For what was already the second time, analysts at the Steinbeis Institute Center for Real Estate Studies were commissioned by real estate company Porta Mallorquina Real Estate to examine the market for holiday properties in Majorca. Overall around 4,800 properties being offered by the island’s biggest estate agencies were analysed with regard to location, price and fit-out.
More luxury properties available
A striking point is that the ratio of properties with a luxury or superior fit-out has risen significantly in 2016, making up 7% of properties across the island. For study director Prof. Dr. Marco Wölfle, this is a further sign that the market has picked up: “Owners wanting to sell, who have seen no chance of getting their asking price in recent years, are now putting their properties back on the market.”
The properties on offer are not evenly spread across the island. Like last year, they are concentrated in the island’s Top 3 regions of Southwest (33%), Palma (13%) and North (10%). In contrast, the largest region by area – the Southeast – accounts for only one-twentieth of the properties. Compared with last year, there is a marked trend towards the west coast and the region around Palma. Available properties rose by 5% and 4% respectively in these two regions, while there was a decline in the northern regions.
In the luxury property segment, the Southwest tops the charts. Around 15% of the available properties were evaluated by the analysts as “luxurious”, which roughly corresponds with the standard of a 5-star hotel. In second place, with luxury properties making up 12%, was the Greater Palma region.
For Porta Mallorquina Managing Director Joachim Semrau the results don’t come as a surprise:
“The Greater Palma area is developing a new face. For quite some time now, high demand for properties in direct proximity to Palma with a superior standard of living comfort has not been restricted only to well-known villa suburbs such as Son Vida and Genova, but is also increasingly extending to the northern and eastern outskirts such as Sa Cabaneta and Puntiró, which are part of the Marratxi municipality.”
Illustrating this, there has been a wave of property building going on in recent years on the hills surrounding the island’s capital. In the main, these are comfortably appointed villas or fincas with a view of Palma Bay or the Tramuntana Mountains.
2% price increase in the Southwest and Greater Palma
With regard to prices, the high proportion of luxury properties is having an impact on average square metre prices. In the Southwest, the average square metre price is EUR 5,150 – about 2% higher than last year. Buyers can even expect to pay up to EUR 7,400/m², depending on the fit-out. This means that Majorca’s upmarket zone of Puerto Andratx, Santa Ponsa, Bendinat and Puerto Portals is the only region of the island where prices exceed EUR 5,000. In Palma and the surrounding regions, while prices of over EUR 6,000/m² can be commanded in the luxury segment, average prices are significantly lower at EUR 4,390/m² and EUR 4,180/m² respectively. For these regions too, the study reports an overall price rise of 1% (Palma City) and 2% (Greater Palma).
In the Central region of the island, the Southeast and the Northwest, increased supply is also having an effect on the price structure. In these regions, the average price per square metre has fallen by 3% in the Northwest and Southeast and by 4% in the Central region. The South retains its position as the most affordable region with an average price of EUR 2,960/m² (EUR 2,950/m² last year).
Sea view ensures that values remain stable
A good price indicator for investors is the sought-after sea view. Although investors pay dearly for it – with a mark-up of around 50% – properties with a sea view retain their value. The square metre price for properties with a highly desirable view of the Mediterranean rose in every region. Across the island, the mark-up is 42%, which represents an increase of 1% compared with the year before.
Ideal market conditions for investors
For Prof. Dr. Wölfle all regions in Majorca currently offer ideal entry conditions for investors:
“Those investors who have bought luxury properties in the South can be particularly pleased: prices for properties in this category rose by over 10% in 2016 compared with 2015. But there are also opportunities for “bargain hunters”. While prices will continue to rise in Majorca’s top regions, buying a holiday property will become increasingly affordable in the basic segment. Tempted by the prospect of a profitable sale, property owners are most notably putting their older properties of a basic quality on the market, thus giving small investors access to the Majorcan holiday property market as well.”