Tuscany Beckoning

Hamid Zeighami’s lifelong love of Italy culminated in the purchase of a home in Florence last year—and he’s not the only international buyer to choose Tuscany for a vacation home. Last year, international inquiries to buy houses in Italy increased by 126.65%, compared to the prepandemic 2019 figures, according to gate-away.com, a property platform for investors outside of country of Italy. The reduction in its numbers only of Americans investing in property in Italy shows an increase of 223% in 2022, compared to 2019.

“I decided to buy in Tuscany after visiting several times because of the strong dollar, the ability to get a good price on a house and because I wanted to spend more time abroad after the pandemic lockdown,” said Zeighami, 61, CEO of the Toronto-based R Courier. “At the end of the day, I want a place with character and history.”

Americans have traveled to Tuscany for centuries, drawn to the beautiful countryside and vineyards as well as the art, architecture, and history of 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 memoirs and movies like Made in Italy, not new. But the pandemic-induced re-evaluation of lifestyles and the strong American dollar compared to the euro have caused a new rush to buy property in Tuscany.

After the pandemic restrictions were lifted “we saw more activity than before,” said Danilo Romolini, sales manager at Romolini Immobiliare, the Italian affiliate of Christie’s International Real Estate. “People want to release after the lockdown. Italy is known for its beauty and as a place for an escape scenario.

Familiarity with Italy and especially Tuscany has helped fuel intense interest in that region, said Diletta Giorgolo Spinola, head of residential sales at Italy Sotheby’s International Realty.

“People feel safe buying here because Tuscany is so well known,” Spinola said. “Plus, our high-speed trains mean you can reach Rome, Milan, and Venice in less than 90 minutes. We have a healthy lifestyle with a lot of time spent outside.”

Financial considerations have been an important driver of purchases in recent years, too.

“In the early part of the pandemic and afterwards, interest rates were very low, which attracted many Italians and foreigners to buy property in Italy,” said Romolini. “And then the dollar became very strong, bringing in more Americans than before.”

Tuscany is the most requested destination in Italy by people looking 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 most requested city in Italy. 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.

Tuscany Without Change

Twenty years ago, most international buyers wanted to buy a villa that they could renovate, Spinola said.

“Today, 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 completed,” he said. “About 20% of buyers buy a house that needs a little renovation, a kitchen or bathroom update or something that doesn’t need a permit because it takes so long.”

Most Americans who buy a home in Italy will use it as a second or third home, Romolini said. He said that those who plan to go in winter want an apartment in a city, while those who plan to come in spring and summer usually want a villa with a pool.

“We have many 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,” said Spinola. “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 guests when they’re out of town, and as an investment for long-term appreciation.

Zeighami bought an apartment in Florence for about 1.6 million euros, which he plans to use for vacations and spend more time in Florence.

Many of Romolini’s clients want to buy a villa or an estate, especially one that produces wine or olive oil, to use as a holiday retreat.

Buyers looking at the countryside prefer a larger property, usually with at least an acre of land, Spinola said.

“They want a lot of space for their guests to enjoy, a swimming pool and a vineyard or olive grove that produces bottles,” he said. “Usually, they outsource the harvest to a neighboring farmer who uses half of the harvest for his own use and bottles the other half for the homeowners.”

Restored villas are the easiest to rent, but sometimes they can be overpriced, Romolini said. However, it is rare to find a foreign buyer willing to take on such a large change, he said. In that case, the property should be in the perfect location, with an excellent view and a good-sized lot and house.

Proximity to a town for basic services and a location less than an hour from Florence is a priority for most buyers, says Romolini.

Financing Tuscan Villa

Most buyers, especially those with high net worth, pay cash for their property, Romolini said. “Foreigners can get a mortgage in Italy for up to 50% or 60% of the purchase price,” he said.

However, there are many financing strategies available based on a person’s assets, says Jonathan Kessler, head of credit and money management solutions for PNC Bank, based in Pittsburgh.

“Paying cash is an option, especially for people who are worried about the market right now,” Kessler said. “But before you reduce your flexibility by using your excess liquidity, you should consider other options. Cash is also more interesting these days, because you can get 4% or 5% on it using a CD or other account compared to none a few years ago.

One option is to borrow the 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 is more cost effective to set up than a refinance,” says Kessler. “You only borrow what you need and some lenders offer the opportunity for a fixed-rate portion of the loan.”

Another option is to sell securities to generate cash for a purchase, Kessler said. However, he warns, there may be a loss or a capital gains tax bill, along with the abandonment of your investment strategy.

“Instead of selling the securities, you can borrow with what we call a ‘secured base loan’ for up to $20 million,” Kessler said. “All you need is to have enough assets to qualify for lending as a line of credit. There is no setup cost and it can often be done in a day or so.”

Currency exchange rates can be a challenge when shopping abroad, Kessler said. “Not only do you want to monitor the exchange rates for your one-time purchase, but you also have an ongoing need for euros to support and maintain your property there,” he said.

Zeighami recommends opening a bank account in Italy, which he says is not as easy as it sounds. He relied on the help of a law firm recommended to him by Romolini, his agent.

Other considerations for buying abroad include tax implications for foreign buyers. Zeighami, who has bought property around the world in Florida and Switzerland, said he relied heavily on Romolini and an Italian lawyer to help with the paperwork.

“You have to have a good agent and make sure they speak English or your language,” says Zeighami. “With the help of the law firm I was able to change the electricity and water in my name. You may think that it is very easy to do, but changing utilities in Italy is not as easy as in Canada or the US ”

This story originally appeared in the June 2023 issue of Penta magazine.