Italy has long appealed to second home buyers from across Europe for its relaxed lifestyle, climate, history and heritage.

Italy largely avoided the oversupply of new build properties seen in Spain and Portugal during the noughties. There has therefore been no mechanism of oversupply to significantly reduce residential values – despite the fact real estate appears less affordable for Italians than for other European countries.

Italy’s residential markets have struggled, in terms of transactional turnover in the six years since the beginning of the economic downturn and Eurozone crisis.

The domestic market has been subdued and, although strict property regulations have prevented the market being oversupplied with new stock, an increase in annual property taxes has meant that Italians owning multiple homes are putting some of their properties on the market.

Mortgages are difficult to come by in Italy, especially for international buyers, and therefore cash buyers dominate.

There are some second home markets that have, against the odds, avoided severe price correction while continuing to see transactional activity. There is still a demand from high end international buyers for lifestyle properties in Venice, Lake Como and Tuscany.

Venice remains a sought after destination for its exceptional and unique characteristics. Its real estate is highly prized and integral to the city’s character. Buyers in Venice are often familiar with the city and invest in a property to occupy for part of the year themselves whilst renting it out at other times (often during the peak summer tourist season, when the city is at its busiest and rents are highest). Rentals are underpinned by solid tourist demand, and yields of 5% are achievable.

Venice is also a popular second home destination for Italians, who make up approximately a quarter of the market. Other major buyer groups include the French and British.

In the north of Italy, Lake Como’s rarefied residential market has enjoyed comparatively stable prices in recent years. Traditional properties with lake views are in limited supply, and these properties continue to trade well.

Some recent ultra-modern new developments introduce a new type of product, for example floor to ceiling glass frontages and lake views with flexible living spaces, not usually seen in traditional lakeside villas.

Further south, properties in Tuscany have seen price falls of between 15% and 30% from their former highs. The more expensive Chianti region has seen some market movement because of some recent high profile sales of vineyards to Russian buyers.

The Lunigiana area closer to Milan has seen the most activity as buyers look for relatively lower price properties and this offers the possibility of weekending from the city. The area is well served by airports and has proximity to the coast and mountains, maximising 
its international appeal.

Russians and South Africans are present, as are the French in growing numbers, some of whom are escaping the fear of rising taxes at home. Some French have also relocated to Liguria, along the coast from Nice.

Taken from
Spotlight: Prime Residential Retreats 2014