Fare soldi oggi: qual è l’investimento che sostituisce i BTP?
The Resurgence of Real Estate Investment
As the cost of borrowing decreases, traditional real estate investments are rediscovering their competitive edge.
In fact, property investment has begun to surpass the returns of the Italian government bonds (Btp) with a yearly net yield ranging from 2.69% to 2.89%.
This is especially notable when considering that these bonds are purchased well above their nominal value.
Years of reliable returns from government bonds, coupled with their favorable tax rate of 12.5% and their overall security compared to equities, have stirred a reevaluation of investment options in today’s landscape.
Why Consider Property Over Government Bonds?
The recent interest rate cuts initiated by the European Central Bank (ECB) have led to downward pressure on the bond market, presenting a challenge for prospective investors.
For individuals with liquid assets or the potential for a mortgage, assessing the value of existing (or future) government bonds versus the prospects of real estate investment is crucial, particularly for Italian savers fond of bricks and mortar.
This discussion focuses specifically on purchasing a second home (or beyond for some) to generate rental income, establishing a stream of passive income.
Analyzing Investment Returns
To illustrate the potential benefits of investing in property over bonds, we must start with data.
Using average purchase prices from the Italian Revenue Agency and rental costs, we assess the major cities: Rome, Milan, Naples, Turin, Palermo, Genoa, Bologna, Florence, and Bari, all of which experience high demand for rented apartments.
For an apartment around 70 square meters, current average purchase prices are:
- Rome: €3,500-4,000/m², approximately €245,000-280,000
- Milan: €5,500-6,000/m², approximately €385,000-420,000
- Naples: €2,500-2,800/m², approximately €175,000-196,000
- Turin: €2,000-2,200/m², approximately €140,000-154,000
- Palermo: €1,400-1,600/m², approximately €98,000-112,000
- Genoa: €1,800-2,000/m², approximately €126,000-140,000
- Bologna: €3,000-3,500/m², approximately €210,000-245,000
- Florence: €4,000-4,500/m², approximately €280,000-315,000
- Bari: €2,200-2,500/m², approximately €154,000-175,000
For monthly rental income, the averages for a similar-sized apartment are:
- Milan: €22.9/m², around €1,600
- Rome: €14.8/m², around €1,036
- Naples: €13.7/m², around €960
- Bologna: €16.6/m², around €1,162
- Florence: €18.3/m², around €1,281
- Turin: €10.1/m², around €707
- Palermo: €7.7/m², about €539
- Genoa: €8.3/m², around €581
- Bari: €10.5/m², around €735
Calculating annual net revenues for property owners after accounting for taxes and fees leads us to the following projected earnings:
- €12,480 in Milan
- €8,080.80 in Rome
- €7,488 in Naples
- €9,063.60 in Bologna
- €9,991.80 in Florence
- €5,514.60 in Turin
- €4,204.20 in Palermo
- €4,531.80 in Genoa
- €5,733 in Genoa
When comparing these annual earnings to property purchase prices, Bologna and Naples emerge as the most favorable cities for investment, demonstrating higher net yields relative to purchase costs.
- Bologna: 4.32%
- Naples: 4.28%
- Palermo: 4.00%
- Turin: 3.94%
- Bari: 3.72%
- Genoa: 3.60%
- Florence: 3.57%
- Rome: 3.30%
- Milan: 3.24%
The data clearly reveals that net yields in all assessed cities significantly surpass the returns offered by the 10-year bonds.
However, it’s essential to note that this analysis is purely illustrative and does not account for acquisition costs, potential loan interest, maintenance, or renovation expenses, and presumes consistent monthly rental occupancy.
Investing bears inherent risks that must be well considered before any capital commitment.
Disclaimer
The information and observations in this article are intended for informational purposes only and should not be the sole basis for any investment decisions.
Readers must assess their own risk tolerance and investment horizon before making choices and assume full responsibility for their investment actions.
