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Jun 07, 2016

Poor rental returns in Italy


Last Updated: June 07, 2016
ROME - Historical Centre Apartments COST (€) YIELD (p.a.) PRICE/SQ.M. (€)
TO BUY MONTHLY RENT TO BUY MONTHLY RENT
70 sq. m. 421,050 1,328 3.78% 6,015 18.97
120 sq. m. 697,560 1,952 3.36% 5,813 16.27
ROME - Suburbs Apartments
90 sq. m. 359,640 1,129 3.77% 3,996 12.54
120 sq. m. 446,160 1,439 3.87% 3,718 11.99
MILAN - Apartments
90 sq. m. 419,940 1,328 3.80% 4,666 14.76
120 sq. m. 586,320 1,721 3.52% 4,886 14.34
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 €6,800 per square metre (sq. m.), more or less 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 €4,400 to €4,900 per sq. m.. A 120 sq. m. apartment in the suburbs would cost around €4,450 per sq. m.

A 120 sq. m. apartment in Milan would cost on average €4,900 per sq. m. Milan apartment prices range from €4,500 per sq. m. to €5,200 per sq. m.

Rents of apartments. In the historical centre of Rome, monthly rents range from €16 to €20 per sq. m., and you can rent a 120 sq. m. apartment here for around €1,900 per month.

In the suburbs of Rome, rents range from €12 to €16 per sq. m. per month. So a 120 sq. m. apartment can be rented for around €1,450 per month.

In Milan, monthly rents range from €14 to €16 per sq. m., and you can rent a 120 sq. m. apartment here for around €1,750 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 3.00% to 4.02%, with little difference in returns by size.

In the suburbs, rental yields range from 2.95% (200 sq. m.) to 4.37% (45 sq. m.), with large apartments yielding significantly poorer investment returns.

Apartments in Milan return rental yields of between 3.53% to 3.88%, with no clear pattern of rental returns according to size.

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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