If you’ve ever dreamed of owning property in Italy, the country’s picturesque, lesser-known towns might have already caught your eye. While Italy didn’t make the cut for my fiancé and me as a long-term home (you can read why in another blog), it offers intriguing opportunities for real estate investment—especially outside the tourist-heavy cities of Rome and Venice. Towns like Terracina and Passignano sul Trasimeno offer a blend of affordability, natural beauty, and untapped investment potential.
In this post, we’ll dive into Terracina’s Airbnb potential, the challenges of long-term investment, and whether these charming Italian towns are worth turning your dream into reality—or best left as a daydream.
Discovering Terracina: A Coastal Haven
With a population of around 44,500, Terracina is a charming coastal gem that strikes the perfect balance between beauty and livability. It’s not as fast-paced as major cities like Rome, Florence, or Milan, but it’s far from the quietude of tiny villages with a few thousand inhabitants. The town offers just enough to keep you engaged, without feeling overwhelmed or bored. Whether it’s the relaxed ambiance, vibrant local shops, or stunning mix of beaches and mountain views, Terracina presents an idyllic escape, making it an ideal place to unwind while enjoying a variety of activities and natural beauty.
In fact, we were so captivated by its charm that we stayed there the longest throughout our trip. The Christmas decorations, glowing streets, blossoming orange trees, and warm winter sun made for a magical experience. While much of Europe shivered in the cold, Terracina offered a refreshing winter retreat.
Here’s a short video I made during my visit, inspired by the mesmerizing oranges adorning the streets—it also gives a sneak peek into the town’s beauty.
Potential Short-Term Rental Investment in Terracina
With its undeniable charm, I was eager to explore Terracina’s potential for Airbnb short-term rentals. The town truly shines as a summer destination, drawing tourists who flock to its sandy beaches and serene mountain views. The Airbnb numbers for the high season look promising:
- Average Summer Rental Price: €110 per night
- Occupancy Rate (Summer): ~52%
But here’s the exciting part: After experiencing the steady flow of winter tourists while we were there and drawing from my property management experience in Tbilisi, Georgia, I believe there’s untapped potential throughout the year. With the right strategies, it’s possible to make Terracina a year-round rental success.
To capitalize on this, consider:
- A unique property that stands out.
- Top-tier customer service that keeps guests coming back.
- Smart marketing strategies, like targeting digital nomads on Facebook groups, especially for winter rentals. Offering a fully equipped, beautiful property for €500-€600 per month could attract long-term tenants during the off-season.
By embracing these strategies, I believe you could boost occupancy rates to 60-80% year-round.
For those ready to put in a little extra work, purchasing older properties with good bones and converting them into stylish, independent rental units could be a game-changer. With the average price of €2,587 per square meter (Global Property Guide 2024), this investment could generate rental yields of 6-10% (before taxes) or potentially even so much higher.
BUT……….
Challenges: Demographics and Long-Term Viability
While Terracina’s charm is undeniable, the town reveals critical risks for investors:
1. Aging Population
Walking through Terracina, it’s impossible to ignore that nearly 90% of the locals are over 60 years old. This reflects a nationwide trend—Italy’s population is shrinking at one of the fastest rates in Europe.
- 2022 ISTAT Data: Italy lost 179,000 residents in a single year.
- 2050 Projection: Another 5 million people are expected to disappear from the population.
While I had heard plenty about Italy’s aging population, I had never experienced its full extent until I arrived in Terracina. My previous travels to major tourist hubs like Rome, Venice, and Sardinia never gave me a firsthand look at the severity of the issue.
With younger Italians migrating to major cities or abroad, towns like Terracina face an uncertain future. As a result, it’s becoming more challenging to find reliable and skilled local property managers, which could pose a significant hurdle for remote investors.
2. Declining Demand
Italy’s smaller towns face significant demand challenges:
- Who will rent or buy these properties in 10, 20, or 30 years?
- Could these towns become near-deserted, like the villages featured in Italy’s infamous €1 house scheme?
*For Those Who Don’t Know: What’s the €1 Home Scheme?
To combat depopulation in rural areas, the Italian government launched a program offering homes for €1, with the condition that buyers renovate them. While this initiative attracts global attention, it highlights the severity of Italy’s demographic crisis—especially in small towns. Many of these areas struggle with declining populations, limited job opportunities, and dwindling public services.
If you’re still not convinced, take a closer look at Japan—its aging population has left many once-beautiful small towns deserted.
3. Liquidity Risks
One of the most concerning issues in these small towns is liquidity. While buying property in Italy is often straightforward, selling can be a slow and frustrating process, particularly in less popular areas. What happens if you need to cash out or redirect your investment elsewhere? In these markets, getting a fair price—or even finding a buyer—can take much longer than anticipated.
The Bigger Picture: Should You Take the Leap?
While these challenges aren’t meant to dissuade you, they serve as an essential reminder to view the full picture before investing in Italy’s hidden gems. Terracina and similar small towns are undoubtedly beautiful, but they come with risks that must be considered. A shrinking population, declining demand, and liquidity issues are just a few things to factor in.
For Successful Investment in Italy’s Hidden Gems, Adopt a Hands-On Approach:
- Analyze Local Demographics: Understand the population trends in your chosen area. Websites like Eurostat provide detailed reports that can inform your investment decisions.
- Be Aware of Risks: Property value appreciation may stagnate, and liquidity could be an issue. Make sure you account for these potential challenges upfront.
- Develop a Solid Property Management Strategy: Invest in property management tools and resources to streamline operations, maximize rental income, and ensure great guest experiences, especially during the off-season.
My Verdict: Big Cities or Small-Town Charm—Which is the Smarter Investment?
While small towns like Terracina may steal your heart with their charm and offer an affordable entry point, larger cities such as Milan, Rome, and Florence, or renowned tourist destinations like the Amalfi Coast and Sardinia, present far better long-term investment prospects. These cities offer consistent rental demand, year-round tourism, and greater economic stability—though at higher price points.
Remember: Affordable prices alone don’t guarantee a successful investment. You need factors like population growth, sustained demand, and long-term appreciation to secure a wise investment.
For now, small towns in Italy aren’t part of my investment strategy. As I’ve discussed in previous posts (here, here, and here), my focus is on major economic hubs with steady population growth—unless an exceptional opportunity in a smaller town presents itself that I just can’t pass up.
If you’ve had success investing in small towns in Italy—or anywhere else—I’d love to hear about your experience. Feel free to share your insights here or privately, as I’m always eager to learn from those who have successfully navigated this path.
