Sunday Business Post - Property Expo 2007 Supplement - February 11 2007
Good value comes with buying a property in Italy, writes Dermot Corrigan
The proliferation of low flight airlines linking Ireland with Italy means that the 'sweet life' is now open to a new generation of Irish investors.
"Italy was previously known as an expensive holiday destination, from an accessibility and accommodation point of view," said Liz Maher, owner of Imagine Property Network.
According to Kevin Hill, director of Overseas Property Centre, Italian property offers a mix of culture, lifestyle and value, which many other countries cannot match.
"Italy is a brand name almost, with the idea of the Dolce Vita," said Hill. "People like to be able to say that they have an apartment in Italy. There is a little bit extra rather than just a property abroad."
The direct air links between Ireland and Italy include Ryanair's direct flights from Dublin to Alghero (Sardinia), Bologna, Milan, Pisa (Florence), Rome (Ciampino), Trapani (Sicily), Turin and Venice (Treviso).
Shannon is linked by Ryanair with Venice, Rome and Milan. Aer Lingus flies from Dublin to Bologna, Milan, Naples, Rome (Da Vinci), Turin and Venice and from Cork to Rome. Other destinations including Genoa, Verona, Pescara and Lamezia are linked with airports in the UK.
Flight costs vary depending on the airline, destination and time of year.
Bargain basement low-cost flights can be found if you book off-peak and far ahead, although late bookings of high season flights can cost more than €200, plus taxes and charges.
Investor Trends
Irish buyers who purchase property in Italy tend to have one eye on the investment, and the other on the lifestyle they are buying into.
"You have both investors and people looking for holiday homes," said Maher. "Italy offers a high quality lifestyle, and a lot of people buy property in Italy for their own use."
Older investors, who are already thinking of their future retirement options, are also active in the Italian property market.
"There are quite a lot of investors who like to have a rental income and be able to use it themselves as well," said Hill. "Also people are looking to have an investment for now, which they can use when they are retired, or for longer periods of time than just your two weeks holiday during the summer.
Property Prices
Property prices in the Italian property market can vary greatly, depending on factors such as location, infrastructure and proximity to beaches, cities or skiing opportunities.
"The average cost of property in Italy is around the €200,000 mark, but there are differences between north and south," said Hill. "In Tuscany, you would expect to pay more than the average, whereas property prices in the south would be lower.
Hill said there was value in the property market in the south of Italy, which has long been overlooked in terms of development, but is now undergoing rapid regeneration.
"EU and Italian government funds are being spent on road and rail infrastructure as well as developing airports," said Hill.
Two bedroom apartments in the Calabria region, which occupies the 'toe' of Italy, can cost from only €80,000, while two bedroom townhouses start from around €140,000.
The island of Sardinia is also appealing to Irish investors, especially as there are now five flights a week linking Alghero with Dublin.
"Sardinia property at the moment is starting at about €78,000 and this is with sea view," said Maher. "The infrastructure is there and the shopping is good."
Maher said that good value investments were still possible in the north of Italy. Many Irish investors have bought properties in the Lake Garda and Lake Como localities in the Italian Alps. However, Maher said value could be found around nearby Lake Iseo, which is located between Como and Garda, near the Swiss border.
"Iseo is probably just as nice as Lake Como and the property prices are not as expensive," said Maher. "They start at around €100,000 to €120,000 for a one bed and €150,000 for a two bed. Most of those would have lake views."
Property prices throughout Italy have been rising steadily over the last five years, which means that the current rate of capital appreciation is attractive.
"The level of appreciation has been at about 10 per cent for the last couple of years and there have been signs of an increase, partly driven by people investing," said Hill.
"I think it will be far greater over the next few years, maybe as much as 12 to 15 per cent," agreed Maher. "Especially as the coastal areas are really starting to pick up.
Tax and Legalities
Investing in Italy is relatively straightforward from a financial point of view. A double taxation agreement is in place with Ireland. Registration tax must be paid on second hand properties, while VAT on new properties is charged at seven per cent for non-Italian residents. Hill estimates that accumulated VAT, notary fees and legal fees generally come to about 13 to 15 per cent of the purchase price.
The Italian property market has a number of unique features. The majority of properties are sold as a shell without painting, kitchen, furniture or floors. However, some developers will offer fully finished properties aimed at foreign investors with furniture and fittings included.
Italian properties also tend to be smaller than those in other countries such as Spain and Portugal, and might not have add-ons such as communal swimming pools and child's play areas, as planning restrictions are strict and, in the north especially, there is a shortage of land. Parking spaces are usually only available at an additional cost averaging €10,000 to €15,000
Italian financial institutions welcome business from international investors and Maher said that financing was readily available to Irish buyers.
"Interest rates are comparable, however bank charges are higher than Ireland," she said
