Strengths of the commercial real estate asset class on Mallorca

Your capital investment in Mallorca: Commercial real estate as a worthwhile alternative to residential properties?

Anyone who wants to invest their capital in real estate on Mallorca as a private or institutional investor usually has the choice between residential and commercial real estate, such as offices, retail space or logistics real estate. In addition to the sometimes rapid developments on the market for privately used properties on the Balearic Islands, the great potential of Mallorcan commercial real estate often remains undiscovered, so that many valuable opportunities can still be developed in this segment. But how do investments differ from residential and commercial real estate? What are the benefits of renting commercial property in Mallorca? Commercial real estate expert Engel & Völkers Commercial Mallorca answers these and other questions in this blog article.

High demand for commercial property rentals in Mallorca due to new business trends

As megatrends of the 21st century, globalization and digitization penetrate almost all facets of economic value creation - independent of location and industry. On Mallorca, too, there is a growing need for modern, multifunctional commercial property investments that are more capable than ever of securing the business needs of retail, logistics, production, tourism and the service sector now and in the future. The island's capital, Palma, in particular, is preparing to take on the pioneering role in terms of innovative strength and the development of ideas with the publicly funded business and technology district Nou Llevant. With the help of an EU subsidy of up to 77 million euros, the best conditions are created here for companies that are actively working on the conception of a digital and sustainable world of tomorrow. In the coming months, the Palma Tech campus will be built here as part of the renowned Balearic University, two HUBs for digitization and energy, and an extensive contingent of living space.

The Covid-19 pandemic is also considered an important trigger for new economic impulses, be it through new working models such as desk sharing, agile project development or the emergence of new business ideas that adapt to the current zeitgeist. So if you value technical up-to-dateness, flexibility and an attractive location when buying a yield-oriented investment property, you will benefit from high demand, which can easily be converted into profitable rentals. Whether office space, warehouse, retail premises or hotel complex - Engel & Völkers Mallorca Commercial is happy to help you choose the right commercial property for your investment.

Long-term retention of tenants in commercial properties on Mallorca easier to achieve

The rental of residential properties is often associated with a significantly higher tenant fluctuation than is the case with commercial properties: While private tenants of a house or apartment often move out again after a few years or even months due to changed living conditions, companies tend to calculate for the longer term. Anyone who decides to rent office space, a retail property, a hotel or medical offices on Mallorca usually relies on a solid, long-term solution that promises planning security and development prospects at the location. For this reason, rental agreements for commercial properties in Mallorca are usually concluded for a longer period of 10 years or more. For landlords, this means significantly less effort when looking for suitable tenants - once a solvent company has been found that operates efficiently, long-term security of regular income can be expected. If you decide to rent a commercial property with Engel & Völkers Mallorca Commercial, we will support you from tenant acquisition and viewing appointments to the drafting of the rental contract and will also be at your side with advice and assistance during the ongoing rental relationship. Contact us!

Buy the right commercial property in Mallorca with our investment experts

Another advantage of commercial properties compared to residential properties is their high resistance to external location changes, which should be considered differently from situation to situation. While houses, villas and apartments can certainly lose their attractiveness due to increasing development in the vicinity or a restricted view of the Mediterranean coast, this only plays a subordinate role for office space, warehouses or medical practices. In restaurant or hotel investments, this is of greater importance. Before purchasing a commercial property as a safe and sustainable capital investment, it is therefore important to carefully weigh up the expected development of the location, the competitive offer and the projected return expectations, taking into account the specific requirements of the industry.

With Engel & Völkers Mallorca Commercial you have found a contact who will provide you with qualified advice on your upcoming decision. With many years of experience and precise knowledge of the market in all parts of Mallorca, we support you step by step in setting up your low-risk and growth-oriented capital investment on the largest Balearic island. Regardless of the intended investment sum and your target industry, we design a complete investment strategy for you, which is characterized by maximum individuality and efficient use of capital. Would you like to find out more? We will be happy to arrange a free and non-binding initial consultation with you soon at +34 871 62 00 83! Regardless of whether you are a private or institutional investor – Engel & Völkers Mallorca Commercial looks forward to realizing your ambitions with you soon!