Post image for Thoughts on the Mallorca property market for 2014

Thoughts on the Mallorca property market for 2014

Mallorca property market, thoughts for 2014

There are seemingly conflicting accounts as to the current state of the Spanish property market. The status of the market in Mallorca however is increasingly clear.

Recent headlines on the Spanish property market vary from those with negative overtones such as “Housing in Spain Still Overvalued”, to more upbeat articles such as “2013 – Great Year for Foreign Investment in Spanish Brick”. One could be forgiven for being confused!.

However, cutting through the headline noise it is plain to see that these differing signals refer to very different types of properties and locations. A more detailed analysis of the information at hand supports our view that the Spanish property market is gradually finding its lowest point in terms of prices, with the most sought-after locations leading and less desirable locations lagging behind.

Mallorca as a whole is one of the most desirable locations in Spain. Moreover, within Mallorca some locations and types of property are more sought-after than others. As noted in previous updates, the increase in activity we have seen throughout 2013 was fueled by international purchasers from a broader range of countries than was formerly the case, focusing very much on the higher profile locations.

Statistics from the General Council of Notaries back this up. At the outset of the Spanish property crash in 2008, a total of 1,642 Balearic Island properties were sold to buyers from overseas. By 2012 this figure had more than doubled to 3,571 and it is likely that the final figures for 2013 will show a further increase.

In simple terms, Mallorca is one of the key locations at the forefront of a gradual turn around in the Spanish property market. Buyers who understand this will be well prepared to seek out and buy the best properties and investment opportunities.

Porto Cristo

Here are a few more words of advice for prospective purchasers:

  • Some properties are still overpriced. Some owners have stuck rigidly to pre-crisis prices. At some point values will once again regain these levels, but even in the best locations this is not currently the case. To buy well you need to have a good understanding of the market in the locality you are buying in. MPP can provide you with such insight.
  • Desirable does not necessarily mean expensive. If you want to buy in the most long-established prime locations, properties will inevitably be at the higher end of the price spectrum. However, some of the less well-known property locations in Mallorca have a lot to offer and are set to become increasingly popular with international buyers. Furthermore, some types of property are less expensive than others; traditional townhouses for example tend to cost less than coastal villas or country houses, have a lot to offer and are also increasingly sought after.
  • Some locations and types of property will take longer to re-establish than others. Lower priced resort areas which were reliant on the holiday rental market and properties outside of the mainstream international market are examples of two sectors of the Mallorca property market where prices will take longer to turn around and could well fall further in some instances.
  • Be wary of “bargain” offers; go for quality over size of discount. If a property has a fair, current market value of Euro 500,000 and is advertised at that price, buying it for Euro 500,000 is likely to prove a good investment. If the same property were advertised for Euro 700,000 and you buy it for Euro 550,000 that’s an impressive 21% off the asking price, but it’s not such a good purchase.This might be obvious but you might be surprised by how widely asking prices vary for similar properties in Mallorca, so understanding the above point and gaining a clear perspective on prices in different locations is key to buying well.
  • Don’t be wrong-footed by repossession. There are still many repossession for sale, but generally speaking they are low quality properties in one respect or another. It is also worth noting that prices set by the banks are often ambitious in relation to current selling prices and they tend not to be terribly responsive to negotiations.
  • Mallorca old town

  • Consider renovating or modernising. Many of the best-located plots were snapped up many years ago and the properties that were built on them are now rather tired. For the same reason, it can be difficult to find new or recently built properties on great plots in the best locations. So there is great opportunity for those prepared to renovate or modernise.

Finally, if you are seriously planning to buy a property in Mallorca, don’t stand on the sidelines dithering as to whether now is the optimum time to buy or not. While I am definitely NOT suggesting you need to rush things, we are not so far from a point when prices will start increasing – at least for the most attractive properties.

Please contact me at kevin@mppsearch.com if you would like to discuss any of the above in more detail, or to enquire about the many advantages to using our highly targeted and personalised service for your own Mallorca property search.