Quarterly Report and Balearic Forecast
The latest quarterly report on the Spanish property market shows continuing demand overall, but with slight decline in some key areas. The figures published in October show a continuation in the trend towards the purchase of new builds, it seems they are still the property of choice for many buyers. There is some concern, however, over the discrepancy in value between new build or off plan homes and the value of their resale equivalents.
An important consideration for potential investors in brand new houses is the length of time it will remain in the ownership of the buyer, as there is often a lapse of several years before a property yields a decent return on the initial investment. This is of little concern to any buyer who wants a permanent residence or long-term holiday home in Spain as values look set to continue their upward trend. Supplies of resale properties throughout Spain is generally higher than that of new builds and demand for such homes has been reduced by the greater interest in the latter resulting in a more realistic purchase value.
When looking at how the property market in the Balearics compares with the rest of Spain it has to be remembered that, due to the popularity of the islands as holiday destinations, a high percentage of investors in real estate are from overseas and this fact is reflected in the prices of holiday homes. Depending on location and condition of the property, average prices, this summer ranged from 2,200€ per square metre to over 8,300€.
Figures published in August from a survey by a leading property portal indicated that the whole island of Ibiza has prices per square metre comparable only with the highly sought-after regions of Mallorca’s southwest and Palma, whilst on Menorca prices are relatively equal across the island and similar to those in the cheaper regions of Mallorca. Ibiza is the smallest of the Balearics and, as a luxury island, has some 80% of its properties for sale in the highest price bracket.
Menorca, on the other hand has only 10% of properties classified as luxury homes, whilst Mallorca falls somewhere in between with 50% of its properties in the high-end category. On all three islands, there is a notably smaller supply of holiday homes in the northern regions. In Ibiza, the Sant Joan area accounts for only 4%, Mallorca’s north has only 10% of properties for sale and northern Menorca 12%. Together, the Balearic Islands have more than 1,100 km of coastline and the highest surcharges for direct coastal or beach locations were shown to be in Mallorca with a supplement averaging 4,700€ per square metre.
All in all, demand for property remains high in both Mallorca and Ibiza, with a key difference. In Mallorca, surveys have shown no regional focus in property sales. The finca in the country would appear to be just as sought-after as the old town apartment in Palma or a seafront villa. On Ibiza, demand is currently much higher than supply, and prices are expected to continue to rise. A healthy outlook, then, for the Balearic property market as we approach the end of the year and with further projects for completion over the winter it would seem that now is the time to consider investing in an Ibiza property either as an all year round dwelling or a holiday home on one of these idyllic and ever popular islands.
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