Italian Real Estate: È Bello!

Tourist trade could make buying property in Italy worthwhile

With its beautiful countryside and Mediterranean getaways, Italy has long been a favorite vacation destination with travelers across the world. The country’s popularity with tourists could make Italian real estate a prime opportunity for investors.

Italy is located in Southern Europe, where it juts out into the Mediterranean Sea. The country shares borders with Austria, France, San Marino, Slovenia and Switzerland. Italy occupies a total of 301,230 square kilometers, making it just slightly larger than the U.S. state of Arizona (295,260 square kilometers). The peninsula is home to an estimated 58,147,733 people as of July 2007, according to the CIA World Factbook.

Both rural and urban properties in Italy have potential for profit

Why Italian real estate?

“Italy's exquisite cultural patrimony, evocative countryside and ‘made in Italy’ craftsmanship all combine to preserve the value of Italian real property,” Donald J. Carroll, Esq.—special counsel to and member of Pirola Pennuto Zei & Associati in Rome and vice co-chair of the ABA Committee on International Investment in Real Estate—said in an e-mail interview.

The flourishing tourist industry in Italy provides a strong potential rental market for investors looking to buy overseas. In 2006, Italy ranked fifth on the World Tourism Organization’s list of top tourist destinations, with 41.1 million international arrivals. Southern Italy, in particular, has been of great interest to vacationers. Homes and apartments along the coast or in the relaxed country settings that tourists favor have the potential to provide substantial rental income.

“Among Europe’s main destinations, Italy was by far the best performer in 2006, after a number of weaker years. Arrivals were up 12 percent, following an excellent winter season at the start of the year, thanks in part to Turin’s hosting of the Winter Olympics,” according to a World Tourism Organization report.

And U.S. investors don’t need to worry about restrictions on property ownership because of their citizenship status. Foreigners enjoy the same property rights as Italian citizens, according to Marco Pessi, a partner with McDermott Will & Emery located in the Rome office. The only difference is that foreign nationals must pay an 11 percent purchase registration tax once the sale has been completed, while Italian citizens need only pay a 4 percent tax.