Mallorca real estate - sparkling wine instead of champagne: luxury in low demand?
The interest in luxury properties in Mallorca is declining. Foreign buyers in particular are increasingly looking for alternatives. One reason seems to be the energy crisis.
After years of a real boom, demand from foreign investors for luxury properties in Mallorca has fallen significantly.
Downward trend
As a market analysis by the real estate association ABINI shows, around 30 percent fewer buyers from abroad were interested in properties on the island in the second quarter of this year than in the same period last year. The trend continued in June, according to the report. Demand here was half of what it was in June 2021, explained the chairman of ABINI, Hans Lenz.
Uncertainties noticeable
There are many reasons for this. On the one hand, the energy crisis due to the war in Ukraine is causing uncertainty among shoppers. Secondly, there is currently a lower supply in the luxury segment on Mallorca, combined with "excessive" sales prices. These are particularly evident in the municipalities of Andratx and Calvià, according to Lenz.
Turnaround since Easter
The development is surprising and drastic in light of the successful times. Just last year, the Balearic Islands had set a record in terms of residential sales value: Purchase contracts with a total volume of 6.6 billion euros were concluded on Mallorca and the neighboring islands. Around 40 percent of the money came from foreign buyers. The turnaround then began after Easter, according to Hans Lenz.
Flocks and losses
The fact is that more and more investors are thinking very carefully about their decision before buying. Whereas a few years ago it was still considered chic to own a property in Mallorca, people are now doing more calculations and apparently searching for the "ideal property" for a long time. Due to the pandemic, many interested parties had also piled up, whose demand was initially processed. Now things are quieter and there is a lack of new demand.
Empty marketBut that seems just right in the current situation, because the market is pretty empty, according to the ABINI association.The number of available properties is now between 25 and 60 percent, depending on the area, according to the association.
Patience is needed
Above all, sellers need to be patient, says Lenz. Optimism is good, but some owners who want to sell need to adjust their expectations to the new reality. The number of customers is no longer infinite.
Impact on pricesAll of this could also have an impact on the future price situation. Spain was already one of the countries with the lowest increases in real estate prices in the first quarter of 2022.According to the Knight Frank Property Price Index, the increase in Spain was just 4.4 percent; the average year-on-year increase among the 56 countries analyzed was 10.2 percent. This put the country in 45th place.
