Mallorca property guide
Mallorca is well known by many tourists, especially for its white sandy beaches, the Mediterranean climate, and its wide hospitality offer. It provides a great balance of quality of life, beautiful scenery and urban lifestyle.
With more than 20 million passengers in 2016, Palma de Mallorca’s Son Sant Joan Airport is one of Europe’s leading airports. Many of these tourists end up in one of the many popular tourist destinations like El Arenal, Magaluf, Cala d’or and Alcudia.
Besides the mass tourism, Mallorca also offers beautiful cultural experiences and has a great variety of architectural jewels spread across the island.
If you take a tour through the rural parts of Mallorca and especially around the Tramuntana mountain range, you are certain to come across many of these beautiful properties. Most of them located in the midst of almond, carob and/or olive groves. These mallorcan country houses and estates called “fincas” and “posesiones” in Spanish, resemble the ones you also can find in Tuscany or the French Provence.
Although small, about the size of the ceremonial county of Essex in the UK, Mallorca is an island that has a diverse geology and the different types of properties and architectural styles are much linked to the area in which they are located. For example, in mountainous villages like Sóller or Valldemossa, you will see houses that are built out of solid stones due to abundance of solid rocks, while other Southern areas such as Santanyí or Campos you will tend to see more houses built more out of sandstone or “marés” as they call it in Mallorca, since that is the most predominant building material found in those areas.
Current Market Situation
After 10 long years of European-wide economic crisis, the property market in Mallorca is clearly recovering.
The short-term lets market continues its steady growth, on the one hand heavily influenced by the high demand from tourists during the summer months and on the other hand the purchase of properties as an investment destined for short-term rentals. It is still unsure how the local Mallorcan government will intervene on the new law that regulates short-term rentals and if this law is going to have an effect on the demand for buying properties in Mallorca.
The property market in Mallorca is heavly influenced by the demand from foreign investors mainly coming from the UK, Germany and Sweden who in most cases do not need a mortgage to buy property. Nevertheless, according to the Spanish Statistical Office (INE) during the month of September 2017, 875 mortgages were signed, which is a decrease of 6.6% compared to the same month of the previous year. However, the value of these mortgages was 162,7 million euros, representing a 41.6% value increase compared to last year.
According to Mr. Luis Martín, the president of the Balearic Association of Developers, there is an acute shortage of properties and many islanders are having difficulties to access the property market since prices are sky high.
There is an acute shortage of properties and many islanders are having difficulties to access the property market since prices are sky high
Mrs Pilar Costa, the minister for the presidency and government spokesperson, stated that to relieve the accessibility for affordable housing, the regional government has had to triple in 2 years time the demand for housing benefits.
Property prices in Mallorca
It is clear that there is a high demand for properties especially those located close to the sea. Municipalities like Calviá and Palma are in high demand, while other more inland locations are growing at a much slower pace.
According to the Colegio de Registradores (Association of Property Registrars), in Q3 2017 the Balearic Islands (Mallorca, Ibiza, Menorca and Formentera) was the province that had the highest percentage of foreigners buying properties in Spain. One out of every three houses sold in Mallorca are bought by foreigners.
One out of every three houses sold in Mallorca are bought by foreigners
Here is a graphic showing the property prices per m² of the Balearic Islands compared to that of Spain
As far as the luxury property market is concerned, the most expensive properties are those located on the first-line and those having a high potential of being rented out.
Most expensive locations to buy property on Mallorca
Demand and supply for properties in Mallorca
There is an average stock of properties for sale in Mallorca. In some particular areas, demand for property is very high and there are no properties available causing buyers and investors to look for property in the second and third line from the sea.
The most demanded property type according to Tinsa (the largest valuation company in Spain) are luxury penthouses located in privileged positions, such as first-line properties or properties with unobstructed sea views.
There is also an increased demand for country properties on large plots of land that have been reformed or that are new.
New build properties
Many developments that during the crisis years were stagnant are now being reactivated. There are also new development projects being built in the municipalities of Palma, Calviá and Andratx, which are the most active areas in Mallorca.
New build properties market in Mallorca is mainly driven by foreign investment. Most popular are apartments with an average surface between 100 and 150 m², semi-detached houses of 200-250 m² and big detached country houses of around 500 m².
Availability of plots
There are not many empty building plots being sold. During crisis years many plots were seized by the bank and are still being retained by these banks and the Spanish bad bank called Sareb. Read more about bank repossessions in Spain.
Costs of buying and selling property in Mallorca
When buying a property in Mallorca there are both costs for the buyer and seller. Many of these costs depend on the municipality in which the property is located and on the agreed contract terms.
In municipalities with expensive properties like Calviá and Andratx, the costs and taxes for buying and selling property are higher than other areas, since taxes are based on the appreciation of the property and land.
If you are not aware of the taxes and costs involved it is best to have a solicitor or a gestoría handle the paperwork.
The costs of transferring a property in Mallorca are well above the average of Spain.
The biggest cost for the buyer is the property transfer tax and depends on the value of the property:
- 8% for properties under 400.000 €
- 9% for properties between 400.000 € and 600.000 €
- 10% for properties of more than 600.000 €
For the seller normally the biggest costs are the:
- Capital gains tax
- The agency commission, which in Mallorca averages 5%
- Plusvalía tax
Be advised that many of these costs are tax deductible, so be sure to consult this with a solicitor.
For more info, read more in detail about the cost of buying and selling a property in Spain, which also includes a practical example.
Property market forecast
Overall the housing market in Mallorca looks positive. The average time to sell a property has decreased from last year, but much depends on the demand of the English, German and the Nordic countries, which are currently the main drivers behind the evolution of the housing market in Mallorca. Read more about where do Spanish property buyers come from?.
|REGIONAL PROPERTY PRICES 2017|
|Es Pla||1836 €/m²|
|MOST EXPENSIVE MUNICIPALITIES|
|MOST EXPENSIVE LOCATIONS IN MALLORCA|
|Port d'Andratx||6395 €/m²|
|Costa d'en blanes||5439 €/m²|
|Camp de Mar||5313 €/m²|
|Portals Nous||4885 €/m²|
|Casco antiguo||4476 €/m²|
|Santa Catalina-Es Jonquet||4227 €/m²|
|TOP FOREIGN INVESTORS|
|MOST BEAUTIFUL VILLAGES IN MALLORCA|
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