ROMA – Fewer and fewer apartments with low energy classes will be sold, and at ever lower prices. And in the Mediterranean areas the number of businesses will decrease, especially agricultural, construction and manufacturing ones, which instead will increase in the “temperate” zones; in the South tourism and services will resist. The increase in temperatures does not limit itself to having a negative impact on growth, but redesigns economic activities, increasing the distances between areas of the country: two studies just published by the Bank reconstruct the effects of excessive heat on businesses and on the real estate market of Italy, signed by Michele Cascarano, Filippo Natoli and (only for the first of the two works) Andrea Petrella. The two studies start from an analysis of what has already happened in recent years whenever temperatures have risen above a certain threshold, which is 25 degrees for the real estate market and 30 degrees for the business system. Excessively hot days always tend to increase, and therefore the effects on the economy are more and more frequent, and one can imagine that they will be more and more in the future.
In the real estate market, the heat slows down searches and also the number of sales: the result is an average drop of 0.2% in prices, which persists for at least twelve months. The overall loss in terms of receipts in one year is calculated in the order of 80 million euros. These are medium-sized, because what is actually being offered is a redistribution of demand: with the heat, aspiring buyers tend to look for better equipped houses, class A, B or C, with outdoor spaces and an air conditioning system .
Even among firms there are unbalanced effects, even if we cannot speak of redistribution because what the three economists observe is a progressive reduction of firms in the hotter areas when the temperature rises, and an increase in those with more moderate temperatures than Central and Northern Italy (or mountain, in Southern Italy itself). But businesses are not moving: excessive heat simply accelerates closures and reduces revenues in areas that experience the greatest increases in temperature, while the opposite effect is recorded in temperate areas.
Bank of Italy analysts hypothesize that overall between 2020 and 2031 there will be a 0.22% reduction in businesses due to the heat. But this is an average: in temperate zones there will actually be an increase of 0.27% (the result of a combination of higher revenues of 0.09% and a decrease in expenditure of 0.18%). On the other hand, in the Mediterranean areas an overall drop of 0.35% will be recorded in the same period, the result of a drop in new businesses of 0.2% and an increase in exits from the market of 0.18%.
All of this will happen in the absence of specific interventions, of course: the Pnrr could help companies become more resilient. Otherwise the gap between North and South will widen more and more. Also because agricultural and construction companies will be most affected by the high temperatures, followed however by manufacturing, which is already less widespread in the South. While tourism and services will resist more.
Size and the number of years on the market also play in favor of a lower or greater resistance: the younger ones have a competitive advantage over the older ones which perhaps have invested little over the years to prevent the impact of meteorological phenomena. In fact, the analysis of the financial statements shows how young and large companies are able to adapt better to the hottest days, even increasing profitability; at the other extreme, older and smaller companies see their profits shrink following sudden increases in temperatures.