Balearic Real Estate Recovery
According to figures published at the end of September demand for Balearic property continued to flourish during what was, undoubtedly, a challenging summer for the traditional buyer demographic. A further fall in the value of the pound in August was expected to reduce the potential of the British market and experts were predicting this to lead to decreased income from sales but, despite the fact that British buyers demanded better deals, this was not a key indicator of the overall trend. There is no evidence of prices falling as Balearic properties have continued to be as be as highly sought-after as ever. The average house price showed a rise of 2.5% on July, although there is some evidence of UK buyers adjusting their property expectations in line with smaller budgets, with Sant Josep de sa Talaia in Ibiza recording a fall in property value of 4.55%.
Over 55% of sales were for apartments and townhouses in August and nearly 60% were for real estate priced at under 150,000€. This doesn’t mean bad news for luxury properties because enquiries for houses priced at one million plus euros also rose by 53% in August and the average value of property in Palma de Mallorca rose by 7.5%. International demand continues to be dominated by larger European countries, with Germany, Holland and Belgium leading the way whilst enquiries from France have shown a slight decline. The National Institute of Statistics recently released the second quarter house price index showing an annual rise of 7.8% in Madrid and 5.5% in Catalonia, which can be seen as an indicator of the continuing growth and recovery of the Spanish property market.
Ibiza recorded a staggering 5,332,497 passengers travelling through its airport during the first eight months of 2016 with almost 1,400,000 in August alone. This represents an increase of almost 7% compared with the same figures for 2015, whilst hotel occupancy was up 6.5%, at an impressive 95.4%. The statistics show that the Balearics are increasing in popularity despite the weak pound and the newly introduced tourist tax. Unexpectedly, visitors to the capital, Ibiza town and its surrounding regions of Figueretas and Playa D’en Bossa saw a slight decline in August 2016 compared with the previous year. This can possibly be attributed to the fact that accommodation in this area has a higher price tag and is largely populated by a younger crowd who may have returned to studies at the end of August.
The surge of visitors to Ibiza may be caused by a reluctance, on the part of tourists, to visit some of the previously popular eastern Mediterrannean resorts which have been shaken by political and social instability. What does this mean for property investors? New laws have obliged home-owners in the Balearics to be licensed for tourism and registered before embarking on holiday lettings, which inevitably leads to taxation. The holiday rental market, however, can still prove lucrative, leaving property owners free to enjoy the island, its sunny climate and stunning scenery, once the high season crowds have dispersed.
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