Real estate auctions: opportunities on the Italian market

30.1.2023

Read Time: 3'

With high interest rates and high inflation, buying property at auction could be an investment opportunity

According to data released by Reviva, 191,253 real estate auctions were recorded in 2022, for a total value of 13.2 billion (+3% on 2021 and -25% on 2019)

The value of the properties at auction decreased overall by 7% compared to 2021

Could the future of the real estate market lie in auctions? Although the auction market in Italy is underdeveloped, this mode of acquiring real estate could play a growing role in buying and selling and represent an additional opportunity for those who need to buy property in the context of rising rates and high inflation. This is when it emerges from an analysis by Reviva, according to which 77 percent of the lots at auction in our country are priced below 100 thousand euros, which very often allows buyers not to resort to financing for the purchase of their property at auction, thus avoiding the impact of rising interest rates and could therefore be investment assets for savers.

What are the regions and five cities with the most properties at auction?

If we analyze the territorial location of properties at auction, at the top is Lombardy, Sicily, and Lazio with 36 percent of the total lots at auction. As far as cities are concerned, Rome remains at the top of the ranking, with 6,839 lots at auction, which alone includes 5.4 percent of the total lots in its territory, worth about 940 million. In the second position is Milan, with 4,170 lots for a value of 540 million, followed by Naples, with 3,665 lots for a total value of 453 million.

Average prices of properties at auction

An analysis of the top 5 regions shows that Veneto leads the ranking with higher average prices for nonresidential properties (180,424 euros) and land (170,335 euros), while Lazio is the region with higher average prices for residential properties (101,595 euros).

Auction market trends in Italy in 2022

According to data released by Reviva, 191,253 real estate auctions were recorded last year, with a total value of 13.2 billion. This figure is only 3 percent higher than in 2021 and -25 percent lower than in 2019 when all transactions could be carried out at total capacity before the two-year pandemic and the slowdown of procedures by the courts.

The devaluation of real estate at auction

In 2022, the value of properties at auction declined by 7 percent overall, while the average value of the properties fell to 106,000 euros, continuing to decline from 113,000 euros in 2021 and 122,000 euros in 2020.

What are the factors that led to this trend? Reviva explained that only 37 percent of the pending executive procedures in the courts have seen an auction set during the year: this means that 63 percent of the executive procedures are still "dormant." As a result, the same properties always go to auction, which, due to deserted auctions (i.e., those in which no bidders show up), suffer price decreases and then have a new sale attempt. The consequence? These markdowns resulted in a devaluation in 2022 alone of 2.2 billion, with an average property devaluation of over 29 percent.

Auction trends in 2022

Residential returns as the type of property primarily placed for sale, accounting for 56 percent of the total and aligning with what was observed in 2019.

Estimates of auction trends in 2023.

"If forecasts of Npe increase in the coming years are consistent, we will see, with a 12/24-month deferral, a new increase in enforcement proceedings and consequently in auctions set," said Giulio Licenza, co-Founder &Cbdo of Reviva. Indeed, the reduction in NPLs in recent years has been marginal and is now on the rise due to new defaults. "This means that so many credits still do not have an active judicial recovery procedure and that, of the enforcement procedures activated in the courts, only 37 percent have seen at least one auction set during the year, a symptom of slowdowns that persist probably due to suspensions during the pandemic period," continued Licenza. For his part, Ivano De Natale, co-founder & CEO of Reviva, then concluded by saying, "By improving the sale of properties at auction through proper marketing activities and in parallel by progressively increasing the number of auctions set and procedures registered, recoveries can be increased and thus support the real estate market at a time of delicate economic conditions."

Stefania Pescarmona

Director of We-Wealth.com and editor-in-chief of the magazine. A professional journalist, she holds a law degree from the University of Turin. She has worked at MF, Bloomberg Investments, and Finanza&Mercati. She has contributed to Affari&Finanza (Repubblica) and Advisor.