Sicily’s real estate market offers room for growth

How likely are properties in Sicily to withstand the global financial turmoil that affects so many countries around the world, including mainland Italy, and is currently experiencing strong capital growth? It is not, unfortunately, the answer.

“The economy is going down,” says Giuseppe Giliberti, director of Hamptons International.

Even before the global credit crisis hit, Sicily’s real estate market, plagued by a strong mafia presence and with corruption generally seen as part of everyday life, has cast a dark shadow over Italy’s real estate sector. However, the real estate market – for sale and rent – on this fascinating Mediterranean island is beginning to overcome its negative image, largely thanks to tourism, which, fueled by the introduction of a number of low-cost airlines, is beginning to take off.

Airlines now operating direct flights to and from Sicily and the UK include: EasyJet, Ryanair, Monarch, British Airways, Air Malta and Thomas Cook. This, in turn, is increasing the demand for property in Sicily both to buy and to rent, which has led to an increase in the supply of new homes, although the quality standard remains an issue. Giliberti says: “Property prices in Sicily have increased considerably in recent years. This has caused a sharp increase in new construction which in many cases has blighted coastal areas. Now the market for holiday homes is quite abundant, but the quality is not always at a high level.

slow market

Despite Giliberti’s claims of strong capital growth, some other brokers take a much more negative view of the real estate situation in Sicily. The Sicilian real estate market has been really bad for about two years and very little is selling, says Paul Symonds of Invest Sicily. Rupert Fawcett, head of the Italian department at real estate agency Knight Frank, agrees that the real estate market has been slow and believes this is because “the foreign market is just now beginning to kick in” and, to date, “There really hasn’t been a market to speak of,” he says. Going forward, Fawcett sees the real estate market in Sicily as offering real room for growth. He adds: “We believe the market will grow in the coming years as more properties become available and the island becomes more popular as a purchase destination.”

Tourist attraction

The increasing levels of tourism are supported by a variety of attractions, including a variety of beaches, excellent year-round weather, attractive scenery, skiing on Mount Etna and two golf courses with more in the planning stage. “Over the next two years, several golf courses will open and this is expected to add a lot of appeal,” says Giliberti. One project that may appeal to golf enthusiasts is a new €129m (£113m) golf resort and hotel currently being built in the village of Verduram, in the island’s southeast region.

Where to buy

Property prices in Sicily vary wildly across this large island, with the most expensive homes typically found facing the sea, in places like Taormina, which along with the towns of Ortigia and Noto, have recorded the highest level of price appreciation in the last decade. according to Fawcett. However, average prices “tend to go down,” even though they are up to “40 percent cheaper than central and northern Italy,” says Fawcett, suggesting that it is currently a buyer’s market. Preferred luxury regions for buying property in Sicily include Catania and Mount Etna, while Fawcetts advises investors to consider buying property in Sicily, the ever-popular capital of Palermo, along with the southeastern part of the island, where it is located. home. prices remain stable and resist the general recession of the real estate market.

Anyone looking for a home at the cheaper end of the market may want to consider buying in emerging destinations in the southeast of the island such as Ragusa, Comiso Siracusa and Sciacca, where new motorways and an international airport are nearing completion. . However, if you’re looking for a really cheap house and don’t mind a bit of DIY, how about a house for less than a pound? !

House for one euro

Homes in Salemi, a small town in western Sicily, are being offered for sale for just EUR1 (87 pence), in a sweeping bid to boost the region’s property fortunes. An earthquake damaged most of the town’s villas 40 years ago, and since then much of the local population has moved out. But local mayor Vittorio Sgarbi believes the plan will help revitalize the city. “There are 3,700 houses owned by the council, almost all in the old town, that are in danger of collapsing, falling apart and dying,” Sgarbi said.

However, there is a catch. Anyone who buys a property will have to sympathetically renovate the old house, without altering its style, in just a couple of years, which will be expensive. “We are thinking of people who have the sensitivity and financial resources to undertake this adventure,” added Sgarbi. “In exchange for a symbolic payment of one euro, we will offer them one of these houses and ask them to commit to restoring them within two years, respecting their original characteristics.”

bridging the gap

Sicily’s homes are among the most affordable in the Mediterranean, yet prices could be boosted by the fact that the Italian government plans to build a new €4bn (£3.5bn) bridge that it will eventually unite Sicily with mainland Italy. The suspension bridge is expected to become the largest in the world and will take five to 10 years to build. The idea was first floated in 2001 by President Silvio Berlusconi, but was abandoned when he was ousted from power. He is now back in charge, after being re-elected in 2008.

rental returns

Because Italians generally like to own property, anyone who wants to rent a property in Sicily should aim for the tourism sector, but keep in mind that tourism is seasonal in Sicily. Still, Fawcett reports that an annual rental yield of between five and 15 percent can be achieved. However, competition for rental occupancy is intensifying; More hotels and bed and breakfasts are opening, while the supply of new homes keeps pace with demand.

tax issue

Anyone who owns property in Sicily for at least five years, or who obtains permanent residence in Italy, is exempt from paying capital gains tax in Italy, which would otherwise be charged at 20 percent.

Summary

The process of buying property in Sicily is not entirely straightforward and sometimes property issues can arise, especially with older houses, although a decent notary should remove any doubts. With the global economy currently in chaos, property prices on the island, like in much of the world, are likely to decline in the short to medium term, presenting a window of opportunity to negotiate a property deal. at a bargain price. A major downside, of course, is the fact that the British Pound is currently at an all-time low against the Euro, which means that keen trading skills are required, if you are to offset any price shortfalls caused by the weakened British Pound. .