time high. According to the monthly projections, in March 2016 the index should be further improved reaching a value of 11.9%. Trades up 6.5% to 449,000 in 2015 The report notes that the figure of 2015 still strengthens the positive trend already observed in 2014, marking a clear sign of recovery. If, in fact, the growth recorded in 2014 was influenced by the effects that the new system of registration fees, mortgage and property rights, enforced on 1 January 2014, has had on the market, – says the study – the figure for 2015 represents an outright + 6.5% growth. “ Declining interest rates among recovery drivers The causes of this housing market recovery depend, according to the report, on four factors. “In the first place, by the fact that, sooner or later, first purchasers who were staying off the market because of the crisis, must acquire a dwelling. Second, the overall economic situation begins to give positive signals, though not exciting, in particular on the various indicators that measure household confidence. ” Third, the interest rates have declined further and the bank credit has increased. The data in the report show that in 2015 purchases made with a mortgage loan increased by 19.5%, and the average interest rate (calculated on first installment) fell by 0.65 percentage points to 2.75% on average. See the market in 2016
Italian real estate investment, pros and cons
The Italian economy is historically fluctuating. Sometimes, it undergoes a depression that can last more than a century. For instance, the Italian economy was perhaps Europe’s most prosperous during the Renaissance. Then, European nations started colonization of Africa, Asia and America, becoming richer and richer. Micro-states or cities in the peninsula (Italy became a nation only in 1861) weren’t neither big nor powerful enough to colonize. So a certain economic decadence began, because European nations became more competitive than the small states in the peninsula that is nowadays Italy. Nevertheless, there sure were decades, like the 80s and the 90s, when the Italian real estate became and stayed really expensive, compared to European real estate in general. Generally speaking, Italy often offers interesting opportunities for real estate investors. The pros of investing in Italy Italy’s incredible cultural and artistic heritage is a sort of insurance against excessive devaluation of the Italian housing market. Indeed Italy will always draw tourists by the millions, and investors by the thousands. World renowned artists as Sting own secondary residences in Italy. The same can be said for the sweet, temperate climate and its beautiful natural landscape, so various and rich. Idem for wine (in 2015 Italy was the first exporter in the world) and food. Italian population is huge compared to the habitable land. These guarantees quite stable prices for real estate, since the demand for housing is never sluggish. Italians care much for their homes. Normally, they are well-built and well decorated. Italian excellence for design and architecture is worldwide recognized. The 2008 recession has weakened both Italian banks and families. This has brought down real estate prices, to a level never seen in the last 50 years. Real estate prices in Italy have bottomed, they are more likely to recover than decrease further. Many Italians live abroad, which renders Italian legislation, is not favorable, at least not disadvantageous for foreign residents altogether. Traditionally, Italians like and welcome foreigners. They Italian style and way of living has many fans worldwide, you might as well become one of them. The cons of investing in Italy Italian legislation can be complicated, you’d better take advantage of legal counsel if you are to invest in Italy. Italy’s infrastructures, motorways, roads, Internet, phone and railway networks are not as performant as in Germany, France, Netherlands or northern European countries. Traffic jams are frequent in big cities. Driving can be slow. The peninsula, because of its geographical situation, is not so well-connected with the rest of Europe. The Alps are quite a barrier if you follow to Italy by car or train. Nevertheless, airports are numerous and flights frequent and often cheap. Conclusion Italy is always been a remarkable country. Its charme is evident and solidly established. Investing in Italy can hardly be a waste. The profitability of a real estate investment in Italy oftentimes depends on the economic conjuncture. Sometimes prices skyrocket, but now they are historically quite low. So…
Lower property taxes likely to improve Italian real estate market
In 2016, the Italian government lowers property taxes in order to boost the real estate market IMU (Imposta Municipale Propria) and TASI (Tassa sui Servizi Indivisibili) are abolished for principal residences Practically, only residents in Italy will benefit from this abolition. Therefore, these two taxes will remain unchanged for secondary residences. For luxury houses and castles, IMU will get a reduction. Owners of those luxury properties will pay a flat rate of four per thousand and receive a standard deduction of €200. Since the four per thousand is calculated on the cadastral value of the property, which is always considerably lower than the actual value, oftentimes sometimes more than 60% lower. There is also a 25% discount on IMU for the foreign residents who have rented their house in Italy, provided that the contract complies with the minimum and maximum rents set by local authorities. Asfor the garbage fee, TARI, please reade below: “TARI: who should pay”. Property purchase taxes are quite reasonable for principal residences Purchase from private owner or from Non-VAT Registered | Purchase from VAT Registered Principal Residence Second Home Principal Residence Second Home Stamp Duty 2% 9% €20 €200 Land Registry €50 €50 €200 €200 Cadastral €50 €50 €200 €200 VAT 4% 10%* IMU, TASI, TARI: property taxes for Italians who reside abroad Many Italians who own real estate in our country but are resident abroad and the rules for the application of the IMU, TASI and TARI abroad are different. If, on the one hand are exempt from paying IMU from 1 January 2015, on the other they are still required to pay the tax on services and the indivisible municipal waste, albeit reduced to a third. IMU for Italians living abroad: exemption Many, in fact, are th Italians living permanently abroad who own a property in Italy. As for the IMU it has been established, with effect from 1 January 2015, that is considered to be directly used as a main residence one housing unit owned through ownership or usufruct in Italy,by Italian citizens not resident in the State and members of the Italian residents to Anagrafe ‘abroad (AIRE), provided that is not leased or given on loan for use. (Decree Law no. 47 of 28 March 2014, converted into Law 23 May 2014 n. 80). Essentially it means that Italian citizens living abroad and the owners of a property used as a principal residence do not pay the IMU. Always provided that the property is not luxury / fine (cadastral categories A1, A8 and A9), otherwise the IMU must be paid even if to a lesser extent, with the application of a rate of between 2 and 6 per thousand. TASI: liable for payment Matters are different when it relates to the TARI and TASI. Recall that this is the direct tax to finance the cost for indivisible services that offer the municipalities (public lighting, road safety, etc.) and is applied to all properties. Taxable for TASI are the owners of the houses but also those who hold, in any capacity, the property, so even tenants in case of lease for residential purposes. In particular, those who hold the property are required to pay a share of the TASI between 10% and 30% and the remaining burden on the owner. To determine the minimum and maximum is the duty the Municipality. TARI: who should pay Introduced as the TASI by 1 January 2014, the TARI is the new garbage fee. Taxable for TARI are all those in local and uncovered areas used in any capacity, located in the municipality. Are exempt from the TARI all those areas that do not produce waste, a condition due to non-usability of the premises and areas (e.g. because the house does not have the minimum requirements of habitability, as they lack the electricity connections, Water and Sanitation). Each municipality, in the Regulations of the garbage fee, may establish exemptions and reduction of TARI (e.g. failure to provide the service of waste management, service interruptions management and collection of waste that may cause damage to the community and to ‘environment, not continuous use of the property, property occupied by a single person). TARI and for Italians TASI living abroad: payment reduction to 1/3 As for Italian citizens who live permanently abroad, even if already retired in the countries of residence, owners of a property in Italy, on the one hand they completely discount the IMU, on the other must pay both TASI that TARI. However, they can still benefit from a tax reduction equal to 1/3. So if the amount calculated under ordinary TASI, amounts to EUR 300, Italian citizens not residents will pay 100 Euros. And if the property is luxurious or fine? Given the silence of the provision, it follows that the reduction in one-third of TASI and TARI can apply even if the property treated as a principal residence of the non-resident, is classified in cadastral categories A1, A8 and A9.