Written by Staff Writer at CNN
Those hoping to snap up a cheap apartment or home in Italy right now will be sorely disappointed.
The 4 billion euro ($4.5 billion) benefits package, which includes aid for micro-enterprises and funding to boost hiring and private investment, was delayed and then watered down — but it may well still be too late for many.
An economic slump that began in 2014 has left Italy in its worst position since the 1970s. In fact, economic growth has been negative for the past three years.
Many owners have hoarded cash to cash in on the country’s soaring property prices. After more than five years, prices for some high-end property remain stubbornly high — meaning those looking to make the most of the tax break for rental properties may well struggle.
‘Buying big is the future of everything’
For those looking to stay put, buy a used property outright or purchase under the flat tax scheme, there is still plenty of opportunity.
Vincenzo Sicuri heads the house buying arm of Unipol – one of Italy’s largest insurers — and has three investments he can recommend.
He tells CNN how to get the best out of your house hunt in Italy and why “buying big is the future of everything.”
Explaining the value of the flat tax scheme, Sicuri says: “A lot of residents in Italy don’t understand the scheme because it’s new and was introduced by former Prime Minister Mario Monti in 2012, but all rules were agreed for it, and it’s a law that has changed a lot since 2012.
“If you are one of the people who were happy to be a citizen in the old country, you can choose whether you are going to buy a lot or be a part of a “speedboat” (a type of property linked to the stock market). As an investor, that means you can be a part of a group of companies that own a bunch of buildings and you can own them like a project manager or an investor in a company with lots of buildings.
Sicuri says: “The house market in Italy has performed badly in recent years due to various things. We have an economic slowdown, we have an immigration problem with refugees crossing from Africa, and a lot of them stay in urban areas.
“So the products are not made right, they’re not cheap, but it’s all become possible thanks to the flat tax.
“A normal “free market” house here in Turin is 450-500,000 euros, we bought two of these homes in Medio Addolorato (an area of Miramare, just north of Turin) for 150,000 euros ($158,000) and 150,000 euros for both houses.”
He goes on to discuss the properties’ value and points out how Buying Big in Italy has become more popular.
“Italy was empty, Italy had the highest non-performing loans in Europe, it was like a cat in a box. When you look at all the data, that’s not true anymore.
“Now, if you’re looking to buy a house, either in a normal market or in a luxury market, you need to be very careful that you’re buying big. Nowadays in Turin, a house of 500,000 euros was sold within two months in the last couple of months at 850,000 euros (a home is worth around 80-90% of its worth).
“It’s true that there is investment and you have to put a lot of money in it, but there is more investment available now in Italy and those big houses have a value.”
Sicuri emphasizes the importance of asking questions. “When you’re asking the agent about your potential buyer, ask about the demands of those buyers. You are investing your money so you need to know who it is.
“On the good side, those people are your customers. It’s not like buying in the flat tax, you really should know what you’re buying.”
Speaking about buying in a specific neighborhood, Sicuri says the right place has become a necessity.
“I think it’s all the more necessary. The neighborhoods are so important, because we are talking about places where you’ve bought a restaurant or a house. You’re not going to open another restaurant, but you’re buying a house and it has the power to do that. You can grow your business on top of it, you can work in it, and you can achieve a lot.
“I think it’s all important. You’re not going to grow that much, or you’re going to invest more than others, you need to buy special places and there’s really nothing wrong in buying them.”