A land of rich history, culture, exquisite landscapes and superb cuisine, Italy wears many hats. As a popular tourist destination, it's no surprise that the country also attracts many foreign investors. Gemma Knowles, director of GK Italian Property, says, "Italy, with its wonderful history, beautiful countryside, food and attitude to life, will never lose its appeal as a holiday destination and location for second homes."
The realty laws in the country allow for 100% foreign ownership of properties. Paul Belcher the managing director of Ultissimo Ltd, says, "Most properties in Italy are freehold and the title can be owned by a non-resident without any difficulty."
While the global financial downturn has crippled real estate markets across the world, experts say that although Italy's economy has taken a beating, the country's property sector is not as hard hit as many other countries. Although Italy is experiencing an economic downturn, the real estate sector is relatively buoyant, Paul says. "Unlike the UK and Dubai, Italy has not seen cheap credit and very rapid price growth in recent years. Good property in the northern half of Italy still remains very much in demand and with significant restrictions on new developments outside major towns, there is a continual shortage of supply in the country which provides strong support for a sound housing market."
Real estate in some of Italy's urban areas has been affected, notes Gemma. "It is the cities that are suffering the most, particularly Milan, where property prices were inflated this time a year ago."
Prime areas preferred by foreign investors are another matter, she says. "The regions which are of most interest to overseas buyers like Tuscany, Sardinia and the Italian Lakes [eg, Lake Como] are holding up well. The realty sector is almost unaffected, buyers seem to want to take advantage of the current climate hoping for more choice and a good deal. There are also people wanting to buy property in Tuscany as a secure place to put their money knowing that Tuscany will have an eternal appeal to property buyers, recession or no recession."
Luca Catalano, executive director of Realitalia, says that overall the market is robust. "Despite a reduction in the number
of transactions in 2008, the market in Italy maintained itself quite healthily since Italians buy real estate a lot and usually they are free from mortgages and loans, so financial trouble in the market caused less problems.
"The second home market remains mainly domestic, especially in areas like Liguria, the sea gateway of Milan, and Turin."
Roger Coombes, manager of Cluttons Italy, recommends Venice, Rome, Capri and the Amalfi Peninsula as investment hotspots. "There is a certain buzz around lower end tourist resort developments in Puglia and Calabria, but these places are not where the strategic interest for serious investors lie," he adds.
Property prices aren't escalating as fast as earlier, notes Paul, and have remained stable or even dropped a little in some areas. Average prices in Italy vary depend on area, location and the quality of the property.
Paul estimates prices for high-quality "character" properties that have been renovated can range from Dh12,305/m² to Dh22,150/m², while lakefront properties on Lake Como command up to Dh49,225/m².
Seafront properties, says Luca, range from Dh29,535/m² to Dh44,305/m² and a countryside Tuscan home ranges from Dh19,690/m² to Dh29,535/m². Farm houses in Tuscany and Umbria start from Dh4.92 million and Dh3.69 million respectively, says Gemma.
She adds that apartment prices in renovated rural complexes in Tuscany start from around Dh1.23 million, villas overlooking Lake Maggiore or Lake Como from Dh4.92 million and waterfront villas from Dh9.85 million.
So what are the advantages of investing in Italy? "From an investment angle, in the last ten years, the market grew less than other countries, but there is a strong domestic demand for holiday homes, and it is a less leveraged market financially than other countries," says Luca.
"From a holiday point of view it's a good choice. Tuscany offers the best countryside in the world and you are a few kilometres from historical cities. Italy tends to be very accessible as well."
Italy is considered a safe haven for investment by many people. As a pure investment destination, Italy has "proved sound," says Paul. "For the character properties favoured by foreign owners, rental demand remains strong there are huge numbers of tourists who are repeat visitors to Italy over many years, enjoying the culture, the Renaissance towns and cities, and the food.
"This underpins property values and, combined with tight development restrictions which limit supply, helps to drive steady growth in prices. Carefully selected locations provide good, solid capital growth year-on-year."
For a UAE-based investor, buying a property in Italy involves a number of steps. The procedure for purchase is pretty straightforward, says Paul. "A Codice Fiscale (fiscal identification) is required for all major transactions to identify an individual, it is also required by utility companies. The process requires an agreement to purchase with the payment of a deposit 30% is normal. Then the formal purchase documentation is drawn up by an Italian Notary acting as an independent legal expert in relation to the transaction. At all stages the purchase paperwork can be signed on the purchaser's behalf by their Italian lawyer under a power of attorney obtained by visiting the Italian Embassy in the UAE."
Indeed, in these turbulent times, Italy, with its relatively stable real estate market and easy availability of mortgages, offers a promising investment environment for foreign buyers.
While real estate markets across the globe are reeling under the pressure of the financial downturn, Italian realty remains comparatively stable.
Ultissimo Ltd. www.ultissimo.com
GK Italian Property www.gkitalianproperty.com
Fact: Tuscany, and lake areas are the most popular spots with buyers.
Fact: Italian real estate laws allow for 100% foreign ownership.