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Real estate: signs of recovery in a changed market

People choose big cities and apartments in residential areas, even if of a smaller size than in the past

by Barbara Benini

Paradoxical as it may seem, the awareness that economic crisis won’t be as temporary as expected and has in a certain way settled itself is favouring real estate whose recovery will be possible provided that the housing as well as the financial markets prove themselves able to offer innovative and creative solutions.

These are the results of Housing Evolution, a project on real estate in the district of Milan, started by Makno and by Assimpredil Ance and co-financed by the Chamber of Commerce of Milan. The study, now at its 5th edition, monitors the residential property market, analysing and predicting housing trends. “Although our study shows a reverse trend in Milan compared to what happens nationwide it must be said that cities generally anticipate trends. So what is seen today in Milan will be observed in the whole country in the next future” says Lorenzo Bernorio, Makno managing director.

Real estate demand is focused on cities, mainly on apartments (59%) and new homes (27%), on furnished and smaller properties than in the past (48% of the sample is between 60 and 79 sqm) and, especially in big cities, with an eye on the area, which must be well connected and safe.

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“Over the last few years the illusion that living in a small provincial town was better than living in a big city dashed out. Cities are now perceived as important: a better quality of life, more working and leisure opportunities, better services. New apartments are preferred as they are more cost effective, with the size being sometimes reduced in order to save some money. In Milan much construction is being done with real estate replacement (old wasteful buildings are demolished and replaced with new ones) making new homes more attractive” Bernorio carries on.

The economic crisis as we were saying pushes real estate: as long as it was perceived as it being temporary the market was stuck, people waiting for the crisis to end to decide whether to buy a house or not; now that the crisis is being considered structural people are trying to get around it to fulfill their projects anyway. In this context real estate is still an important market: houses in Italy still hold a symbolic value and real estate investments are considered less risky than financial ones.

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The study shows that real estate recovery concerns both Milan (12.2% people are willing to buy a house in the next 2/3 years against 6.1% in 2012) and the surroundings, where in the same years there has been an increase from 2.6% to 7.6%. Furthermore among those who have decided to postpone the purchase, mainly for economic reasons (53% of the sample), there is a 12% of potential buyers, who may actually turn into real buyers if ad hoc finances were implemented.

“Innovation is very important to understand market trends, with innovation meaning both product innovation with new materials and original solutions (such as furnished homes) and financial solutions favouring credit access. A significant share of potential buyers would be interested in lease purchase agreements (45%), 100% mortgage loans (37%) and easier real estate trading (27%)” Makno managing director explains.

The number of those going for home renovation over the next three years is also increasing: from 6.7% in 2008 to current 12.1%. Renovation will mainly concern bahrooms and toilets (26.4%), doors and windows (23%), and floor coverings (18.8%), with an expenditure potential of up to 20,000€ for 78% of people interviewed.

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The choice of floor materials is pretty much the same in Milan as in the outskirts, reflecting Italian taste. In particular, potential buyers prefer ceramic tiles and cotto tiles in the kitchen, with a slight preference for wood in the area analysed by Makno; tiles and wood in the living room, followed by marble and cotto tiles; tiles and marble for bathroom floors; wood and tiles in the bedrooms.

As a consequence the emotional value of our house changes, our home becomes a home “for all and for everyone”, a house well taken care of, the place for the family but also for a wider sociality. “My house represents me, is the place of my intimacy, but also the place where I can foster my relations, open up to the exterior. It is a multifunctional house, balancing itself over these various aspects and meanings”, Bernorio continues.

The living room and kitchen therefore become the core of the house, more highly appreciated than the bedroom and other rooms, although the bathroom is still well considered by Italian people who believe it the perfect wellness place.