Abstract
In the present research the financial convenience of refurbishment investments concerning residential properties located in the Italian territory was analyzed. The study aimed at determining the unit profit range for a potential investor deriving from the refurbishment of residential properties and contextualizing the analysis to the Italian provincial capitals. With reference to the three macro-areas that for geographic and socio-economic differences define the Italian territory, namely the North, Center, South and Islands, three financial convenience maps were elaborated with the aim of providing a useful support in the investment choices of private and public operators. In particular, the financial convenience maps could guide the private operators in their investment decisions through a higher awareness of the achievable earnings and could help to identify the optimal allocation of financial resources due to the increase in the market value of the refurbished property. For the public administrations, instead, the study will be a useful reference for the calibration of the fiscal policy decisions regarding the incentives for building refurbishment at the different territorial scales and of the tax revenues related to the increase in the market value of the refurbished properties.
Highlights
The issue of building redevelopment concerns the need for renovation and securing of the existing property stock, both physical and functional, due to the building age, the widespread lack of maintenance, the energy dispersion and the high consumption
It should be added that in the context of the recent policies relating to the assignment of the tax credit, for which a higher tax deduction is associated with a lower risk of its recovery (Articles 1260–1267 of the Italian Civil Code 1942; Articles 10 of the Growth Decree 2019; Circulars 11, 17/E and 84 issued by the Revenue Agency in the year 2018), the analysis provides a useful support to entrepreneurs or builder–developer companies for the choices relating to the building refurbishment interventions
In the context of the widespread importance attributed to the redevelopment initiatives at the national level, the significant role played by the sector of the existing housing stock renovation is attested by the renewal of tax incentive policies aimed at increasing the interventions to improve the residential properties’ maintenance conditions, with a focus on the housing strategies oriented towards sustainability principles
Summary
The issue of building redevelopment concerns the need for renovation and securing of the existing property stock, both physical and functional, due to the building age, the widespread lack of maintenance, the energy dispersion and the high consumption. During the entire life cycle of the property, the different components of the total construction cost are related to: i) the initial design and the promotion of the intervention (land and enabling works, user support costs, etc.), ii) the production (land acquisition costs, suitability and/or remediation, actual construction), iii) the subsequent management of the property, following the performance of the functions for which it was built (ordinary and extraordinary maintenance costs) and, iv) the redevelopment, adaptation or complete demolition of the structure (disposal inspection, disposal and demolitions, reinstatement to meet contractual, etc.). The process of defining a project involves further categories of costs whose analysis and estimate allows one to provide a more comprehensive economic framework These include management costs to maintain the asset’s ability to be functional and usable for its original uses and/or those for energy efficiency, to reduce the expected maintenance costs (NZEB buildings) [17,18,19,20,21,22,23,24]. A separate mention is deserving for the assessment of the depreciation of the property, mainly due to the functional obsolescence, physical wear or loss of income, and carried out through the depreciated reproduction cost [25,26]
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