Amongst the motives that have encouraged many Italians to concentrate a consistent part of their savings on real estate investments is the progressive increase in value that has gone hand in hand in the last decades, consolidating it, the national economic growth. A growth which has by now become part of the collective memory, becoming almost a given..

This doesn't mean that what has happened in the past will necessarily repeat itself in the future. Obviously though, we hope is this case.

But a prudent attitude and a critical eye towards attitudes that are commonplace should encourage every wise investor.

Even in Italy in the last decades, in certain areas and for certain types of real estate investments, even for long periods, there has been a decrease in prices quoted.

On the other side, the country that had the most dynamic European real estate market last decade, Spain, with average prices practically doubling in the last 6 years now shows sign of slowing sales and lowered prices.

This happened while RR de Acuna & Associates of Madrid, a Spanish real estate agency was cutting 10 percent off of the price of vacation homes.

Even in Italy there is certain stagnation in sales and it's since 2005 that "housing values have stopped growing".

This is what Federico Oriana thinks, President of the National Real Estate Companies' Association. According to Oriana, at the moment, Italy is not on the verge of a housing market crash. "For a series of reasons, I personally think this doesn't exist in Italy because: 1) the average prices in real terms are not higher than those in 1991; 2) It's at least one and a half years that prices have stopped growing; 3) the demand for new housing, is still larger than their supply on the market; 4) we are amongst the European countries where the average (housing) prices are lower and we are not amongst the countries where they have grown more in the last 8 years"

He continues to say, "There is no risk of a crash, then but of course there is the danger of a prolonged stagnation caused by the government's decision taken from 2006-2007. In Italy the rate of family home ownership is one of the highest in the world ...so, a drop in prices would affect almost the entire population. Thousands of real estate units in bankruptcy would be immediately put on the market, triggering a domino effect, construction activity would slow down as a result of the scarcity of new investments, with a huge negative effect on GDP and the unemployment rate. These are the question that the government ought to ask itself, while there is still time, a real estate crisis here (in Italy) wouldn't find adequate compensatory gains in other economic and productive areas".

To these stances, which certainly have a "political" meaning, but that can't be ignored, must be added other worrisome signals. This is the study, for example, done in March 2007 by the real estate group Sarpi Spa of Milan, with information that is particularly relevant to the centre of Milan where, as a result of degrading situations (drug dealer, prostitution etc.) in certain areas, the price of real estate has suffered a heavy blow. Some streets specifically neighbouring: Buenos Aires 30%, Corso Como and Corso Garibaldi 25%, Viale Vittorio Veneto 15%

Of course these are particular situations but in many main cities, these days prices frequently go the way of "leopard skin spots", affected by factors like immigration and general degradation.

This is not to devalue the hypothesis of a possible future depression of real estate in Italy. Absolutely no! We think and hope that, for motives that are typically attributed to Italian characteristics, the value of real estate will go up just at the moment of greatest stasis, but will maintain in the long run, positive values.

In favour of our conviction is the scarce propensity for change in the investment strategies of Italian families. In fact, Italian diffidence towards financial investments is motivated beyond the scarce comprehension of the dynamics that regulate such markets (and they have a point!) but also by the concrete fact that many families still take for granted the negative repercussions on their savings that would come from crises in financial markets, maybe not recent ones but for sure some that haven't altogether been absorbed. Both financially, most of all, but also psychologically. This is just to keep in mind, for those who had forgotten, the future in the economy, beyond forecasts, is unknown. And that such a possibility cannot be excluded.

If it is not scientifically possible to see into the future, an intelligent differentiation of assets also leads to a differentiation of risk. This protects savings from eventual events (which can hit only one part of these investments). In the long run, it's not the reduced rent off investments that cause damages that can be at times irreparable. It is the destruction of initial capital (even somewhat) or of the good that produces rent.

To be precise, with this, we don't intend to give investment advice and the table above is purely for reference.

The world has changed a lot in the last century. Huge capital investments are just a distant memory and collective memory is lacking in this drama both human and economic, caused by the shift from an agricultural to industrial society. And still we are (despite the resistance) transforming into a post-industrial society, abandoning the very industrial economy that seemed to many the final point of arrival. And the world around us in changing quickly. Really quickly.

It isn't possible to know if American companies and their mangers have chosen the correct path by almost completely delocalising production activities to third parties in other countries. The economic results in the next decade will be the ones to say so. We know that these decision were made completely independent of political or ideological conditioning, in accordance with opportunities that were offered by the market with the end goal being long term profits, in the long run, for their respective companies.

Markets are sovereign judged so, we will see in the next few years.

Well then, in these global scenarios, what is to be said then about the "brick" world?

Simply that the real estate market, amongst the oldest markets known, exactly follows ancient rules even within the context of big changes.

In the case in which one were to want to buy a house to live in, especially in accordance to the habits of Italians that maintain ownership of houses in which they reside for long periods (in the USA the average window of ownership for a home is around 5 years) parameters for which the buying price can scarcely be significant if compared to the arc of time in which one will have ownership of said house, an arc which could extend even for decades. The acquisition of a house in which to live, in which the "use value" prevails, still is at the same time, an investment and can become in time, especially if the deal was made with a cautious eye, an excellent means of family savings.

Obviously the "investment" part in this case is more relevant, in as much as personal use is, from the temporal point of view, more limited than in the case of residential housing. The expected appreciation of the real estate unit prevails in this case, rather than those coming from revenue on the place. In this case too, we are talking about an excellent vehicle in which to channel family savings.

Let's return to the real estate investment. In the case that enough savings or income was available to be leveraged, and one decided to proceed with a real estate investment, the acquisition of a property require a series of passive voices and a series of active voices that are worth summarizing.

The passive voices consist essentially of that which can be called "financial passivity", which are maintenance and building coasts, consultations and taxes. Beyond what we can define as "immaterial passivity" made up of the costs the investor incurs to bring himself up to date with the socio-political norms of the country in which he has invested, an investment which is rather immediate if that country in which he is investing is also where he resides, more onerous if he has invested abroad. In practice the management of what is referred to as "country risk".

The active voices instead, comprise the "financial assets" which include everything from the rent made on rentals to the eventual re-evaluation at the moment of sale, the "immaterial assets" which include the gratification for use of the property and the possession of the good.

The main motivations include: a family vacation home or study abroad experiences for their children (especially in English-speaking countries). In these last years, the number of Italians that have taken on real estate investments abroad for rent production has also grown.