Alastair Kinloch from Property Works gives his views on the property market in Mallorca for 2017
Mallorca remains an attractive first or second home destination for European Residents mainly due to these key points:
• Mild climate and the benefits of a Mediterranean lifestyle
• “45 city” direct flight airport
• High levels of planning, construction control, protected areas and architecture
• International community
• Excellent infrastructure including roads, the airport and telecommunications
• Good supply of quality housing stock
• Palma is now recognized as one of the best places to live in the world
• Fantastic beaches and mountains
• It is relatively safe
• Excellent local and international schools
• Economic maturity (the Balearics boast the highest number of companies per resident in Spain)
• Excellent leisure activities and facilities including shopping, music, cuisine, sport and sailing
• Relatively stable property prices
Overall, the house price variation is likely to improve in 2016 though it remains shaky. From 0% in 2015 we estimate a slight but important improvement, to around 1.5% this year. This is the first time we have seen a rise in nearly 10 years.
This takes into account
a) The full diversity of the housing stock. The ability of a property to hold its value or increase its value is not the same when buying a quality apartment or villa in sought-after rural Deià or a city apartment in Inca. Blue chip properties have values as high as 27,000€ pm2.
b) The economic situation of the residents to consider. High unemployment, speculation and financial imprudence has led to a significant number of repossessions and bankruptcies. This has led to a large amount of low quality stock flooding the market.
c) The market for overseas purchasers is different in that most have different requirements to residents. Properties such as quality villas and coastal apartments which are well built and in a good area remain an excellent investment and have maintained their value relatively well over the past few years, and are likely to do so in the future. Mallorca is highly dependent on the northern European economies which appear to be in better shape than the overall Spanish economy. New investment is also now being seen from the Russians and Chinese.
d) Quantitative easing is now a reality in Europe with an estimated 600,000 Million Euros being pumped into the economies. This will mean that banks in Spain are slowly starting to lend again and, more specifically, offer more and better deals on mortgages.
With poor returns common on savings and investments, people continue to look at real estate as safe haven and an attractive investment vehicle which they can enjoy. Mallorca has maintained its position as Europe’s top holiday destination for a reason and our bet is that it will stay there for many years to come.