Unrelenting demand has sent sales and prices to record heights in Majorca.
Balearic Archipelago Hotspot
Majorca is the largest island of the Balearic archipelago off the south-east coast of Spain in the Mediterranean Sea. Other main islands making up the archipelago are Minorca, Ibiza and Formentera. For years, Majorca (also spelled as Mallorca) has been an extremely popular holiday destination. Since COVID, however, Majorca has become a preferred place of international buyers looking for family retreats in secure locations.
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According to a market report from Engel & Volkers, home sales in the Balearics increased a whooping +80% y/y in 2021 with a transaction volume of 6.6B euros or $6,89B.
Due to such a marked uptick in demand, Florian Hofer, the managing director of Engels & Volkers Balearics, said, “This is the first year (2022) in about a decade where the number of properties on the market is going down (due to drained supply). In the past our offices always had about 2,500 properties for sale. It’s just below 2,000 at the moment.”
Majorca’s Advantages Over Other Mediterranean Destinations
Here are just some of Mallorca’s advantages:
- There is no off-season – weather is always beautiful
- Highly developed infrastructure
- Major international airport
- Large complement of international schools
- 40% of the island is protected area from development
- Considerable newly constructed properties being built from older teardowns
- Mountain peaks
Ban on New Holiday Rental Licenses Initiated in 2021
The Balearic government instituted a ban on new holiday rental licenses, required for owners wishing to rent out their properties, last year in efforts to dampen demand from outside investors. This ban is in effect through 2026.
According to Jack Newberry, an associate property agent with Balearic Properties, “Certain areas were getting saturated. There were areas where the streets were absolutely packed because everyone was renting out their properties. But the ban hasn’t really cooled the market.”
Newberry continued, “People know what they’re looking for and they’re not wasting time. Without any kind of pushing, people will go for asking price or over.”
Prices
The most exclusive areas of Majorca’s resort city of Palma, such as Port d’Andratx and Son Vida known as “the Beverly Hills of Palma,” have home prices start at approximately 3M euros ($3.13M), said Engels & Volkers’ Hofer.
Smaller properties available in the city of Palma itself are less costly. Hofer said, “You can get a fantastic penthouse in Palma for 1M euros ($1.043M) or a one-bedroom apartment with a terrace for 400,000 euros or $417,000.
Who’s Buying?
Currently, Majorca’s housing market is predominantly driven by foreign investment from Germany, Scandinavia and Britain. This international demand is so intense that Majorca’s international schools have waiting lists.
The harbor town of Soller draws at least a dozen different nationalities, including Americans, according to Eddy Barrera, the director of Engels & Volkers Majorca West office. Soller, a village heavily influenced by the French, sits in a valley of the Tramuntana mountain range, home to the island’s highest peaks.
Now that direct flights between New York City and the international Palma de Mallorcan Airport have been added, Hofer is anticipating more interest from American buyers.
Buying Basics
Since there is no multiple listing service in Majorca, Balearic Properties’ Newberry said, “You need a good lawyer to navigate, and a good consultant who understands who the people are you need to work with, and the different areas of the island. It’s an Old Word culture with an Old-World system.
Agents’ commissions, paid for by the seller, are approximately 6%. Transaction fees (including notary services and transfer tax typically run 10-12% although new construction may run higher.
Thanks to The New York Times.
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