Rome. The City of Seven Hills among other florid nicknames. Beyond a doubt, Rome is one of the most intensely historic and significant cities in the world. All roads lead to it and since its foundation around 750BC it has been one of the world’s most frequently visited. There would be no London without Rome and all its sackings. There would be no sporting arenas. For a city that is the fourth largest in the EU, the seat of the Vatican and the capital of Italy — and an original G7 member — it is remarkably frazzled. Italy is currently governed by yet another cobbled together cabinet led by Enrico Letta — appointed by president Giorgio Napolitano in April 2013 following technocrat Mario Monti’s failure to form a government — and the country still has notorious politician Silvio Berlusconi hanging around. “Mamma mia!” doesn’t come close to describing it.
Down, Not Out
Despite Italy’s parliamentary shenanigans, Rome is a crucial cog in the European wheel. Major international bodies are located in Rome, among them United Nations agencies such as the FAO, the World Food Programme and IFAD, as well as countless historical, scientific and cultural institutions. It may not be a hot bed of banking à la London, but there’s no place else art historians would want to train. Italy is home to 47 UNESCO sites, the highest in the world. However, BNP Paribas Real Estate’s guide to Italian investment for 2013 lists reasons such as the country’s high level of private wealth, a diverse economy that ranks among the globe’s strongest, a robust tourism sector, strong retailing (you don’t say?) and, ironically, a healthy banking sector as just a few of the reasons to invest there.
Given the political — and financial — situation in Italy, it’s a bit surprising to find Sardinia is home to Europe’s most expensive residential address according to new research by Engel & Volkers. Porto Cervo on the Costa Smeralda, overlooking the Mediterranean, represents the zenith of lifestyle living, and has a limited number of prime properties. Home prices can reach €300,000 per square metre (approximately HK$280,000 per square foot), tops in Europe and 100 percent higher than the previous winner, Avenue d’Ostende in Monte Carlo.
Clearly Italy has its share of luxury homes, but is Rome much of a residential investment market right now? “Rome is the capital city and as such there is a good and relatively fluid local market up to about €2 million. Above this it is mainly international,” explains Rupert Fawcett, head of Knight Frank’s Italian Department head in London. Currently Brits, the French, Russians and Americans are the biggest and most frequent investors in Rome, and purchases are most often for personal use. The city is similar to Paris in the sense that it possesses a glamorous, romantic vibe that is both intangible and appealing for some investors. Buyers in Rome don’t necessarily want, need or expect a strong rental yield, nor are they anticipating a strong capital gains return given price dips across the continent. “Most buyers are looking at a longer term lifestyle investment, although will often be buying as they visit Rome on business frequently, or to use as a base to access other parts of Italy or due to relocation,” Fawcett continues.
La Dolce Vita
Investment remains driven by the office and retail sectors despite a reduction in volumes over the last few years. “In a market such as the Roman one which has always been dominated by local players, the effect of uncertainty characterising global financial markets (and the increase in country risk perception in Italy) seems to have had a lower impact,” BNP stated in its report. But if an investor does decide to roll the dice with residential Rome, what are they most likely looking for? Apartments in the beautiful UNESCO-certified central core and perhaps the residential districts such as Parioli, on the north side of the Villa Borghese Gardens, and Aventino in the south (named for one of Rome’s hills) that surround it. “Most in demand are apartments with balcony or terrace, and in general apartments are more requested than single villas, which are rarer,” points out Fawcett, reiterating the city’s enduse tendency. For the most part, property can be purchased freehold, and there is no capital gains tax where a property has been held over five years. “Italy in general does not offer great rental returns — yields are on average about 3 percent — so most buyers will be buying for personal use and if they do rent it will be to cover running costs rather than for high returns.” Assuming a Bernini fountain in your front yard isn’t return enough.