Italy’s rental market surges

With the slowdown in property sales, Italy has consequently seen an increase in the volume of rental transactions. Economic researchers Nomisma have taken a detailed look at the current state of play regarding Italian houses, offices, shops, commercial premises and garages.

Homes: Although robust, the demand for rental accommodation is not sufficiently high as to have forced a price increase. In fact there has been an average 2.3 per cent fall in rental prices, although some cities have seen an increase. The average period required to rent out a property has remained unchanged over the past year and is between two and three months – slightly less in the large cities.

Offices: There has been greater supply and a fall in demand for rented commercial office space. This rise in supply has been due to a slowdown in sales of office space. Messina in Sicily and Verona in Veneto are the only cities to have shown movement in the rented office sector, where important increases have been reported, although the number of rental contracts has fallen.              

The offices sector has seen a -15.5 per cent reduction of the number of sales. The first three months of 2008 saw a decrease of -11.8 per cent compared to the same period of 2007 and -14.3 per cent in the second quarter of 2008 compared to the previous year. The last quarter of 2008 saw volumes down -20.9 per cent on the corresponding period in 2007.

It typically takes 7½ months to sell an office, a time period unseen in the past decade. But in the city of Modena, Emilia-Romagna, it can take up to 10 months. The North and Centre of Italy are currently reporting the longest times.

Shops: The general sales picture is worse with commercial properties because demand is weak. There has been -11.7 per cent fall in sales and the average time to sell a shop is 6½ months (but in Bergamo near Milan 8 months plus is the norm). Rentals are down 3.4 per cent, which in turn has seen a typical 11.1 discount on asking prices. The shop rental sector is more stable although it now takes an average for 4.7 months to secure a lease.

Garages: This market seems to be faring much better than others so far examined, showing far more stability than in the past regarding demand, supply, sales volume and rentals. Average sales prices remain stable (a 0.9 per cent rise) as do rental volumes (down just 0.2 per cent). Profitability has reached 5.8 per cent. However, the time required to rent and sell have increased and it now takes at least four months to sell and three to rent.

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