2017 has been a fascinating year for Ultissimo. We have seen some clear themes and trends in the Lake Como residential property market and are delighted to share these with you.
Our key headlines are
– properties are in shorter supply
– prices are robust and trending upwards
– renovation opportunities offering good value are gaining favour.
Demand is broad and steady
We continue to see international interest from around the world, with enquiries rising by 30% compared with 2016. As 2017 draws to a close we are talking to clients from 30 different countries actively considering owning a home on Lake Como. Those who have bought this year were from a wide range of countries, and from every continent (Antarctica excepted!).
The desire to have a home on Lake Como, which can be traced way back to the days when Pliny the Younger constructed his home on the eastern shore a short distance from Como, continues to this day. It remains an international destination of choice, for all that it offers.
The property overhang has gone
Dating back to the financial crisis in 2008/09 there have been some unattractive properties stuck on the market, in need of some serious love and attention. Good quality new builds have tended to shift quite quickly but some older properties in a poor state of repair had been sitting awaiting a buyer for five years or more.
Since February we have found regularly that, in the 7-14 days between finalising a client viewing shortlist and our client arriving on the lake, some shortlisted properties have gone under offer and cannot be viewed. This is a clear indication of a more active market. And most of the unloved properties that had been stuck on the market have gone during 2017, without substantial discounting required to shift them.
Prices remain firm and now likely to rise
With the financial crisis ‘property overhang’ now gone, international buyers have fewer properties to consider. Attractive new builds tend to sell quickly and anything freshly renovated to international standards will attract plenty of interest – provided the location meets the usual international preferences.
Couple this with a restricted opportunity for new development (more on this below), and clearly sellers have reason to be more confident. They are encouraged to increase their asking price and less tempted by a lower offer. After almost a decade of level prices we see the prospect for prices increasing in 2018, not by a significant amount but by a few percentage points. The balance between supply and demand affects asking prices. And there seems little to prevent prices from rising gently as international demand for a home on Lake Como remains strong.
Our view is that a buyer who chooses to wait in the hope of more attractive pricing will be disappointed.
Renovation is increasingly popular
Most properties are not maintained to international standards. New builds are almost always sold as a shell for the buyer to specify the finishes, and most re-sales will require some changes to meet both international standards and personal tastes.
There are two quite distinct market price levels. One for homes that are immediately appealing and another for properties that will only be wonderful after significant upgrading. Italians will often buy in locations that simply do not work for the vast majority of international buyers (would you choose a property on Lake Como without a good lake view??) but there are plenty of opportunities where the location is desirable but the property is unattractive.
Around 60% of our clients who bought in 2017 have purchased with the intention of significantly upgrading the property. And the capital gain can be significant, even where internal works are no more than upgrading the bathrooms and kitchen, redecorating and putting in some attractive furniture. Undertake more structural work and the gain should be greater. Our clients who renovate properties secure a gain on their spend of 25% – 50%.
Of course most people who renovate a home are doing this for their own pleasure, and not to sell. However we have had several clients who already own a home on Lake Como return to make an investment into properties to be renovated and then sold. Those who understand market pricing and our capability of executing a renovation project on time and on budget with quality builders engaged have invested into opportunities themselves.
It is surely inevitable that with comparatively few new builds and fewer properties that are ‘ready to move into and enjoy’ our international clients will increasingly looking to renovate. They end up with the perfect home, have more property for their money and have confidence in us to deliver without placing undue demands on their busy lives in distant places.
Will I be able to find a newly built property?
There is a continuing modest flow of newly constructed properties coming to market over the next 18 months. One of the highly reputable local builders sought our help in finding two new plots to construct apartments and others have land banked and awaiting development. Ultissimo owns increasingly scarce development land also, and we intend to design and start construction in 2018.
Beyond the natural topographical constraints, the municipalities are being persuaded not to zone land for new development. The regional authorities are pushing for a greater emphasis on improving the current stock rather than building on undeveloped land and so we expected a significant reduction in newly built properties in the years ahead. This further increases the appeal of renovation to international buyers, particularly as a shortage of newly built villas and apartments is likely to push up new build prices and increase the return on investment from renovating existing properties.
Undoubtedly there is a sweet spot to be found. If a property is in a good location that appeals to international buyers, but is in poor condition and really only appeals to Italians who will pay much less per square metre and accept a different standard, then there is the opportunity to make a substantial gain by lifting the property to international market standards. Trust us, we find these opportunities and we have some delighted clients as a result. They have a home they love and take added pleasure from spending less for a perfectly tailored home.
How much should I expect to spend?
There are properties available to suit a wide range of budgets and requirements. Some look for a convenient ‘lock up and leave’ apartment and aim to spend less than €500,000. Others seek grand villas with a willingness to commit €5m upwards. There is a home on Lake Como to suit this wide range and our very personal, tailored approach will unearth the right solution for each client. If you are thinking that 2018 might be the right time for you to buy, then simply tell us what you would like and we’ll take it from there.
There are still plenty of opportunities in a changing market, but we have one unchanged headline statistic. Over 80% of our clients who purchase a property buy a home they saw on their first visit with Ultissimo. We doubt very much that this will be any different in 2018.