Hamid Zeighami’s lifelong love of Italy culminated in buying a home in Florence last year—and he wasn’t the only international buyer to choose Tuscany for a vacation home. Last year, international inquiries into purchasing Italian homes rose 126.65%, compared with the prepandemic 2019 figures, according to gate-away.com, a property platform for overseas investors in Italy. Narrowing its figures to just American investors in Italian property shows an increase of 223% in 2022, compared with 2019.
“I decided to buy in Tuscany after visiting many times because of the strong dollar, the ability to get a good price on a home and because I wanted to spend more time overseas after the pandemic lockdown,” says Zeighami, 61, CEO of Toronto-based R Courier. “At the end of the day, I wanted a place with character and history.”
Americans have traveled to Tuscany for centuries, drawn by the picturesque countryside and vineyards as well as the art, architecture, and history in towns and cities such as Florence, Lucca, Pisa, and Sienna. The dream of buying a house in Tuscany, captured in Frances Mayes’ 1996 Under the Tuscan Sun memoir and movies like Made in Italy, is not new. But the pandemic-induced re-evaluation of lifestyles and the strong American dollar compared with the euro triggered a new rush to buy property in Tuscany.
After pandemic restrictions were lifted “we saw more activity than ever before,” says Danilo Romolini, sales manager of Romolini Immobiliare, Italy’s Christie’s International Real Estate affiliate. “People wanted to be set free after the lockdown. Italy is known for its beauty and as a place for a getaway scenario.”
Familiarity with Italy and particularly with Tuscany helped fuel the intense interest in that region, says Diletta Giorgolo Spinola, head of residential sales at Italy Sotheby’s International Realty.
“People feel safe buying here because Tuscany is so well-known,” says Spinola. “Plus, our high-speed trains mean you can get to Rome, Milan, and Venice in less than 90 minutes. We have a healthy lifestyle with lots of time spent outdoors.”
Financial considerations have been an important driver of purchases in recent years, too.
“Early in the pandemic and afterward, interest rates were extremely low, which attracted lots of Italians and foreigners to buy property in Italy,” Romolini says. “And then the dollar became very strong, which brought in even more Americans than in the past.”
Tuscany is the most requested destination in Italy by people searching for property in Italy on the Gate-away site, with 23.24% of all inquiries, and Lucca, Florence, and Fivizzano are in the top five of the most requested Italian towns. The top regional choice for American home buyers in Italy, according to the site, is Lake Como in Piedmont, followed by Chianti, and Lunigiana in Tuscany.
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Tuscany Without Renovations
Twenty years ago, most international buyers wanted to buy a villa they could renovate, Spinola says.
“Now, 80% of buyers want a turnkey property because they don’t have time to manage a renovation and they don’t want to wait for it to be complete,” she says. “About 20% of buyers will purchase a house that needs a little renovation, just a kitchen or bathroom update or something that doesn’t require permission because that takes too long.”
Most Americans buying a home in Italy will use it as a second or third home, Romolini says. He says those who plan to come in winter want an apartment in a city, while those who plan to come in the spring and summer usually want a villa with a pool.
“We have lots of buyers who want to live in Florence and in Lucca, which is also beautiful but a little smaller than Florence and closer to the sea,” Spinola says. “Buyers in the city want historic buildings with views of the Arno river or churches, high ceilings, and exposed beams.”
Spinola says most buyers want to use their home for vacations, rent it to visitors when they’re not in town, and as an investment for long-term appreciation.
Zeighami purchased an apartment in Florence for about 1.6 million euros, which he plans to use for vacations and to spend more time in Florence.
Many of Romolini’s clients prefer to buy a villa or an estate, especially one that produces wine or olive oil, to use as a holiday retreat.
Buyers looking in the countryside prefer a larger property, usually with at least one acre of land, Spinola says.
“They want plenty of space to entertain their guests, a swimming pool and a vineyard or olive grove that produces bottles,” she says. “Often, they’ll outsource the harvest to a neighboring farmer who will use half of the harvest for his own use and bottle the other half for the homeowners.”
Villas that have been restored are the easiest to rent out, but sometimes they can be overpriced, Romolini says. Still, it’s rare to find a foreign buyer willing to take on a major renovation, he says. In that case, the property would have to be in the perfect location, with excellent views and a good size lot and home.
Proximity to a town for basic services and a location less than one hour from Florence is a priority for most buyers, Romolini says.
Financing a Tuscan Villa
Most buyers, particularly those with a high net worth, pay cash for their property, Romolini says. “Foreigners can get a mortgage in Italy for up to about 50% or 60% of the purchase price,” he says.
However, there are plenty of financing strategies available based on someone’s domestic assets, says Jonathan Kessler, head of credit and cash management solutions for PNC Bank, who is based in Pittsburgh.
“Paying cash is an option, especially for people worried about the market right now,” Kessler says. “But before you reduce your flexibility by using your excess liquidity, you should consider other options. Cash is more interesting these days, too, because you can earn 4% or 5% on it with a CD or other account compared with nothing a couple of years ago.”
One option is to borrow equity from your primary residence with a cash-out refinance or a home equity line of credit or Heloc, Kessler says.
“A Heloc taps into your home equity but it’s more cost-effective to set up than a refinance,” Kessler says. “You only borrow what you need and some lenders offer the opportunity for a fixed-rate on part of the loan.”
Another option is to sell securities to generate cash for a purchase, Kessler says. However, he warns, that could incur a loss or a capital-gains tax bill, along with interrupting your investment strategy.
“Instead of selling securities, you could borrow with what we call a ‘secured base loan’ up to $20 million,” Kessler says. “All you need is to have enough assets eligible for lending against as a line of credit. There’s zero setup cost and it can often be done in a day or so.”
Currency exchange rates can be a challenge when buying overseas, Kessler says. “Not only do you want to monitor exchange rates for your one-time purchase, but you will also have an ongoing need for euros to support and maintain your property there,” he says.
Zeighami recommends opening a bank account in Italy, which he says isn’t as easy as it seems. He relied on the help of a law firm recommended to him by Romolini, his agent.
Other considerations when buying overseas include the tax implications for foreign buyers. Zeighami, who has purchased property internationally in Florida and Switzerland, says he relied heavily on Romolini and an Italian lawyer to help with the paperwork.
“You must have a good agent and make sure they speak English or your language,” Zeighami says. “With the help of the law firm I was able to change the electricity and water to my name. You may think this is very easy to do, but changing utilities in Italy is not as easy as in Canada or the U.S.”
This story originally appeared in the June 2023 issue of Penta magazine.