Rentals are at an all-time high in Ticino - an estimated 7000 sit empty

CATEF, the Ticino Chamber of the Economy of the Land, expressed yesterday in a press release

We contacted Gianluigi Piazzini, president of Catef, for additional comments. ‘We foresee - he explained - that the pressure will increase the reduction on rents, which we think is already underway, given that existing rents are not counted. There are only portals that publish data of dubious scientific validity every month, given that they are rents requested by advertisements on the Internet, and they are not existing leases, but only those on new objects’.

‘The market is correcting - he notes -, but with a slow pace, because otherwise it would collapse. We remember that the real estate asset is exceptional and we must not be over optimistic as the rents fall, since it is a dangerous situation. In fact, one of the strengths of the country is real estate.

‘We also pay a compliment - he underlines - to the Statistics Office, which has found over a thousand more apartments. It was a great job. But it must be said that many landlords do not report vacancies, and therefore we estimate that there are actually at least 7,000 vacant apartments, which is equivalent to a production of 2 and a half years. Overall, calculating that each apartment in Ticino hosts an average of 2.2 people, there are at least 15,000 people missing to occupy them, and at this moment the population is no longer rising, and indeed decreasing. Thinking of an average rent of 1,250 francs per month, multiplied by 7,000 homes, the shortfall is over 100 million per year’

Difficult situation

‘I fear he concludes - that Ticino will follow the example of Solothurn, which had a difficult time after the watch crisis, and today it is still the canton with the highest rate of empty homes’.

‘The current vacancy rate - notes Alberto Montorfani, secretary of SVIT, the association of real estate operators - is unprecedented, and has risen by 20% in a year and is now at 6,600 objects. But many escape the census, and so realistically it can be assumed that there are over 7,000. This leads us to assess the situation differently than usual. We have previously experienced (from the 1970s onwards in more or less ten-year cycles) production increases and consequent reductions, when it was not a question of the crisis in the real estate sector, that is the famous ‘bubbles’. Until now, however, the economy has always recovered ground, and with it immigration, filling the production surplus over time’.

‘Now - he continues - it may not be so easy. The local economy is stagnating (the financial sector has suffered a reduction in activity for over 10 years) and immigration has stopped abruptly. We are perhaps facing a structural change, where coexistence with important vacancies could be the new reality to deal with. But the pandemic also plays its role’.

‘As in other sectors, such as work at home or Internet shopping, COVID has done little more than anticipate and reinforce trends already underway - he specifies -. Different times are ahead, and we must prepare: Covid has sounded the alarm’

Negative effects

‘The effect of this imported vacancy on rents - he underlines - is strongly negative because the new apartments struggle to be put out into the market at an adequate price that covers the costs of production and maintenance of the investment, but it also has an effect on leases in progress, especially recently rented apartments (last 3-5 years) which had higher rents and which are now in danger of being emptied by migrating tenants to new cheaper apartments. This generates a dangerous deflationary spiral that affects the entire market by depressing the value of properties, which is determined by their ability to earn’.

Construction must slow down

‘I believe that this situation is weighing on the whole economy, and even the construction industry has understood that one cannot push the engine speed beyond a certain limit. The policy could activate the countercyclical engine of public property renovations, to create alternatives to housing. However, the sector has understood that this situation creates internal damage to the sector itself and is already partly ‘self-regulating’. We hope that this trend continues and that, as for COVID, it does not last too long, otherwise the consequences will be harsh’.