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When (and whether) parcelling is convenient
07 July, Milano Finanza
Old buildings to divide between successors, unlet offices, big apartments hard to rent. The solution is often renovating and parcelling the property to sell or rent it separately at higher prices. “Bear in mind that this solution might be tricky and that the figures won’t add up”, warns Emanuele Barbera, Sarpi Immobiliare Ceo. In fact, many are the hidden costs: feasibility checks, project fine-tuning, submitting the necessary paperwork to the municipality, starting and monitoring the works, and selling or leasing the property once parcelled. Besides, in case the funds to do it are not available, it will be necessary to look for financing or a partner in the project. Without counting costs. Even for small interventions, we must take into account the registration taxes and fees, as well as a considerable discount on the property since the future buyer will claim at least a 30% margin on the value. “For this reason, we operate through Fides Advisor to carry out such activities. The company will study the best solution according to the property and the client”, adds Barbera.
Cases such as people needing to sell quickly to obtain liquidity or successors that have to divide an inheritance among them are quite frequent. “We’ve recently had about a dozen of such cases all over Italy: from Turin to Olbia and Pavia. Milan remains the biggest market, with half the operations here alone. After all, the choice is between being assisted by a specialised company or selling the whole property at a big discount”, explains Barbera. “We have many private clients as well as companies, like Unipol and the retirement fund Cariplo. The process we follow always starts with the appraisal of the asset and the analysis to find the best solution. Then, according to the client’s requirements, we’ll follow all or just some of the project phases, including the sale, the research for funding or our direct participation”.
The same approach is valid for offices, although with some complications. In fact, location is crucial in this case; and even after the renovation and the parcelling are carried out, it might be difficult selling or renting. “In other words, if an office stays unlet or is hard to sell there must be a reason”, continues Barbera. Obviously, it’s not difficult for offices in the centre of big cities. However, apart from cities like Milan, where the property market is expanding, the success of the operation is not guaranteed. In any case, before proceeding, it’s necessary to survey the demand for offices in the area, to see if there’s a need for small or big surfaces, or whether it’s better to change the destination into residential property. In difficult areas, or where the economy is stuck, such as small provincial towns, it’s not an easy task”.
It’s also very challenging for a private to parcel not an entire building, but a very big apartment. Firstly, one must assess the feasibility of the project, considering the recent regulations on construction, which is something less obvious than it seems.
Generally, investors are always interested in big apartments with the aim of parcelling them, mainly if located in central or semi-central locations and are not renovated. They cost less, and they’re usually found in nice condominiums. “The recovery of the residential property market in the big cities together with the boom of short-term rentals gave a new impulse to the demand for 120-150 Sq m apartments to renovate and those above 200 Sq m to parcel”, confirms Alessandro Ghisolfi, from the research department of AbitareCo. “After all, the demand focuses on small- and medium-sized apartments, between 50 and 70 Sq m, which register the highest price per square metre”.
From a geographical point of view, the demand concentrates in the centre and semi-centre of the big cities, but it’s also extending to the suburbs, especially in case of singles, students, workers and foreigners. Ideally, such properties are located near a company, a university, a Court or a hospital. As already mentioned, the reasons for this type of investment are the convenient prices in comparison with a smaller apartment in the same building. On average, big apartments in the centre of big cities to be renovated cost 5% less than studio or one-bedroom apartments. The gap rises to 7% in the semi-central areas and 10% in the outskirts of town. “In the past, the difference was even five percentage points”, stresses Ghisolfi. How to choose the right property to parcel? Before buying, it’s necessary to make sure there are no restrictions on the property and that the condominium regulation doesn’t prohibit the parcelling. One must also check the planimetry taking into account the flushing (to build bathrooms) and the possible entrances. To create a new hall, it takes the approval from the condominium. If the parcelling doesn’t imply the modification of the common spaces, there is no need for authorisations. Moreover, one must pay attention to the local regulations. For instance, small apartments must not face only the north. After the parcelling, it’s necessary to recount the table of thousandth shares. Also, the sale of one of the apartments will require a registration of transfer and a property registration with a notarised deed. Finally, even the mortgage can be parcelled.
Source: Milano Finanza
Translator: Cristina Ambrosi