Italian property suffers from lower Russian buyer activity
Two years ago, Italian property was well within the budget of Russian buyers but the crisis has taken its toll on their wealth and Italy’s real estate recovery.
“Brash, boorish and rude” are just some of the harsh words used to describe the Russian tourists in Italy by Telegraph journalist, Nick Squire, back in 2014. Another few that have certainly come up in the news are certainly loud, demanding and lacking in etiquette. However, there is a more pertinent financial reality behind the smokescreen of media condemnation they have been subjected to.
In truth, Russia’s recession is a far bigger offense to Italian bank accounts than their unsmiling faces, seeing as their citizens are valuable consumers of Italian tourism, property and luxury goods — a detail that many often omit to mention.
Luckily, Russian buyers are not much bothered by the opinions of those who don’t speak their language. In fact, they understand one thing very well: money talks louder than they do. Especially since Italy’s real estate market has been struggling to claw its way out of
Russian outbound tourism, a fundamental pillar of the holiday home market, has just suffered its worst year since the country’s historic default of 1998. Foreign travel plummeted 31.3% in 2015 and outbound investments were halved due to the sudden but brutal weakening of the ruble.
Data by Eurostat shows that the Italian residential market is making headway towards recovery but isn’t quite in the clear just yet. Annual
Italy’s residential real estate market would certainly benefit from Russia lurching back into growth the same way it stumbled head first into a recession. Over half of Tranio’s partners in Italy (57%), real estate agencies and developers, reported a decline in Russian transactions for 2015, disinterest that is echoed by Google search engine results, down by 14.5% for the same period.
So it should come as no surprise that this buyer segment has downgraded its budget and expectations after the ruble’s steep plunge. Primarily, it means that they are buying less holiday property, an understandable decision considering the financial expenditure required to maintain a second home property in the midst of a currency crisis.
The stark contrast in behaviour between 2014 and 2015 was captured by Tranio’s Annual Russian Buyer Reports. Two years ago, Italian property landed in the “low to medium” budget category for properties ranging from
But that’s not to say that Russians will not return to Italy — it will just take longer and depend largely on the world’s ability to clean up the oil price crisis that put Moscow there in the first place. The truth of the matter is that Russians have a strong emotional attachment to Italy, where the variety of landscapes, weather and great food is an excellent alternative to six months of snow and ice among the rolling plains of marshland and pine trees. Their favourite spots, according to Tranio research, are Lombardy, Tuscany and Lazio.
Key attraction points
- refined tourist infrastructure and travel access
- rich geography: beaches, ski resorts, islands, natural parks
- sports seasons: swimming from May to October, skiing from November to April
- culture and history
- spectacular culinary tradition
The main change to look out for is the Russian buyer’s newfound interest in commercial property as they try to safeguard their capital against any further financial failures. While they might only be paying €300,000 on average for residential property, they have approximately €1,000,000 stashed away for the right hotel, which they will, in all likelihood, choose to manage themselves, according to Tranio’s 2015 survey.
Leigh Stewart, Tranio