The Balearic Islands remain a ‘safe haven’ for property investments, with the overall volume of transactions on the market levelling out as high as €4 billion in 2019, according to the latest real estate report by Engel & Völkers Mallorca.
The ratio of foreign buyers in the region is approximately 40%, accounting for a transaction volume of €1.6 billion euros and Mallorca, in particular, is a magnet for many international buyers and investors.
“The island is known for its superb quality of life, stable prices and strong economy. We are gradually seeing the availability of homes on the market come back in line with the level of demand,” says Florian Hofer, managing director of Engel & Völkers on the Balearic Islands.
With annual revenues of €470 million, the real estate company has been operating successfully on the island for 30 years, having a 30% share of all real estate business with international clients in the region. German citizens currently form the largest buyer group (60%), followed by clients from Spain (12%), the UK (10%), Switzerland (5%), and Scandinavia (4%).
Prices in the southwest and Son Vida remain stable
Premium locations in the southwest – Port d’Andratx, Santa Ponsa, Bendinat and Portals – rank among the most expensive addresses on the island.
Asking prices for villas in the exclusive harbour of Port d’Andratx reached an average of €4.3 million in 2019, while properties in prominent hillside locations and superior new builds with sea views are highly desirable.
Engel & Völkers noticed an emerging trend towards a modern reinterpretation of Mediterranean architecture, with expansive outdoor living areas, terraces and beautiful gardens.
Meanwhile, in the upmarket residential area of Son Vida, just outside of Palma, investor interest is focused on newly built residences, often with avant-garde design, and in direct proximity to the golf course. The average asking price for such properties was €4.7 million last year.
Strong level of demand for Palma apartments
Palma de Mallorca has quickly become one of the most attractive cities in the entire Mediterranean region, with a real estate transaction volume of €1 billion in 2019.
Prime locations include the Génova neighbourhood and the Old Town, where the average asking price for apartments is €800,000. Prospective buyers are particularly drawn to properties that are either newly built or refurbished.
There is also strong interest in residences that offer sustainable and eco-friendly solutions without compromising on quality finishes and contemporary design. The high level of demand means apartments in Palma are usually sold within three to six months.
High average prices across all regions
Buyers drawn to rural Mallorca tend to gravitate towards properties in the traditional coastal towns and historical villages in the west of the island. Villas and finca estates in the region between George Sand, Deià and Port de Sóller commanded average prices of €3.5 million last year.
Properties in outstanding locations in the north sit in a comparatively moderate price bracket. In Pollensa and Alcúdia, for example, villa prices average between €1.5 and €2.5 million. In prime locations around Colònia St. Pere and Artá in the northeast, villas with average asking prices of €1.7 million offer potential for future appreciation in value. New buyers showing increased interest in this part of the island are from French clients.
The region around Cala Blava and Son Veri Nou in the south of Mallorca registered average prices of €1.85 million with a clear upward trend. In the southeast, the areas around Santanyí, Alqueria Blanca and Porto Petro are especially popular. Villas here have an average asking price of €1.65 million.
The most expensive locations for properties at the centre of the island are Santa Maria and Alaró, where villas are offered on the market for an average of €1.8 million.
Outlook: demand set to remain high across the board
Hofer says: “The upward price trend over recent years reflects a general development in the longer term. Owners on Mallorca can continue to rest assured that the price of their property will retain its value.”
Additionally, the growing focus on quality tourism is leading to ongoing investments aimed at improving the infrastructure on the island. Palma is currently undergoing regeneration, while hundreds of millions of euros are being invested in the expansion of the Club de Mar luxury marina, as well as in the regeneration of the city’s Paseo Maritimo port promenade and the Playa de Palma area.
Alongside numerous construction projects in the historic Old Town, several premium residential complexes are currently being built in the family-friendly Bonanova district. The region surrounding Palma and the average locations on the Balearic Island are also set to grow in popularity and see rising prices in the future.
Elsewhere, the Balearic Islands Parliament has announced increased regulation of the property sector in 2020. As a strong advocate for professionalisation of local business, Engel & Völkers has played an important role in establishing the new association of real estate agents known as the “Asociación Balear Immobilaria Nacional e Internacional (ABINI)”.
Its aim is to assist the authorities with its know-how in an advisory capacity, in order to ensure a healthy and stable development of the Mallorcan real estate market in the long term.