The Market for Sicily Property Offers Room for Growth

What's the likelihood that Sicily property is bucking the global financial turmoil that is plaguing so many countries around the world, including mainland Italy and is currently recording strong capital growth? It's not, is unfortunately the answer.

"The economy is declining," says Giuseppe Giliberti, director of Hamptons International.

Even before the global credit crunch took hold, Sicily's property market, plagued by a strong mafia presence, and with corruption generally considered to be a part of everyday life, has long struck a dark shadow across Italy's property sector.

Nevertheless, the property market - sales and rental - on this fascinating Mediterranean island is starting to overcome its negative image, thanks largely to tourism, which buoyed by the introduction of a number of low-cost airlines, is really starting to take off.

Amongst those airlines now operating direct flights to and from Sicily and the UK, are: EasyJet, Ryanair, Monarch, British Airways, Air Malta, and Thomas Cook. This in turn is increasing demand for property in Sicily to both buy and rent, which has led to an increase in the supply of new homes, although the standard of quality remains an issue.

Giliberti says: "Sicily property prices have sharply risen in the last few years. This has caused a strong increase in new constructions that have in many cases spoiled the coastal areas. Now the market of holiday homes is quite abundant but the quality is not always at a high standard."

Slow market
Despite Giliberti claims of strong capital growth, some other agents possess a far more negative view of the Sicily property situation.

The Sicilian property market has been really bad for around two years now and very little is selling, says Paul Symonds of Invest Sicily.

Rupert Fawcett, head of the Italian department at property agency Knight Frank, agrees that the property market has been slow, and believes that this is because "the foreign market is only now beginning to start" and to date, "there has not really been a market to speak of," he says.

Moving forward, Fawcett considers the market for property in Sicily offers real room for growth.

He adds: "We believe the market will grow over the next few years as more properties become available and the island will become more popular as a destination to purchase."

Tourist appeal
Growing tourism levels are being supported by a range of attractions, including an array of beaches, great year-round weather, attractive scenery, skiing on Mount Etna and two golf courses with more in the planning stage.

"Over the next couple of years a number of golf courses will open and this is expected to add tremendous appeal," says Giliberti.

One project that may appeal to golfing enthusiasts is a new €129 million (£113 million) hotel and golf resort which is currently being constructed in the village of Verduram in the southeastern region of the island.

Where to buy
Prices for Sicily property vary enormously across this large island, with the most expensive homes typically found along the sea front, in places like Taormina, which along with the towns of Ortygia and Noto, have recorded the greatest level of price appreciation over the past decade, according to Fawcett.

However, average prices are "tending to decrease", despite the fact that they are up to "40 per cent cheaper than central and northern Italy", notes Fawcett, suggesting that it is currently a buyers' market.

Well-liked high-end regions in which to buy Sicily property include, Catania, and Mount Etna, while Fawcett advises investors to consider buying Sicily property the ever-popular capital of Palermo, along with the south eastern part of the island, where home prices remain stable and are resisting the general property market downturn,

Anyone looking for a home at the cheaper end of the market may want to consider buying in emerging destinations, situated in the south east of the island, such as Ragusa, Comiso Siracusa and Sciacca, where new motorways and an international airport are close to completion. However, if you are looking for a really cheap home, and do not mind a spot of DIY, then how about a home for under a pound? !

Home for a euro
Homes in Salemi, a small town in western Sicily, are being offered for sale for just €1 (87 pence), in a radical attempt to boost the region's property fortune.

An earthquake damaged most of the villas in the town 40 years ago and since then, much of the local population has moved out. But local mayor, Vittorio Sgarbi, believes the scheme will help revitalise the town.

"There are 3,700 houses owned by the council, almost all in the old town, that are in danger of falling down - of crumbling and dying," Sgarbi said.

However, there is a catch. Anyone who purchases a property will be required to sympathetically renovate the old home, without altering its style, within just a couple of years, which will prove costly.

"We're thinking of people who have the sensibility and economic resources to embark on this adventure," Sgarbi added. "In exchange for a token payment of one euro we will offer them one of these houses and ask that they undertake to restore them within two years while respecting their original characteristics."

Bridging the gap
Sicily houses are among the most affordable in the Mediterranean, and yet, prices could be buoyed by the fact that the Italian government plans to construct a new €4 billion (£3.5 billion) bridge which will eventually link Sicily with mainland Italy.

The suspension bridge is expected to become the largest in the world and will take between five and 10 years to build. The idea was first conjured up in 2001 by President Silvio Berlusconi, but abandoned when he was ousted out of power. He's now back in charge, after being re-elected in 2008.

Rental returns
Because Italians generally like to own property, anyone wishing to let out a property in Sicily should target the tourist sector, but be aware that tourism is seasonal in Sicily. All the same, Fawcett reports that an annual rental yield of between five and 15 per cent is achievable.

However, competition for rental occupancy is hotting up; more hotels and bed and breakfast establishments are opening up, while the supply of new homes is keeping apace with demand.

Taxing issue
Anyone who owns Sicily property for at least five years, or gains permanent Italian residency, is exempt from paying capital gains tax in Italy, which is otherwise charged at 20 per cent.

Summary
The process for buying property in Sicily is not entirely straightforward, and issues over ownership can sometimes arise, particularly with older homes, although a decent notary should stamp out any uncertainties.

Given that the global economy is currently in chaos, property prices on the island, like much of the world, are likely to fall in the short to medium term, presenting a window of opportunity to negotiate a property deal at a bargain basement price.

One major downfall of course, is the fact that the UK pound is current at an historic low against the euro currency, which means that sharp negotiating skills are required, if you are to off-set any price deficit caused by the weakened sterling.

Marc Da-Silva for Homes Overseasw. Search our range of Sicily property and our extensive range of articles offering independent expert advice on buying or investin g in overseas property.