Buying a luxury second home can be a bargain. After the housing crisis that started in 2008, prices in Italy have dropped, in some cases considerably, and new buying opportunities crop up throughout the country.
Knight Frank’s first report paints a detailed picture of the Italian luxury real estate market, especially in vacation areas. The report highlights a general decline throughout 2016, ranging from -13.3% in Forte dei Marmi, due to a disappearance of Russian buyers during the ruble crisis, and -1% in Western Liguria.
In this context, which according to Knight Frank marks a low point in many markets, the stability of the Rome real estate market and the slight price increase in Lucca and Pisa (+ 0.5%) and Lake Como (+1.2%) stand out.
Milan - despite enjoying strong international interest, even from tourists - ended the year with a 1.5% price drop.
The Italian Prime Residential Index points, on average, to a 5.5% drop, but the gap between the strongest and weakest markets is much wider.
“We published this first report because the Italian market suffers from a lack of data. Unlike the Anglo-Saxon market, where there are extensive databases on real estate, Italy lacks transparency. We decided to monitor prices and market trends in 15 Italian locations were there is a significant presence of foreign investors,” said Kate Everett-Allen, head of European research at Knight Frank.
The survey showed that in many markets prices are still falling. Prices are dropping the most in Tuscany. In addition to Forte dei Marmi, prices fell by 11.1% in the Val d’Orcia and in Southern Tuscany, by 9% in the Argentario area and respectively 9.5% and 7% in the Maremma and in the Chianti areas.
Despite the strong decline, Tuscany remains the favorite destination for Northern European buyers, who associate this region with Italian lifestyle and culture. Fascinated by the architecture of the houses, country houses or buildings, and by the landscapes, they flock in growing numbers to this area.
Lucca, the Chianti area and the Val d’Orcia remain the favorite destinations.
The appeal of the Maremma area, that offers endless beaches, is also increasing.
The Lake Como luxury real estate market continues to gain traction, too, recording a slight price increase. “The area benefits from its proximity to Milan and Switzerland. The area continues to be popular among those looking to purchase a house or a luxury villa. This area has the best prospects, there are a few developments taking place and prices could rise again in 2018,” said Everett-Allen.
The prospects are also good for Liguria and Sardinia, where prices fell (5% in the Emerald Coast) and will continue dropping, but the locations still gather interest from prospective buyers. However, Sardinia should run for cover and extend the holiday season.
At the moment the area attracts buyers from the Middle East - perhaps thanks to the acquisition a few years ago of the hotels in Costa Smeralda by the sovereign fund of Qatar - but also German and Northern European buyers.
The Russians are making their comeback on the mid-level segment, especially in Liguria.
In general, the offer is broad and opportunities abound, especially as the owners become reasonable and are more willing to negotiate the initial asking price.
Political uncertainty causes buyers to be cautious, but with respect to lifestyle Italy is still seen by many as unparalleled.
Not surprisingly, the Knight Frank report ends with a long list of events taking place in Italy, from food festivals to cultural events.
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