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Jun 28, 2014

Poor rental returns in Italy


Last Updated: June 28, 2014
ROME - Historical Centre Apartments COST (€) YIELD (p.a.) PRICE/SQ.M. (€)
TO BUY MONTHLY RENT TO BUY MONTHLY RENT
40 sq. m. 263,840 884 4.02% 6,596 22.09
70 sq. m. 436,940 1,382 3.79% 6,242 19.74
90 sq. m. 548,460 1,632 3.57% 6,094 18.13
120 sq. m. 711,600 2,288 3.86% 5,930 19.07
180 sq. m. 1,083,240 3,371 3.73% 6,018 18.73
ROME - Suburbs Apartments
50 sq. m. 202,750 797 4.72% 4,055 15.94
85 sq. m. 331,925 1,046 3.78% 3,905 12.31
120 sq. m. 516,120 1,495 3.48% 4,301 12.46
200 sq. m. 986,200 2,444 2.97% 4,931 12.22
MILAN - Apartments
40 sq. m. 186,320 636 4.09% 4,658 15.89
75 sq. m. 334,875 1,098 3.93% 4,465 14.64
120 sq. m. 524,520 1,580 3.62% 4,371 13.17
200 sq. m. 968,000 3,452 4.28% 4,840 17.26
Rome- Historical Centre: Aventino, Centro Storico, Esquilino, San Saba & Trastevere
Rome- Suburbs: Camilluccia, Cassia, EUR, Fleming, Olgiata, Vigna Clara
Milan: Brera, Citta Studi, Fiera, Porta Romana, San Siro & Stazione Centrale
Source: Global Property Guide Definitions: Data FAQ See also: Update Schedule

In the historical centre of Rome, apartments now cost between €6,000 and €6,600 per square metre (sq. m.), unchanged from last year. The property slump was caused by a number of factors, including the euro zone crisis and austerity measures like higher property taxes such as the Imposta Municipale Unica (IMU) - in English, the Local Property Tax.

Prices of apartments. Apartments in the wealthy suburbs of Rome cost on average between €3,900 to €4,900 per sq. m.. A 120 sq. m. apartment in the suburbs would cost around €4,300 per sq. m.

A 120 sq. m. apartment in Milan would cost on average €4,800 per sq. m. Milan apartment prices range from €4,400 per sq. m. to €4,800 per sq. m.  These prices are lower than last year. 

Rents of apartments. In the historical centre of Rome, monthly rents range from €18 to €22 per sq. m., so you can rent a 120 sq. m. apartment here for around €2,300 per month.

In the suburbs of Rome, rents range from €13 to €16 per sq. m. per month. So a 120 sq. m. apartment can be rented for around €1,500 per month.

In Milan, monthly rents range from €13 to €17 per sq. m., so you can rent a 120 sq. m. apartment here for around €1,600 per month.

Rental returns. Gross rental yields on apartments in Rome and Milan are poor.  Gross rental yields on apartments in Rome’s historical centre range from 3.57% to 4.02%, with little difference in returns by size.

In the suburbs, rental yields range from 2.97% (200 sq. m.) to 4.72% (50 sq. m.), with large apartments clearly yielding poorer investment returns.

Apartments in Milan return rental yields of between 3.62% to 4.30%, with again no clear pattern of rental returns.

Conclusion: Property prices are beginning to look attractive. But gross rental yields are very poor, and Italy’s predatory taxation system doesn’t help.

Round trip transaction costs can be very high on residential property in Italy.  See our Italy residential property transaction costs analysis and our Residential property transaction costs in Italy compared to other countries.






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