The Balearic Islands offer one of Europe’s most stable, secure and attractive destinations for property investment, with a real estate market that remains resilient and dynamic, driving stable values and consistent demand, according to a new report from Engel & Völkers.
The company says that buyers view this real estate not only as a traditional long-term investment asset, but as a permanent place of residence or second home destination.
It says that a robust economy, with 2.9% growth above the national average, legal security, excellent connectivity, and a quality lifestyle supported by excellent infrastructure, helps to drive both strong local and international buyer demand across the island group.
German buyers account for 48% of purchases, followed by the UK (10%).
Over the past five to ten years, prices have increased significantly. In 2025, average property prices per square metre rose by around 9%, while total transactions increased by 6.5%. Across the Balearics, the largest share of transactions is within the €1-5 million range, and entry-level deals up to €1 million remain steady, according to Engel & Völkers. The rental market is also showing dynamic development with rising contract numbers (+9%).
Construction activity above long-term average
According to IBESTAT, a total of 10,775 residential properties were sold in 2025 (+6.5%), while construction activity, with 3,631 new units (+34.5%), was significantly above the long-term average.
A large share of new development is already focused on affordable housing and is being actively promoted by the Balearic government. “This development will have a noticeable positive impact on the entire real estate market,” said Florian Hofer, managing director of Engel & Völkers Balearic Islands.
Mallorca remains the most dominant island, accounting for around 80% of property sales transactions. While Menorca and Ibiza are steadily developing, they have differentiated markets, emphasising that the Balearic Islands are not a homogeneous real estate market.
Menorca has comparatively moderate entry prices and a stable market with 1,701 sales (-1%), remaining above the long-term average, while in Ibiza transactions rose to 1,819 sales (+15%), according to IBESTAT.
Supply shortage benefits long-term price stability
A key feature of the Balearic real estate market is the natural and regulatory supply shortage. Limited developable land, strict regulations and controlled development ensure supply cannot keep pace with rising demand, says Engel & Völkers.
It claims that this structural scarcity benefits long-term price stability and strengthens the value of property investment retention. Additionally, the Balearics benefit from a healthy tourism and services sector, says the report, providing a foundation for sustainable investment that boosts commercial real estate, particularly in prime locations.
