Due to the stabilization of the economic situation in Italy and changes in the monetary policy of the Central Bank, the demand for Italian real estate has significantly increased. Over the past year of 2019, foreign investors invested €12.3 billion, which is a third more than in 2018. Milan was the most sought-after city, with €4.6 billion invested.

Most Popular Investment Properties

In 2019, investors were primarily interested in commercial real estate in Italy, pushing residential and retail properties to the background. Although the price drop in Florence, Milan, and Turin wasn't large, it was noticeable enough to attract even small investors, who successfully took advantage of it.

The majority of the funds in 2019 were directed towards office real estate – more than €5 billion. This surge in interest was driven by the rise in rental rates, which increased by 7.4% in Milan and 5% in Rome.

The hotel market also drew significant attention, with investments growing 2.5 times compared to 2018. Those looking to start a hotel business invested €3.3 billion, which is unsurprising, given that sunny Italy is one of the most popular tourist destinations.

The logistics real estate market in Italy has been rapidly developing since 2010, and in 2019, investments in this sector reached €1.3 billion.

The residential sector did not see an increase in investments last year, but a definite advantage was the expansion of the market to other well-known cities in Italy. Besides Rome and Milan, investors showed interest in purchasing apartments in Turin, Palermo, Naples, and Bologna.

Rome or the Provinces: Where Is It More Profitable to "Freeze" Money in Real Estate

When it comes to the cost and liquidity of real estate in Italy, a single assessment cannot be applied to all properties. The market is highly heterogeneous, with many regional peculiarities.

Most properties belong to the secondary market. In Italy, there is a limited supply in the primary market, so those wishing to purchase a new apartment or house will have to focus on specific regions. If investors do not want to limit themselves to such constraints, they should be more open to secondary properties – this is worth considering. It is important to seek the help of an experienced lawyer, as working with unfamiliar markets may present a range of difficulties, especially when dealing with historical buildings.

Factors Affecting the Profitability of a Property

The main challenge for an investor is to assess the property objectively. Numerous factors influence the profitability of your investment—specialists from the GARANT.IN migration agencies have compiled factors that are guaranteed to be important (and in some cases, decisive) when evaluating and calculating liquidity.

Location:

  • Distance from highways, major transport routes, and airports;
  • Level of infrastructure development;
  • Safety of the area;
  • The comfort of the location – minimal or no industrial facilities, building density, abundance of parks, greenery, lakes, etc.

Condition:

  • Market activity – the more active the sales in the chosen area, the higher the liquidity of properties;
  • Demand exceeding supply;
  • The price range of real estate – more affordable options "fly off the shelves" faster than the premium segment;
  • Several new properties.

Other Factors:

  • Time required for a full assessment of the property;
  • Legal costs – complex and expensive procedures reduce the level of liquidity;
  • Transaction timing – spring-autumn: active sales period, and summer-winter: quiet period with falling liquidity.

Best Cities in Italy for Investment and Earnings

Investing in Italian real estate is an excellent way to achieve stable passive income. Before purchasing a property, it is important to study and analyze the market thoroughly, and our detailed analytical material will help with this.

Investment No. 1 – Shops and Retail Spaces

This category has been classified as one of the most profitable for landlords. Unsurprisingly, metropolitan areas and large cities are prioritized, where shops and retail spaces are extremely popular among foreign investors:

  • Milan – at least 16.5%.
  • Ferrara – up to 15.4% annually;
  • Taranto and Genoa – you can expect a return of about 14.5%;
  • Rome and Naples – offer about 13.5% from renting and 12.3% from selling the property;
  • Ragusa, Vicenza, Cuneo, and Andria, with the lowest figures, offer 8.1%, 8.5%, and 8.6%, respectively.

The liquidity of a property is influenced by price growth and the purchase cost of the property.

Investment No. 2 – Residential Properties

Residential real estate is the second most profitable category after shops:

  • Syracuse and Taranto – renting out property can yield returns of up to 11.4%;
  • Biella – shows a return level of about 10.5%;
  • Ragusa – a good option for investors, with guaranteed passive income from renting properties at around 9.6%;
  • Trapani – another promising direction, offering around 9.1%;
  • Siena (3%), Salerno (3.1%), Venice (4.2%), Rome (4.5%), and Milan (about 5.5%) – cities ideal for those planning to earn on short-term rentals.

Notably, major cities like Rome and Milan did not make it to the top of the list where you can expect high income from renting out properties. In this regard, they were outperformed by smaller tourist locations where visitors prefer to stay and explore local attractions.

Investment No. 3 – Office Spaces

The top three most profitable real estate segments for property owners include office buildings and spaces for corporate clients. There are also regional leaders and divisions on where it is best to purchase commercial property and earn stable passive income:

  • Ancona – ranks highest in our rating, guaranteeing a return of no less than 9.7%;
  • Lecco, Trieste, and Turin are almost on the same level, with liquidity in these cities at 9.2%, 9.1%, and 9%, respectively.
  • In Rome and Milan, you can also expect a high return on investment – 8.6% and 7.8%, respectively.
  • Naples offers 7.6%, Reggio Calabria – 6.1%, Pescara – 6.2%, and Modena – 6.8%.

Garages and garage cooperatives also deserve special mention. Owning a garage can earn you up to 6.7% in Rome and slightly less in Florence – up to 6.5%.

Remember that property ownership does not equal obtaining a residence permit, but owning real estate will be a significant advantage when applying for a new status.

If you plan to invest in Italian real estate or buy a property for personal use, contact the specialists at the GARANT.IN migration agency. We work with trusted developers, realtors, and intermediaries – we will help you choose any type of property, focusing on your preferences, budget, and expected level of income. We will take care of full legal support and all organizational issues. We value your time, money, and resources.