Buying a house to rent provides a gross return of 8.8% in Q3 2023, up 1% from the same period last year. According to a study by idealista, the leading technology web portal in Italy, the yield clearly exceeds the rates offered by 10-year government bonds (4.8%)
According to this study, which relates the sale and rental prices of different real estate products to calculate their gross profitability, commercial premises (shops) remain the most profitable real estate investment. Buying a shop in Italy to rent it out offers a gross profitability of 12%, stable compared to twelve months ago. Offices offer a yield of 9.6% (9.2% a year ago) and in the case of garages it stands at 7.1%, slightly lower than the 7.2% in September 2022.
Residential yields
Among the Italian capitals, Ragusa (12.4%) Syracuse (11.4%) and Biella with 10% are those offering the highest profitability. Trapani, Catanzaro and Massa followed with above average returns for the period, with 9.5%, 9.2% and 9% gross return, respectively. In contrast, Siena (4.6%) is the least profitable capital city for owners, followed by Cuneo (4.7%) and Trento (4.9%). In the large markets Rome reached 6.1%, Naples 6%, Milan stopped at 5.6%.
Box performance
In many cities, boxes are the least profitable product for the investor. This month we have 2 capital cities that offer a lower return on this type of property than Btp (4.8%) ("Buoni del Tesoro poliennali"- debt securities issued by the Italian government to finance public debt). These are Padua (3.1%) and Genoa (4.7%).
The highest profitability is achieved in Verona (8.5%), followed by Cagliari (8.1%), then Bari and Parma (7.7%). Even in Rome, the rate of return is 7.7%, Milan comes in at 6.7%, while Naples stops at 5.4%.
Yields on commercial premises (not warehouses)
The retail segment is the most profitable in almost all cities.
The highest performance is achieved in Monza (16.3%), ahead of Trieste (15.7%), Genoa (15.6%) and Venice (15.4%). Double-digit returns affect 80% of the capital cities analysed, in a long list of 62 capital cities led by Rome (14.9%) and Milan (14.8%).
Cuneo is the market where the profitability of premises is lowest, at 8.2%. Foggia (8.8%), Ascoli Piceno (8.9%) and Trento (9%) complete the lower part of the ranking.
Office performance
The office sector shows very attractive returns for investors, sometimes with double-digit returns, as in the cases of Monza (11.3%), La Spezia (10.5%) Trieste (10.3%) Perugia (10%). In Barcelona profitability is 9.1% and in Milan 7.1%.
On the opposite side, Rimini and Pescara (5.9%) offer the least attractive returns.
Methodology
To prepare this study, idealista divided the offered sales price by the rental price demanded by landlords in the different markets by reference to the quarterly indices of houses, commercial premises, garages and offices corresponding to the fourth quarter of 2022. The result is the gross rate of return an owner gets for renting out the property. This data facilitates the analysis of the current state of the market and is a basic starting point for all those investors who want to purchase real estate in order to obtain benefits.
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