17 October, Il Sole 24 Ore
Parcelling is the new frontier of real estate investing. Alberto R., who just started in the real estate world, tells: “I bought a 200 Sq m apartment. After having requested the necessary authorisations, I divided the apartments into three units. One of the apartments will become my home, while I’ll rent the other two of 50 Sq m each. One of them will be a short-term rental”.
Alberto is in good company. Many people are choosing this solution to take advantage of the various locations and tourist destinations which are driving the demand, especially in the central and semi-central areas. Owners of offices are doing the same, especially if located on the first floor. Such properties are generally reconverted for a different use, considering the decrease in the demand for small-size offices.
Large-sized houses are generally cheaper if compared to the price of a studio or a one-bedroom apartment. Who decides the parcel to sell immediately can obtain a good capital gain, although we have to consider a 20% tax on the capital gain if the property is sold within the first five years. Alessandro Ghisolfi from AbitareCo says: “If we look at new apartments, large properties generally cost 10% less”.
Once again, Milan has been leading the trend for the last one and a half year. Turin, Rome and Naples are also reporting the same trend.
However, buying a property and divided it into smaller apartments requires skill and time. Ghisolfi explains: “Not all apartments can be parcelled. For instance, they must have separate entrances”. Getting the necessary permits is essential. To obtain the authorisation, it’s necessary to create new entrances with the permission of the condominium. A very delicate matter.
According to the guidelines of the builders’ association Ance, some factors may exclude the possibility of parcelling. Therefore, one must check the condominium rules, which may prohibit parcelling properties. Such a prohibition is valid only if approved by all the property owners.
It’s also necessary to consider the intrinsic characteristics of the properties. “A property must comply with the health and hygiene regulations which vary depending on the municipality and which are included in the condominium rules. For instance, a property must comply with a set minimum surface and with the window/floor surface ratio”, as the guidelines report.
Who buys must also check whether the building and the various systems are organised in a way that allows parcelling.
Parcelling is classified as an extraordinary maintenance intervention. Therefore, tax reliefs may apply for renovation and energy saving interventions.
What are the costs to take into account? According to the analysis by AbitareCo, the costs are between 600 and 900 euro/Sq m, depending on the location. Costs are higher in the case of high-quality materials and luxury finishes.
According to the calculations made by AbitareCo, in Città Studi in Milan, a 170 Sq m apartment costs around 640 thousand euro. The capital gain before fees and commissions is set at 216 thousand euro. The renovation costs amount to 117,600 euro, corresponding to 700 euro/Sq m. An apartment in this area can be leased to students or rented short-term, although the location is not as well connected to the city centre as other areas are.
In Trastevere, Rome, the necessary investment amounts to 1.3 million euro for a 210 Sq m apartment and over 150 thousand for its renovation. But an apartment in this neighbourhood can be rented to tourists all year round. Prices are lower in Turin and Bologna. In Naples, if one wants to bet on a prestigious location, Chiaia or Posillipo are ideal, budgeting 990 thousand euro for 200 Sq m in the former and 720 thousand for a 140 Sq m apartment. In the last two examples, the renovation costs are rather high, going from 98 thousand and 150 thousand euro, while a new property in the two locations costs respectively 7,500 and 8,500 euro/Sq m.
Source: Il Sole 24 Ore
Translator: Cristina Ambrosi