Mixed results for Italian prime property performance

The performance of prime Italian property was mixed during the first quarter of 2013, according to a new study. Knight Frank's Italian insight report revealed that while Liguria and Venice have been going strong, Tuscany, Florence, Rome and Sardinia saw prices drop between January and March. This is not to say that the prime market performed poorly overall. In fact, super rich buyers are still attracted to Italy and Knight Frank agreed a record number of sales in 2012/2013.
Political and economic fundamentals appear to be behind the ups and downs currently experienced in the real estate sector. As fears over the eurozone start to abate and Enrico Letta takes the helm of the Italian government, activity levels have started to improve. However, with the future anything but set in stone, the property market is feeling the backlash. Currently, unemployment in Italy is at a 36-year high and GDP is expected to fall by 1.5 per cent in 2013. This is higher than the Eurozone average of 0.5 per cent. Consequently, investors have been changing their approach to property purchase.

Buyers are now seeking long-term life purchases, opposed to short-term investments. Vendors are also taking stock of market sentiment, which is being reflected in price and helping to encourage prime second home buyers back into the market. However, the British have fallen on hard times when it comes to investing in Italian real estate. The weakness of the pound has cancelled out some of the positives associated with the European Central Bank's interest rate cut. Nevertheless, Scandinavians and Benelux buyers have stepped into the breach. Research from Scenari Immobiliari revealed that second-home sales to overseas buyers increased 14 per cent in 2012.

Liguria and Venice have proven to be particularly popular, with prime prices rising by five per cent in the first three months of the year. However, mainstream house prices are continuing to fall and across Italy a drop of 12.3 per cent from peak levels was noted. In her analysis of the results, Kate Everett-Allen, head of international research at Knight Frank, said: "Since the financial downturn, prices at the eastern end of the Riviera have proved more resilient particularly in the sought-after towns of Santa Margherita Ligure, Rapallo and Portofino. In the west, the stretch of coastline from Bordighera to Imperia is popular, with views across to Monaco highly desirable."
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