Engel & Völkers Mallorca Report Sales Up in 2014 by 28%
Development of Upper Price Bracket Segment of > 5 Mio. Euro
Average Value of Property Sold Increases from 750,000 to 1.2 Mio Euro
January 29th, 2015. Engel & Völkers Mallorca, the number one international real estate brand on Mallorca with 16 offices throughout the island, is reporting total sales of 259 Mio. Euro (202 Mio. Euro in 2013) up by 28% over the previous year. The trend for buyers to make decisions faster to buy continued as potential investors wanted to take advantage of the stable market and this sales movement has increased the average sales value from 750,000 Euro in 2013 to 1.2 Mio. Euro in 2014.
Hans Lenz, Managing Director, Engel & Völkers South West and spokesperson for E&V Mallorca says; “A new segment of the luxury property market in the 5 Mio. Euro price range is developing in areas all over the island. Prior to 2007, a top luxury villa would have been priced at around the 2 – 3 Mio. Euro mark. However, in today’s market that price bracket has moved up to 5 Mio. Euro. This recent trend, which started in the south west, is now becoming more common place”.
Property Boom in Mallorca’s South West
Over 40% of all property sales on the island by E&V were made in the island’s south west region last year where sales totaled 125 Mio. Euro in 2014 representing a 43% increase over the previous year.
In this region, the new premium property segment of 5 Mio. Euro plus has been the more active; prior to the 2007 boom properties of this value were rare. However, in the last two years there are more properties available of 5 Mio. Euro to meet increasing demand and a new super prime level has developed on top of this of 10 Mio. plus Euro. Last summer the most expensive property sold in this area by E&V was valued at 18.5 Mio. Euro.
In addition, a record square metre price of 27,000 Euro was achieved by E&V for a sea front villa in Puerto Andratx and all sea frontline locations are in demand. The average sales value in the south west reflects this upturn and has increased from 1.36 Mio. Euro in 2013 to 1.9 Mio. Euro in 2014 representing a 27% increase over 2013.
Market Performance around the Island:
In Palma sales are on a par with 2013 rising by approximately 10% for the fashionable Portixol/Molinar areas just outside the Palma’s old town. Demand is focused on penthouses and apartments with outside space and views. Buyers continue to make decisions faster as they realise that property is not staying on the market as long.
E&V has seen a sales increase of 25% over 2013 in the exclusive residential area of Son Vida strategically located between Palma and the south west, developers are buying up prime plots for the construction of new villas from 2 – 12 Mio. Euro. In Son Vida the average sales value last year was 3 Mio. Euro.
Along the West coast area investors continue to be attracted to some of the island’s most picturesque villages including Deia, Valldemossa and across the Sierra Tramuntana to the town of Soller, Puerto de Soller and Fornalutx. Here British buyers dominated the market and the average sales value increased to 1.27 Mio. Euro in 2014.
In the Centre and South of the island E&V is reporting more sales activity for properties and increased demand for plots. Prices are stable for sea frontline positions. Some non European investors from America, Canada and Australia have been encouraged by the Golden Visa and are spending from 500,000 – 2 Mio. Euro.
In the North sales activity has doubled with more renewed interest from British clients. Prices for apartments remain stable in this area with increases for quality rural properties. Last year the Alcudia and Bonaire areas were more popular and are only 40/45 minutes by car from Palma. Buyers are attracted to the great range of property in this region from a 2 bedroom apartment at 200,000 Euro to exclusive luxury villas in top locations at 15 – 20 Mio. Euro.
Along the coast to the North East sales activity has focused on the top end with demand in the 2 – 4 Mio. Euro bracket and there was more interest in good plots. Buyers here were mainly German speaking.
Down to the South East around Santanyi the demand focused on property from 500,000 Euros for a small villa or a well appointed apartment to 1 – 2 Mio. Euro for a villa with sea views or land. European buyers want a sea view whether it’s a villa or a rural property and more investors are looking for a rental investment.
NEW FOR 2015
Beneficial Tax Breaks
This year the Spanish Government has introduced a series of beneficial tax breaks for foreign investors; the capital gains rate will be reduced from 21% to 20% this year and to 19% in 2016. There’s a substantial reduction in Inheritance Tax from 34% to 1% and 7% for transactions to immediate family (spouse and children).
Increased Lending by Spanish Banks
There has been a notable shift by the Spanish Banks for foreign lenders and they are now offering mortgages with LTV up to 70% with fixed interest rates in the first year starting as low as 2.75 % changing to 1.85 – 2% of interest above the Euribor in the following years on a variable mortgage. This year the Euribor is currently at a record low of 0.32%.
The combination of a protected territory (40% of Mallorca’s territory is protected) with local authorities enforcing strict building regulations maintain a healthy level of supply and demand and consequently good plots are at a premium price. In recent years, investors have been buying up existing properties, particularly in prime seafront positions, only to knock them down and start again.
A major trend is the increased demand for cutting edge modern architecture and technology at the top end for bespoke villas in prime locations where the architecture and views are the main focus and the price tag becomes secondary.
German speaking buyers continue to dominate the market although the strengthening pound sterling against the Euro has brought in more British buyers. The Scandinavian market continues to develop and makes up approximately 20% of the market for E&V on Mallorca.
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Our extensive property portfolio and lots of interesting information about the Mallorca real estate market are available on: www.engelvoelkers.com/mallorca/southwest
For press enquiries/images regarding Engel & Völkers Spain and Portugal:
Dominique Carroll email@example.com Mobile: + 34 669 49 77 22.