South Tyrol's investment trend: real estate above all!

South Tyrol's investment trend: real estate above all!

In South Tyrol, real estate investment remains the preferred investment for local families. Karl Florian, President of the Chamber of Tax Consultants and Auditors, emphasizes that the majority of South Tyroleans' financial resources flow into real estate. This is in line with a study by Banca d’Italia, which confirms that the total net wealth of South Tyrolean families was around 175 billion euros in 2022, positioning it above the values ​​in neighboring Trentino.

South Tyroleans tend to be risk-averse in their savings and investment strategies. Many people keep their savings in liquid assets in accounts or savings accounts. According to current statistics, Bolzano leads the Italian ranking in bank deposits with an average of almost 30,000 euros per capita. While Milan is a leader in investing in stocks, interest in stock market investments in South Tyrol seems to lag behind the love of real estate. The savings rate in the region is 14 percent, while nationally it is 10 percent. Florian also notices that South Tyroleans have a lot of trust in local banking institutions and are less willing to take risks.

Economic framework conditions

The economic situation in the autonomous provinces of Trento and Bolzano developed positively in 2022, albeit more slowly than in the previous year. Annual GDP growth in both provinces was almost 4 percent, even exceeding 2019 levels. All economic sectors, especially the tourism industry, contributed to this growth. However, it should be noted that inflation, rising interest rates and geopolitical uncertainties are dampening the economic recovery.

Forecasts indicate reduced GDP growth for 2023. While industrial sales only increased slightly in 2022, the construction sector is benefiting from government incentives and thriving real estate markets. At the same time, corporate capital accumulation and fixed investment are burdened by rising liquidity, while rising borrowing costs reduce demand for credit.

Labor market and quality of life

Despite high inflation, which reduced the purchasing power of private households, employment shows a positive trend in 2022. The market witnessed an increase in permanent contracts and a decrease in the unemployment rate. However, the challenge for companies to find qualified workers remains.

In addition, the effects of climate change are becoming increasingly noticeable, with agriculture, tourism and hydropower in particular being severely affected. Policy measures to combat climate change could pose potential “transition risks” for companies. Despite these challenges, the local economy shows remarkable adaptability.

Overall, the region remains in a stable financial situation. Bank credit to the non-financial private sector showed a decline, while credit quality remained high. Despite increased debt costs, the financial situation of companies is stable.

The real estate market and the broader economic conditions in South Tyrol suggest a clear focus on the continuous development of investments and trust in local financial institutions. More and more South Tyroleans are using the opportunities offered by the regional economy to increase their financial security.

Further information on the financial situation and investment strategies in South Tyrol can be found in the reports from Rai News and Banca d'Italia.