Mallorca property market update – 3rd Qtr 2019
The Mallorca property market has proved its resilience over the past five years. Moving out of the crash of 2008 earlier than most other locations and rising strongly since, Mallorca has stood out among popular locations for international buyers. Here’s our take and the current market and thoughts as to where it goes from here.
Mallorca has been one of the strongest property markets in Europe over the past five years. Average price rises have outstriped most other locations in Spain and, for that matter, Europe. Even when other prime markets such as London have begun to stagnate, buying interest in Mallorca has remained strong and stable.
- The greatest focus has been on long-established prime locations from Palma along the southwest coast to P Andratx. Also Pollensa in the north and Soller and Deia on the northwest Coast. These places have seen the most significant property rises.
- Strict planning controls and a limited stock of available properties has led to redevelopment of many older properties. In prime spots such as Bendinat and Puerto Andratx, buyers have been prepared to pay market value for an existing property, only to raise them to the ground and build a new, luxury property in its place. A demonstration of the value placed on having the best, prime, location.
- Locations that were once not so widely recognised, such as Sol de Mallorca on the southwest coast and and Son Veri Nou to the east of Palma, have matured. High quality development projects have been completed, residential communities now feel lived in, putting these locations securely on the map for prospective buyers.
- The east and southeast coasts continues to be popular. Prices are moderately lower here and have risen proportionately less than in Palma and the southwest. However, developments such as the Cap Vermell Country Club in Canyamel represent significant investment in the area. Similarly, increasing numbers of the older resort properties are being remodelled and upgraded.
- Similarly, the south of the island, which has received less interest from international buyers in the past, is becoming of more interest as prices rise in other areas.
- Mallorca has continued to attract greater numbers of new permanent residents. Several new international schools have opened including one between Pollensa and Sa Pobla in the north.
- The origin of buyers has become increasingly broad. Whereas in the past, British and German buyers accounted for most international sales, buyers from many other European countries and other parts of the world now represent a significant portion of the market. Scandinavians in particular have developed a strong presence. This wide international buying base is one of the things that gives the Mallorca property market its stability.
Prices are now approximately 23% above the low point reached after the financial crisis of 2008. Prices in the southwest increased by a solid 8% in 2018. It’s worth noting however that prices are, on average, still around 9% below the peak of 2008.
Having said this, there are now indications that the rate of increase is levelling off. Recent numbers from the National Statistics Institute show that, during the 2nd qtr of 2019 across the Balearics, there was a 5.3% increase compared with April-June 2018, the lowest quarterly rise since the second quarter of 2016. It is only an indication but we do expect the market to cool off slightly at least. In our view this would be a healthy thing for the market longer term.
What about Brexit?
It would be remiss not to at least touch on this. The uncertainty surrounding Britain’s exit from the EU is certainly leading many UK buyers to hold back. It’s completely understandable that this is the case, particularly when coupled with the resulting unfavourable exchange rate.
However, there is nothing to show that Brexit itself has affected the market in Mallorca in any significant way. The level of interest from prospective British buyers appears still to be strong. Visits to the major Spanish property portal Kyero published earlier this year, show British buyers to make up nearly a 25% of all visits to the site. 59.8% are from the rest of Europe and 16.4% from the rest of the world.
More important perhaps are fears of an economic slowdown in Europe and elsewhere. Should this take hold, property markets everywhere will be affected. As a counter to this, Mallorca is seen as a “safe haven” in terms of property investment. While most of our clients buy for lifestyle reasons, knowing they are investing in a relatively stable and secure market is undoubtedly one of the attractions. in our view this is even more so the case now than it was in the past.
We see a period of consolidation with price increases levelling out somewhat. We may also see some of the more ambitiously priced properties being brought more inline with actual market values. Whether we see prices falling more broadly remains to be seen but, as things stand, this seems unlikely.
When some kind of clear direction is brought to Brexit there is likely to be an uptick in the number of UK buyers. However, we wouldn’t expect that to dramatically affect prices.
However, buyers should recognise the statistical trends can only show a broad picture. The best locations in Mallorca will fare better than the Balearics as a whole. Furthermore, values vary greatly even within individual municipalities. This goes down to a street level, with features like sea or mountain views generating notable price differences between properties that are otherwise the same. The more on-the-ground research you can do (or ask us to do for you) the better prepared you’ll be to find the right property, in the right location, at the right price.
Photo credit. Property market – Photo by Lukas from Pexels