Residential real estate market on Majorca:
No end in sight for property boom as high demand continues
Hamburg/ Majorca, 9 March 2016. Engel & Völkers Majorca can report another successful financial year in 2015. The 16 residential property shops grew their commission revenues by 22.2 percent to 14.5 million euros (2014: 11.9 million euros). Low rates of interest are helping to boost the Majorcan property market at present, along with the fact that buyers aspire to own a second home on this popular holiday island.
One of the most desirable regions for real estate investments is the southwest. Last year, Engel & Völkers sold five properties alone here with a sale price of between 8 and 10 million euros. The highest sale price achieved by Engel & Völkers was 10.5 million euros, in the exclusive residential area of Son Vida. In the west of the island, prices of up to 17,000 euros were reached. This also marks the highest price that Engel & Völkers registered on Majorca in 2015.
Increase in the number of transactions
Last year, the number of property sales in the southwest rose by approx. 50 percent over 2014. This same percentage rise was also recorded at the centre of the island. It was in this region that Engel & Völkers sold some of the most expensive real estate on Majorca.
“The selling period became shorter in 2015. That is a key reason why the number of sale closures increased,” said Hans Lenz, Managing Partner of Engel & Völkers Majorca Southwest. At the centre and in the south of Majorca, Engel & Völkers brokered 20 percent of the properties sold in less than three months. In Palma, the average selling period was between four and six months.
International buyers are ensuring strong demand
The majority of sales were of second homes. The main buyer groups here include clients from German-speaking countries, the UK, Scandinavia and France. German buyers dominate the market. Nonetheless, large numbers of British buyers are active in the north and west of the island. The strength of the British pound over the euro has led to a tangible rise in interest from UK citizens.
Panoramic views prove a key incentive to buy
Interest is focused on homes in prime locations with exceptional outlooks. In Palma, apartments with balconies or a terrace overlooking the marina are especially sought-after. At the centre of the island, buyers are looking for luxurious estates on large land plots with panoramic views of the Tramuntana Mountains, plenty of space and privacy. In the northwest, demand centres on modern villas close to the sea and traditional finca properties in rural surroundings.
Families are relocating to the island
One clear trend emerging is the increasing number of families choosing the Balearic island as their main place of residence. “These families want to enjoy the lifestyle offered by the island and commute to work in their country of origin,” said Hans Lenz. Majorca’s southwest is particularly popular with this buyer group, due to its good connections to Palma with its international airport, international schools and extensive amenities.
New residential developments set to remain limited
The topography of Majorca restricts the potential for new real estate development. Around 40 percent of the island is protected by nature conservation laws. This is coupled with very strict building regulations. A small number of new development projects are being built, in a bid to meet the high demand for real estate. In the northeast, for example, the luxury Hyatt Park Hotel is taking shape with villa residences. In the Old Town of Palma, historic palaces are being converted into contemporary apartments and penthouses. As the number of desirable locations is limited, areas outside of the classic hotspots are increasingly attracting the attention of international prospective buyers. “Acquiring a property on Majorca will remain a sound investment in the long term, due to the sustained level of buyer demand. We are seeing a particular surge in interest from those countries with a strong currency at present,” Hans Lenz added.