Real estate agent and industry expert Jürgen Dreckmann on the market situation, risks, legal pitfalls—and why sound advice is more important than ever.
Mr. Dreckmann, how would you describe the current real estate market situation in Mallorca? Are there any noticeable trends or shifts in supply and demand?
From our perspective, the current market situation is primarily characterized by a limited supply of real estate. In our more than 20 years in business, we have never experienced this to this extent, despite all the ups and downs.
On the one hand, this drives up prices and tempts some sellers to list their property at an &overpriced price. Unfortunately, there are plenty of real estate agents who go along with this game because they want to list the property and are unwilling or unable to negotiate with the owner.
Which legal changes in the real estate sector will be particularly relevant for buyers or owners in 2025—especially with regard to building codes or energy efficiency standards?
At the moment, I don’t see any new regulations that would bring about any significant changes.
In new construction projects that buyers plan and build themselves, high-quality installations are usually factored into the builders’ plans. If you look at the standards set by developers, there is still a significant need to catch up when it comes to timely construction.
That doesn’t mean, however, that it won’t happen eventually. Unfortunately, depending on the municipality, we’re operating in an uncertain area where things can change quickly.
How are the Balearic Islands government’s latest regulatory measures— z. B. in the vacation rental sector &— on the real estate market?
In recent years, we’ve long been dealing with the issue that no new vacation rental licenses have been issued. We’ve always pointed this out to our clients, and often the desire for a license turned out to be just one possible option. When we explained to prospective clientsexplained everything they needed to consider when renting out a property and what the bottom line ultimately is for properties that the owneruses themselves, the issue of the rental license was usually resolved quickly. Many clients had a misconception about how the process works and what the bottom line is for an owner-occupied property.
In this regard, from our perspective, nothing changes for most prospective buyers.
We have always been critical of prospective buyers who can only finance their real estate purchase through vacation rentals.
What should buyers from German-speaking countries pay particular attention to right now when it comes to financing and tax planning?
When it comes to financing, it is important to understand the differences between mortgage regulations in Spain and those in the buyer’s home country. Financing in Spain offers several significant advantages over Germany, but these need to be explained.
A very important point if you rely on financing:
Do not sign a preliminary contract until you have received a final financing commitment from the bank! If there is any doubt, you risk losing your down payment—which is, after all, 10% of the purchase price.
Tax planning generally applies more to properties in the high-end segment. On the one hand, you should be aware of the available options and their implications. On the other hand, these options usually only pay off when dealing with larger sums.
Given the current wealth tax regulations—which apply only to amounts of 3 million euros or more per person—most transactions aren’t affected by this anyway.
Another issue is the proposed 100% real estate transfer tax for buyers fromthe EU. Here, we’ll have to closely monitor what is ultimately passed into law. The affected group of buyers will then certainly no longer be able to purchase properties without further ado, but will instead have to rely on “structuring options” when making a purchase.
Are there any new or revised tax obligations for non-residents, such as those related to rental income, gifts, or the sale of real estate?
Several new regulations have come into effect this year. We don’t track this for rental income, since we don’t operate a rental business. However, under certain conditions, income from a long-term lease can even be received tax-free.
The tax rate on gifts to close relatives (Tier 1) has long been just 1%, and now, under certain conditions, the tax rate is 0 percent.
And recently, the tax rate for more distant relatives has also been significantly reduced.
On the topic of sustainability: To what extent does energy efficiency now influence property values on the island—and which technologies are in particularly high demand?
In the lower and middle segments, this doesn’t really play a role in the purchase decision. However, once these properties are renovated, they are modernized accordingly and often brought up to current standards.
In the high-end segment, customers place much greater value on modern and efficient amenities. This is then reflected in the price accordingly. For older buildings in this segment that lack these features, this can sometimes lead to significant price reductions, unless this is offset by a prime location.
What is the current situation regarding the supply of building lots in Mallorca? Are there regions where the market is particularly active right now—or is new construction becoming increasingly difficult?
My perspective pertains to potential private homebuilders.
There is sufficient building land available—in our view—if attention were paid to all the vacant lots that currently exist.
A particular issue in our area of Manacor is the building department. Whether due to insufficient staff or improper staffing, it takes an eternity (sometimes as long as 4 years) for a developer to receive a building permit.
Added to this are &“interpretations” of rules and laws triggered by new staff members in positions of responsibility. In all these years, we have never referred as many cases to lawyers as we have since mid-2024.
In Cala Murada, we’ve been discussing the lack of a sewer system, which means that building permits are not being issued—or are only granted if the developer installs the sewer system at their own expense and “donates” it to Manacor.
In Manacor, public protests are now gaining momentum. A meeting on this issue was held in January.
I’m also familiar with this issue in a milder form from other regions, and there, every potential homebuyer will have to keep a very close eye on it before making a purchase. This is only possible with professional support.
Of course, different rules apply to large developers
What advice do you give to homeowners who are planning to sell in the near future? Are there legal or tax optimization strategies that are often &overlooked?
That really depends on the individual circumstances of each buyer. Depending on the case, you have more or less „flexibility“.
And yes, I would think that most real estate agents aren’t aware of these options. Since we also operate a service division similar to a full-fledged gestoria, we’re positioned differently in terms of expertise and can better advise our clients.
Are there typical mistakes that real estate buyers in Mallorca keep making despite being well-prepared—and how can these be avoided?
One of the mistakes is letting a seller or real estate agent pressure you: "You have to decide now because there are other buyers interested. ...We’ve already received offers from others, but we’d really like to sell it to you.....That’s not a big deal—that’s just how it is in Mallorca...."
I fully understand the buyers’ emotional state. But while that’s good when making a choice, it’s bad when closing the deal. Because when closing the deal, you should keep a clear head and only sign once everything has been thoroughly considered and clarified.
You should also under no circumstances sign a preliminary agreement or option contract until you have a financing commitment from the bank, if you’re relying on a mortgage. It’s better to lose the bank’s fees because the property is no longer available than to lose the 10% down payment because you can’t close the deal.
In conclusion: What developments do you expect for the second half of 2025 — will Mallorca remain a stable and attractive real estate market for investors and private buyers?
Yes, looking into the crystal ball… we expect Mallorca to remain stable and continue to be the preferred destination for many prospective buyers looking to invest in vacation property. However, not everyone will be able to fulfill this dream as easily as they used toas easily as before. The market will continue to change. But we’re looking forward to it with optimism.
Interview with Jürgen Dreckmann, Perfect Mallorca S.L.
Via Europa 45-6
07688 Cala Murada
Tel. +34 971 82 81 24
Fax +34 971 82 81 45
office@perfectmallorca.com
