The main objective of this report is to provide a guideline for vendors and potential investors into the current market situation for quality residential property on the island. This year has certainly started with more activity and optimism for Mallorca’s second home residential market. All 18 of the Engel & Völkers offices throughout the island report a surge of increased requests and visits over the first half and in some areas sales have doubled over the same period as last year. Since the end of 2008 vendors have had to adjust their pricing strategy to sell in the current market environment and prices overall have reduced by an average of 15-30% depending on location. Today, the general picture is that prices are not decreasing further, that the market is stable with price levels (in some areas) of 6/7 years ago. The increased sales activity also reflects what our customers believe; that prices will increase next year so now is the time to invest.
Still Good Long Term Investment Potential…
According to a property article in the Financial Times (February 5th, 2010) which cites Mallorca as a good place to invest; “You have plenty of choice and, if you do your research, you can find prices of 7-10 years ago. Mallorca will always be popular with affluent buyers. Prices will rise as the economic situation brightens“. Furthermore, The Daily Telegraph newspaper recently rated Mallorca the fourth best place to live in the world *12th April, 2010. According to E&V Mallorca spokesperson, Daniel Chavarria Waschke; “The residential market here is stable and the Engel & Völkers offices are expecting serious buyers who want to invest in Mallorca over the coming months. So the prospects look good and we are cautiously optimistic for the rest of the year”.
Bargain Hunters Beware!
Among the international community, German speaking and Scandinavian buyers dominate the market at this time with less British clients than in previous years. Clients should be aware that more price reductions are unlikely to materialise at this stage as owners have, in most cases, already reduced prices and would rather sit and wait, or rent, than succumb to further discounts.
Mortgages Now Available
Spanish banks have started to lend again to non-residents for up to 70% of the property value and approximately half of the buyers will use the mortgage option for tax relief purposes. Demand is focused on prime property, mainly villas, well located fincas and penthouses, particularly on the seafront or with good views.
New Tax Rates
As of July 1st, the standard rate of Spanish Government Tax (IVA) will rise to 18% from 16% and the reduced rate will rise from 7% to 8%. Property buyers will pay 1% stamp duty plus 18% IVA on purchases of building plots. Buyers of new developments or property, which are being sold for the first time, will pay 1% stamp duty plus 8% IVA. For re-sales, the property transfer tax remains at 7%.
Local & International Investment Continues
International, national and local investment continues on the island with Palma’s new hospital near completion; the Palma Congress & Exhibition Centre is scheduled for completion in 2011; the super yacht designer marina at Puerto Adriano will open in Spring of 2011 and the new Jumeriah Puerto Soller luxury seven star hotel will open in Summer 2011.
A top destination for a quality Mediterranean lifestyle
Over the past 15 years Mallorca has successfully transformed the island from a sun and sea holiday destination to a year round location with one of the most sophisticated infrastructures in the Mediterranean. The island is easily accessible from all over Europe and beyond with a modern international airport and features a diverse range of landscapes including the breathtaking Sierra de Tramuntana mountain range, beautiful coastal areas, stunning beaches, traditional Mallorcan villages and the elegant capital of Palma. Mallorca off ers an excellent range of hotels, restaurants, shopping, a year round cultural and activity programme and an ideal place to practice sports with 23 golf courses and 44 marinas.
Price Orientation – our report
The Engel & Völkers Market Report provides guide tables to approximate average prices in each respective area to off er a better idea of price orientation. Therefore, these tables should not be taken literally as valuations fl uctuate depending on location, views, construction, quality, sun orientation, property features and land.