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Are You ready to invest in the real estate market of Rome?

Italian article

During the last two years, the real estate market in Rome showed a low performance. The crisis caused a reduction of property prices, even in wealthy neighbourhoods.

“Buying a London Mansion is beyond the wildest dreams of virtually all of us”. So starts Jonathan Prynn’s article, appeared in the London Evening Standard (12/16/2013). The commentary is about luxurious estate market in London. The reporter stressed the fact that sumptuous mansions needed even more expensive running costs. This article suggests a thinking on the topic and some notes. Here is a short analysis on Italy, where things went quite in a different way from what happened in London. 

Rome real estate market suffered a prolonged crisis. It emphasized the Italian economic disaster. So, even if the scenario shows extremely glamorous areas keeping their worth, residual city areas have been undergoing a heavy downsizing price distress. In fascinating historic districts too. For this reason, property investors could find a chance whenever they want to buy an estate in Rome.

cost per square meter house in Rome

Table 1: cost per square meter

 

A capital like Rome does not offer a city life like Paris or London, however it holds steadily as one of the more fascinating cities in the world. And those who love the città eterna could buy affordable flats (in comparison with London) in many city districts. Some causes contributed to keep the average estimate price low. One of these reasons is that Rome citizens have an aversion to live in old rioni (ancient districts). It’s impossible to drive and park in the old town. And everybody knows that Romans, still today, prefer to drive in spite of using public transport. Another reason dwells on the fact that many flats belong to old citizens and the homes hardly pass from one generation to the other, because young people prefer to live in other areas.

Let’s see how real estate market evolved in four districts:

  • Aventino
  • Via Giulia 
  • Corso Trieste 
  • Esquilino

Aventino and Via Giulia are two of the most city luxurious areas. They include magnificent homes and better stood firm to the price falling of the last two years. The first one, Aventino, is one of the Seven Hills of Rome and stands in front of Palatino, the hill where the legend and the archaeology say that Romulus (first supposed king of Rome) founded the city. Via Giulia is the heart of Renaissance area of Rome, built by order of Pope Giulio II, during Sixteenth Century. 

In a different perspective, Esquilino and Corso Trieste represent the other side of the coin. Esquilino is a 20th century bourgeoisie district near the Termini Station. After a long golden, age this quarter suffered a long decadence until a few years ago, when it became a magnet for actors and artists who chose to live in the area. On the contrary, the district of Corso Trieste kept the aura of prestigious dwellings quarter since the beginning - during the Fascism Benito Mussolini had there his residence and the writer Luigi Pirandello his home. This is the area where the top civil servants had always their homes.  Still today the quarter preserves significant edifices and pleasant houses.

How did the market perform between 2011 and the beginning 2013? In table 1 we can find the estimate values per square meter (minimum/maximum price) of the closed deals in the examined period. In the right column we can see the ratio of growth rate (or reduction). The reported values are the figures recorded by semesters. These data are the results of a periodic survey by the “Agenzia delle Entrate”, branch of the Minister of Economy (http://wwwt.agenziaentrate.gov.it/servizi/Consultazione/ricerca.htm?level=0). The statistics concern the property contract agreements closed in the previous months. This means that the reported figures are related to purchase agreements started roughly nine months before the date report. So, when we read 2nd Semester 2012, we know that the figures are related to the purchases closed between June 2011 and January 2012.

cost per mq – minimum values chart

Table 2: cost per mq – minimum values chart

 

Back to table 1, in the “minimum values” columns we see the swinging of the costs per mq of the properties, at their lowest prices.  While the prices in the richest districts kept their value, in Esquilino and Corso Trieste we observe a negative growth of 10% in a year and half. 

The district of Via Giulia, for example, had in its lowest values a respectable growth (+3.45%), the cost of the properties reaches the average price of buying and selling of € 7,300/square meter (see table 2). Aventino had an even better performance: Its quotations reach an average value of € 5,600 (+4.11%). 

In the other two areas the trend was completely different. The properties of Esquilino, as well as in Corso Trieste, suffered a reduction equal to -10.00% and -10.87%, respectively. That is a purchase value of € 4,000/square meter if you would want to buy a flat in Esquilino or € 5,100/square meter in Corso Trieste.

The maximum prices had a similar trend (table 3). Aventino and Via Giulia keep their positions and Esquilino and Corso Trieste lose ground. Values in Aventino went into a positive growth of 6.02%, equal to € 8,300/square meter. In the area of Via Giulia, the prices were constant. The reason is that they were excessive since 2011. A different story in Esquilino and Corso Trieste. In Esquilino we had a decrease equal to 5.56%, this meaning a closing price for purchased agreement of € 5,600/square meter. In the latter we witnessed an even worse cost reduction  of 6.25%, that is to say an average price of € 6,400.

cost per mq – maximum values chart

Table 3: cost per mq – maximum values chart
 

From the examined data we can gather a few points. Rome real estate market suffered a remarkable price reduction – in periphery areas up to 20%. The downtown  glamorous areas, near the archeological sites, did not suffer the crisis. Other city areas, less glamorous, had a market price contraction up to 10%. Today, some economics indices seem to reveal the end of the financial crisis, eventually. If this was confirmed  by the strengthening of the job market, the real estate prices would end the downhill race and start going up again. 

This is the scenario and perhaps this is time for a shopping season. The question is: which areas to choose? Probably the choice would fall on areas which conjugate the value decrease and a buying interest,  like Corso Trieste or Esquilino. From an urban point of view these are downtown areas, well connected to public transportation system, and not too far away from archaeological sites or museum centers. Concerning the housing type, the buildings are very well built and date back to the beginning of the twentieth century. They have high ceilings flats, very thick walls (warm during winter, and fresh during summer) and they can reach modern comfort standards with an appropriate property renovation (< €1,000/square meter).

 Real Estate on Rome Trend Analysis 2011-2013 – Chart

Table 4: Trend Analysis 2011-2013 – Chart

 

Should you decide to invest in the real estate market in Rome, Niross will be glad to offer you its know how, experience and support. Our team will give advice in technical guideline and be happy to deal with all administrative paperwork related building permits, licences and contracts.

More on Projects to be realized in the municipal territory, then click on:

Building permits in Municipio I - Rome 

Property renovation in Rome - Tips - 1

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