From typical budgets to preferred locations and property types, Silvia Marchetti looks at how the profile of the average foreign buyer looking for a slice of Italian life has changed over the years.
The vast rooms of Palazzo Raggi, an 18th-century architectural jewel a stone’s throw away from Rome’s Spanish Steps, were once lived in by an illustrious noble family and a host of cardinals and other historic characters hailing from Italian aristocracy.
Now the six-storey building, which stood derelict for years, is being revived as it prepares to welcome a new class of inhabitants: the foreign billionaires who are turning their backs on the likes of Switzerland, Dubai or the Cayman Islands and moving to Italy to taste the dolce vita and, moreover, the financial benefits of a tantalising tax regime.
Italy rolled out the little-known incentive, which applies to the super-rich of all nationalities, in 2017. In exchange for paying an annual fee of €100,000 (£87,000), those who take up residency in the country are entirely exempt from paying tax on income generated overseas. The initiative also extends to family members for a yearly payment of €25,000 per person.
The measure, which was intended to boost big spending in Italy, whether it be on property or luxury brands, enticed 98 people in its first year before jumping to 549 by 2020 and more than doubling to 1,339 in 2021.
Their arrival has revitalised the market for luxury homes – buyers rarely put down less than €10m – and spurred the redevelopment of long-neglected historic landmarks in city centres.
Nineteen of the 29 opulent apartments under development in the swish Palazzo Raggi have been snapped up since going on sale less than a year ago, and several have been bought by those exploiting the flat-tax.
“We have never sold so quickly in Rome,” said Diletta Giorgolo, head of residential property at Italy Sotheby’s International Realty. “People want a slice of an 18th-century house, but with an interior that has been completely modernised.”
Giorgolo has had a busy few years. The influx of the super-rich began in earnest in 2019 and was partly driven by people in the UK with non-domicile status – a regime similar to Italy’s whereby they are exempt from paying tax on income or capital gains earned overseas – fleeing as a result of looming Brexit. Then came the coronavirus pandemic, an experience that left many reconsidering their lifestyle choices.
Giorgolo has sold a property on the island of Capri to a French couple who transformed it into a boutique hotel; a €20m mansion in Venice to a Chinese buyer; and a mansion worth €10m in Laglio, the Lake Como town where George Clooney has a home, to a couple from Switzerland.
More recent flat-tax clients include a Dutch couple who bought a home in Rome for more than €10m and another who paid €11m for a place in Milan.
“Some of them bought properties that had just come on to the market, others bought properties that needed renovation,” said Giorgolo. “Some rented top properties during their first year in Italy before buying. It has definitely been one of the best things to have happened for the top-level real estate market.”
Marco Cerrato, a tax lawyer and partner at Maisto e Associati in Milan, has handled the financial affairs of several new billionaire residents in Italy.
He said foreign nationals who once had non-domicile status in the UK had been leading the way. “Brexit is one aspect, as the UK, especially London, started to feel less hospitable,” he said. “But a big factor is the fear that a possible win for the Labour party in the next election could lead to such tax incentives being abolished.”
Among the contingent of super-rich are those who have switched residency from Switzerland, which also has a favourable tax regime, as they are attracted by Italy’s cheaper living costs, beauty and warmer climate. Others have come from Asia or South America.
They are investment bankers, asset managers, entrepreneurs, people who work in technology, or those who have income generated through dividends or trusts.
“At the beginning, the flat-tax regime was especially targeted at those who had passive income,” said Cerrato. “But then came those who were actively working – they do have to pay tax on income produced in Italy – but still found the regime appealing.”
Italy’s tax authority brought in €108m from the initiative in 2021 while luxury brands are investing more in areas where the super-rich take up residence, which is mainly in Rome, Milan, Florence and Venice and areas of Tuscany, Lombardy and Liguria, but also in the south including Sicily.
Noto, an area of Sicily south of Catania, has been attracting a lot of wealthy buyers, said Giorgolo.
“Catania has very good flight connections, so that has helped to develop interest,” she said. “So unless they need to be in a city, people are focusing on beautiful places like Sicily. But generally, interest all over Italy has been exponential.”
The showroom for the properties being sold at Palazzo Raggi attracts a steady number of prospective customers throughout the day. With the building earmarked for completion towards the end of 2024, they are only privy to sales brochures and promotional videos showing terraces with fantastic views over Rome, as well as visuals chronicling the restoration works at various stages.
Vincenzo Lupattelli, a sales manager at Sotheby’s, is unable to reveal any details about his clients. But he said their demands are low-key. “Palazzo Raggi is about class,” he said. “There is nothing glam like jacuzzis and saunas. They won’t be bringing a flashy car either as there is no garage. They are people who want to feel the history but in a modern setting, and to enjoy walking around Rome. They won’t have to deal with noisy neighbours either as an acoustic expert is working on making all the apartments sound-proof.”