Foreigners snatching up property from cash-strapped Italians

Foreigners snatching up property from cash-strapped Italians
German, British and Russian buyers are finding holiday home bargains in the depressed Italian housing market. Recession hit Italians can't afford the investment properties.

According to Bloomberg, the demand from German customers has jumped significantly over the last year.

Italy with its mild climate, lots of cultural attractions and developed infrastructure has long been a popular destination for foreigners looking to buy a holiday home. It's not just the Germans, but British and Russian buyers who are looking for a place in the sun, Bloomberg reports.

“This is a good time for foreigners to buy,” Bloomberg quotes Francesca Andreini, head of Italian-based real estate agency Case e Ville. “Properties that cost 2.5 million euros have come down to 1.5 million euros due to taxes and the economic downturn.” She added that successful haggling can slash 30 percent off the price during negotiations.

Foreign investment has grown with the contraction of the domestic Italian residential property market. Sales shrank by almost 26 percent last year on the back of tighter mortgage lending, two years of recession, and uncertainty over a new tax on primary residences.

A study from the Scenari Immobiliari research institute shows second-home sales to foreign buyers increased 14 percent in 2012 accounting for 2.1 billion euros ($2.8 billion) of non-Italian investment. Most buyers since 2009 turned out to be Germans who accounted for about 40 percent of the deals by foreigners. Deals with Britons amounted to 18 percent and Russians came out the third most popular buyers accounting for 13 percent of the transactions.

Engel & Voelkers realty agent Yasemin Rosenmaier engaged in property sale in Italy told Bloomberg that more and more Germans are buying property in Italy each year. According to Rosenmaier’s experience “60 percent of our closings are with Germans, which is much higher than in previous years.” Rosenmaier explains that the growing demand for property is based on the “fear of inflation, the uncertainty on the financial markets, fear of what happened in Cyprus,” the latest European country to get an international bailout.

According to a survey conducted in summer 2012 by the Engel & Voelkers agency and vacation-rental website HomeAway.com, about 43 percent of those polled claimed they consider vacation properties a form of retirement savings and around 25 percent saw such an investment as a hedge against inflation. The study revealed that most of the properties are bought in Germany, followed by Spain, Austria and Italy.