The upturn on the Majorcan residential property market continues unabated. In 2013, Engel & Völkers brokered more properties in the premium segment than at any time during the previous 15 years in which the company has been operational on the island. In addition to the number of sales, prices too have increased significantly over previous years.
Top prices per square metre currently range from 6,800 euros in the south, between 7,000 to 8,000 euros in the island’s interior, in the north and in Palma, 10,000 euros in the northeast, 18,000 euros on the west coast, right through to far in excess of 20,000 euros in the region surrounding Palma and in the southwest. For top properties in the exclusive resort of Puerto de Andratx, prices per square metre of as much as 25,000 euros are now being reached. In 2013, the highest price achieved from the brokerage of a luxury property by Engel & Völkers was 10 million euros. The average sale price on the entire island for a villa directly on the coast with five bedrooms and top-quality fittings was 5 million euros in 2013.
34 percent rise in turnover for Engel & Völkers
2013 saw Engel & Völkers register its most successful financial year since 2008, due to the strength of its market position, the increase in sale prices and the rise in the number of transactions in the premium segment. With overall revenues totalling 210 million euros, the 16 Engel & Völkers shops on the island generated an average turnover increase of approximately 34 percent over the previous year (2012: 156 million euros). By far the majority of properties brokered were situated in the southwest of the island, with approx. 40 percent of all revenues generated in this region. Turnover here grew by as much as approx. 70 percent over the previous year. In the southwest, Engel & Völkers has a market share of around 50 percent in the segment for luxury properties worth upwards of 7 million euros.
Investors and private buyers in competition for the best land plots
“This development shows that private owners and investors continue to place their trust in the value stability of the Majorcan property market. The overall stabilisation of Spain’s economy is also having a positive impact on the already high level of demand,” said David Scheffler, Managing Director of the Regional Office of Engel & Völkers in Spain. According to the property expert, reductions in property prices are now extremely rare. Investors and developers are reacting to the high level of demand in the luxury segment. The upturn on the market is resulting in a considerable increase in the amount of new properties being built, and private buyers are competing with investors for the best land plots. “Every once in a while this leads to a veritable bidding battle as investors are worried that they might miss out on potential opportunities. This in turn means that the scope for negotiation is reduced considerably,” said David Scheffler.
Buyers are becoming increasingly younger
The market upturn is being carried primarily by affluent international second home buyers who usually acquire homes without any outside financing. According to the Spanish Association of Notaries, the overall number of property purchases by foreign buyers has doubled on the three Balearic Islands of Majorca, Menorca and Ibiza – from 1,642 properties in 2008 to 3,571 properties in 2012. The main buyer group for holiday and luxury properties on Majorca originates from the German-speaking world, followed by clients from the UK, Scandinavia and Russia. “Most international buyers in the luxury segment are currently over 50 years old. But interested clients are becoming increasingly younger,” David Scheffler observed.
Location, high comfort and convenient connections are most important purchase criteria
Villas and penthouses are most in demand, as well as historic properties in a traditional “finca” style in an attractive location with sea views or sea access, or looking out over the mountains. There is also very strong interest in modern building developments with the latest standards of technology and fittings. These properties are sometimes even sold “off plan”, meaning that the sale takes place whilst they are still in the planning or construction phase. Top-floor apartments affording views of the sea and the cathedral in Palma as well as historic townhouses, so-called “Palacios”, in Palma are also very popular, especially in the sought-after districts of Portixol, Calatrava and Santa Catalina. In addition to the location, the most important purchase criteria for any type of property include high comfort and quality of life, as well as convenient connections to the centre of Palma.
“Good plots in Majorca’s prime locations are becoming increasingly rare. Around 40 percent of the island is designated as a nature protection area, whilst the entire island is subject to very strict building regulations. We anticipate that premium properties in Majorca’s most desirable locations will continue to appreciate in value in the long term,” David Scheffler added.