The majority of overseas buyers come from Germany, the UK and Scandinavia.
Second home prices are highest in the southwest
Mallorca’s southwest is among the most desirable residential locations, along with the mountainous Sierra Tramuntana region in the west.
The southwest’s picturesque coastline, traditional villages and superyacht marinas of Puerto Portals and Port Andriano attract many international buyers. Here, sales transaction volume was approximately €720 million in 2018 – the highest number on the island.
What’s more, sale prices for premium properties in Puerto de Andratx were up to €30 million in 2018. The average prices for villas in good locations, such as Bendinat, is approximately €4.5 million. Prospective buyer interest is typically focused on new developments with sea views.
Elsewhere, average prices for homes in Deià, in the heart of the Sierra Tramuntana, are approximately €3.5 million. Buyers here will find unique, historic manor houses with large plots of land often featuring their own vineyards and olive groves. These can command prices in excess of €10 million.
Urban living close to the beach
As well as being a popular location for second homes, the capital of Palma is seeing increasing numbers of high-net-worth individuals making it their primary place of residence.
Its close proximity to the international airport makes Palma an ideal location for urban living while being close to the beach. Buyers are drawn to its coastal location and views across the bay, coupled with its surrounding hotels, restaurants, bars and marinas.
The average price for premium apartments in Portixol is approximately €800,000. The historic Old Town is another sought-after district, boasting locations directly on the coast. Restored townhouses here with modern fittings and amenities are in high demand; average prices for these properties reached €4 million in 2018.
Thanks to the redevelopment and modernisation of Playa de Palma, the city now features four kilometres of white sandy beach with ideal bathing conditions. With the recent opening of several first-class hotels and gourmet restaurants, the property market here promises high development potential.
Palma’s surrounding area is also popular with international investors. To the west of the city is Son Via, which is desirable for its good infrastructure, substantial villas, proximity to international schools and numerous golf clubs. Last year, the average prices for homes here rose by 4% to €4.7 million. Top prices for properties with sea views, a swimming pool, high-quality fittings and luxurious gardens reached as much as €7 million euros. Demand for both classic and contemporary villas is high here.
Prime locations in the north
In the north of the island, the property market – particularly in the region around Pollensa – is seeing dynamic development. In 2018, the market grew by 24% to a total transaction volume of €330 million. Average prices of €5 million were recorded for homes in prime locations, where traditional finca estates with direct sea access are especially sought after.
The high level of demand indicates that prices will continue to rise in 2019, according to Engel & Völkers. This region is also becoming increasingly popular for primary residences helped by infrastructure developments, including the opening of an international school near Pollensa.
Prices in the south and northeast on the rise
The occasional top property can also be found in Mallorca’s south and southeast, with a steady upward trend in the region between Cala Llombards and Porto Colom, with the same being the case around Santanyi. The average price here is €1.65 million.
In coastal areas closer to Palma, such as Son Veri Nou and Cala Blava, house prices have reached an average of €1.9 million and are expected to rise further. This also applies to the northeast, where sales volume in Arta rose from €187 million in 2017 to €200 million in 2018.
Meanwhile, in the centre of the island, buyer interest in Llucmajor tends to focus on large traditional finca estates with expansive plots and good connections to the coast. Last year, Engel & Völkers registered the second highest sale of €15.3 million in the area. The most expensive inland locations for property are Santa Maria and Alaró; houses in these regions reached an average price of €1.8 million in 2018 and cost up to €2.2 million.
Upward trend set to continue
“The stable development of prices on the Malllorcan market in recent years reflects the enormous potential that the island holds,” said Hofer. “Based on the strong interest from affluent investors, Engel & Völkers expects prices to remain high in 2019.”
He says significant changes could reinforce this trend even more. For example, the Balearic Government is taking steps to limit the number of development plots available in prime locations, which will further boost prices.
What’s more, the low Euribor interest rate is creating positive conditions for mortgage loan real estate transactions. Buyers with sufficient private equity are taking advantage of banks’ attractive financing options, which will also have a positive impact on the market.
Investments aimed at improving the island’s infrastructure are planned over the coming year, such as improvements to public transport and Palma airport. There are also new construction and development projects in Palma, including the regeneration of the Paseo Maritimo beachfront promenade, which will benefit pedestrians and cyclists.