According to new research from international property consultancy Knight Frank, unlike Tuscany's mainstream residential housing market, the prime luxury segment is on a firmer footing.
Over the last decade, prices declined 40% in peak-to-trough terms but we are now seeing prices stabilize with Florence and Lucca both recording 1% growth in 2018. The latest data for the year to March 2019 shows the region generated 62% of our applicant numbers for Italy.
International enquiries rather than domestic demand is behind the recent resurgence. Buyers pay little attention to the political and economic landscape focusing instead on the unrivalled lifestyle on offer.
For Italy, banking and governmental crises are nothing new. For the wealthy, the €100,000 flat tax introduced in 2017 is acting as a key draw. According to the Minister for the Economy and Finance, Fabrizio Pagani, 150 UHNWIs applied for residency through the scheme in 2018.
Under the initiative, individuals who take up Italian residency benefit from a flat tax on all global income of €100,000. In addition, eligible family members benefit from a flat tax of €25,000.
Linked to this, we have seen a detachment of the super-prime market over the last year with enquiries for properties €10 million or above strengthening. Some of these high net worth individuals already own an Italian home and following the advice of their family office, are keen to expand their footprint in the country, often seeking multiple homes across a range of locations - city, coastal or in The Alps.
In 2018, Middle Eastern, US, UK, Benelux and Indian buyers were most active in Tuscany. While most are looking to acquire a holiday home, an increasing number are seeking a permanent base.
The number of overseas residents in Tuscan cities continues to climb. Almost 100,000 foreign residents now live in Florence, Lucca and Pisa according to Italy's Statistics Office; Istat.
Florence witnessed the largest increase of the three cities between 2012 and 2018, with the number of overseas residents rising by 38.5%
The one trend that stands out this year is that our applicants are time-poor and it influences their search in several ways. Firstly, most want a renovated project, not one that requires any work.
Secondly, buyers want to be within an hour of an airport enabling them to make use of the property four or five times a year for mini-breaks and minimize travel - the days of visiting for a whole month in the summer are largely gone. Finally, most intend to own their home for upwards of five years, often renting it out to cover costs, so a low-maintenance property is preferred.
Buyers continue to seek value and with prices in Lucca 20% to 25% lower than in Florence the city is firmly in the spotlight. Lucca is also easily accessible via Pisa Airport; it is located within a 30-minute drive of the Mediterranean and hosts a world-renowned Summer Music Festival.Tuscany Luxury Housing Market Highlights Include:
- For the wealthy, the €100,000 flat tax is acting as a key draw, attracting 150 UHNWIs to the country in 2018.
- The Florence to Vareggio train line which runs through Lucca is being upgraded. Works due for completion in 2020 will put Lucca within a 45-minute train journey of Florence.
- A new 5.3km tram line now provides a direct link from Florence city centre to the Airport. The new T2 line has reduced travel times to 21 minutes making the city much more accessible.
- Prime prices in Tuscany have stabilized following a decline in peak-to-trough terms of 40%. Florence and Lucca both recorded 1% price growth in 2018.
- Tuscany is responsible for 62% of Knight Frank's applicant numbers for Italy.
- Enquiries for properties €10m+ has strengthened due to the new flat tax, with many wealth families purchasing more than one property in Italy.
- Buyers which are most active include those from the Middle East, US, UK, Benelux and India.
- The numbers of overseas residents in Tuscan cities continues to climb. Almost 100,000 foreign residents now live in Florence, Lucca and Pisa.
- Florence witnessed the largest increase of the three cities between 2012 and 2018, with the number of overseas residents rising by 38.5%.