Investing in the renovation of the building stock. Is this convenient?

Very often, today, given to the strong imbalance between supply and demand, in seeking a home we find ourselves in front of a multiplicity of real-estate listings including buildings conceived and built in totally different eras of construction. In fact, for the same living space, the real estate market offers newly built properties, properties in normal conditions, restored houses as well as houses to be restored, to which correspond highly different selling prices. 

Although the choice of a ready-to-use home can be the most advantageous in terms of guarantees regarding the quality of the goods, as well as the time needed for moving into a new house, which option allows greater economic savings? Do we save more money in the purchase of a renovated house, with quality comparable to the new houses, or buying a property to be restored? 

Beyond the undoubted advantages of buildings renovation, through which it is possible to personalize your home making it closer to your needs and personal taste, some recent studies have shown that in Italy it is worth investing in a property to be restored, since the renovation allows an increase in the real estate value - capital gain. 

The study conducted by Scenari Immobiliari examines the semi-central districts of the main Italian cities where the market is more dynamic, analyzing as standard a sixty square meter apartment according to the prices recorded in February 2018. The comparison between the prices of the flats to be restored and under standard conditions has allowed to highlight the addition of value following a building renovation, with percentage capital gains varying from a minimum of 1.6% in the city of Teramo and a maximum of 10.4% in the Roman capital town. The estimated capital gain represents a parameter that measures the percentage increase in the value of a house including the average costs for the refurbishment. 
The average values among the 104 capital towns have recorded a surplus of 3.6% and a net gain of five thousand euros, considering an average renovation costs of thirty thousand euros and a discount of about 24.3%. 

These data can also explain the several changes in the real estate market. Over the last few years, the number of transactions of properties to be renovated is constantly increasing: in the report we read that out of the total of 560 thousand transactions in 2017, 130,000 houses to be restored were purchased - 23.2% of the total, with a growth of 36.8% compared to the 2016. Investments in the renovation of the building stock are in strong growth, covering the 38% of the total investments in construction industry in 2017. 
This trend shows that buyers are increasingly attracted by the possibilities offered by a custom renovation in terms of a greater discount and profit on the property value, in addition to the added value coming from the possibility of living in a tailor made home.

As consultants in the luxury real estate sector, the ENGEL & VÖLKERS team selects and proposes investments in some of the most prestigious locations in Le Marche Region, with the possibility of choosing among numerous solutions to be renovated and customized according to the needs of the new owner, also through turnkey contracts. 

(Statistical data sources Scenari Immobiliari, Ance, Istat)

Chiara Sandroni.