Investment Factors in Italy
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Investment Factors in Italy
Professional investors consider Italy as one of the best parts of the world to invest money buying properties. The Capital appreciation has reached up to 20% in selected areas and the property system is similar to that of the UK and Ireland, where foreigners are not only able to buy property without restrictions but are encouraged to by the local government.
Italy, as the fifth largest global tourism destination welcoming over 37 million tourists per year, therefore the outlook on potential rental returns for investment property is very healthy.
Favourable taxation for foreign investors include no capital gains tax and no wealth tax. Also, there is a maximum of 8% inheritance tax and gifts up to € 80.000 to close family members are shielded from taxation.
Italy is viewed as a secure option for real estate investors.
In the heart of the Meditteranean, Italy is a founding member of the European Union, a member of the G8 and a non-permanent member of the United Nations Security Council. With the 7th highest GDP and projections for a rebounding economy, the Italian government is actively promoting foreign property investment.
Risks Assessment
The highest return on investment ratio involves selling the property prior to completion as the capital invested is much smaller, however the risk is also higher as the investor is relying on finding a buyer for the property within a short amount of time.
To determine the correct purchase, the investor should take into consideration all and any factors which will influence the demand for property within the timeframe that their strategy dictates, to be able to assess the risk associated with the development they are considering. Key factors to consider is the increase or decrease of permanent and temporary residents in the area as well as the increasing or decreasing amount of tourists visiting the region. Local infrastructure, facilities available on site and increase of employment opportunities in the region will also dictate how easily the property will be resold or rented in the interim. As always with real estate investments, holding on until the perfect time to sell is an absolute necessity.
Return
Capital appreciation in some regions of Italy have reached up to 20% per annum and rental returns of between 5% and 8% per annum. Generally, developers sell the initial units in their developments at undervalued prices to generate cash flow to finance the remainder of the development. Once a certain number of sales has been achieved, the prices for the remaining units are increased substantially. This is one of the main reasons that early investors are able to achieve maximum return on their investments.
Financing
The maximum loan available to purchase a property in Italy as a non-resident is 80% of the purchase price for a maximum length of 30 years. The interest rate in Italy can be as low as 5%.
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