_SW Mallorca saw prime sales increase 14% in 2017

What is driving interest in Mallorca? 

Mallorca has successfully positioned itself as a premier second home destination located within a two-hour flight of most major European cities, and offering a Mediterranean lifestyle in a secure and private setting.

The island is attracting new residents as well as second home buyers. It now boasts 14 international schools, good IT infrastructure and enjoys a reliable winter flights schedule making the island, in particular, Palma and the South West, a viable weekly ‘commuter’ option for locations such as London, Barcelona or Frankfurt. 

Which areas and price brackets are in most demand? 

Mallorca’s south western corner represents the island’s most upmarket enclave and stretches across five distinct markets, from Bendinat in the east to Portals, Son Vida, Santa Ponsa and Port Andratx in the west.

New-build properties with sea views generate strong demand, particularly those priced between €5 million and €7 million.

Those seeking value usually target the South East of the island, here values are lower but there are fewer amenities such as marinas, good roads, restaurants etc. 

How are prices performing? 

Prices across the Balearics have been rising since the final quarter of 2014. Although average prices have risen 23% above their financial crisis low, they are still 9% below their peak in the second quarter of 2008.

Average prices across the exclusive South West region increased 8% in 2018 according to the Center for Real Estate Studies, with average values now close to €6,250 per sq m, whilst prime values are excess of €10,000 per sq m.

Mallorca’s property cycle is two or three years ahead of that on mainland Spain. We expect prices to continue rising in 2019 but we may see sales volumes weaken due to a degree of uncertainty in the run up to the UK’s exit from the European Union in March.

Only 1,842 residential units were completed across the whole of the Balearic Islands (Mallorca, Menorca and Ibiza) in 2017, down from 12,162 a decade earlier and this lack of new supply is insulating prices. A building license moratorium remains in place until November 2018 and affects large parts of Mallorca’s prime South West market. 

Who is buying? 

Mallorca has long been a favoured haunt of German and British buyers. In recent years, we are witnessing more Austrian and Swiss buyers as well as Scandinavians, in particular those from Denmark and Norway.

Tourism is strengthening, the island attracted more than 27.9 million arrivals in 2018, a 22% rise compared with 2008 and this is a good lead indicator of demand with German and British representing 65% of arrivals.

Hosting 23 golf courses, the Rafa Nadal Tennis Academy, 400km of hiking trails which take in the UNESCO heritage site of the Serra de Tramuntana, the island is now attracting an increasing number of sporting enthusiasts. 

What are the rules surrounding short-term rentals? 

In July 2018, the city of Palma banned the short-term rental (less than a month) of apartments, although long-term rentals of a month or more are still permissible and do not require a licence.

Outside Palma, short-term lets are still allowed but a license is needed and all rental income has to be declared. The Council of Majorca plans to introduce a holiday rentalzoning scheme for those areas that attract the greatest volume of visitors. 

Read the report in full here

For further information please contact Mark Harvey or Kate Everett-Allen