Mallorca real estate market - How experts see the current situation

The Spanish real estate market is in demand like never before. Last year, over 18% of properties on offer went to foreign buyers. Our experts shed light on the situation in Mallorca

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The real estate market in Mallorca and the neighboring islands closed last year with an outstanding result. According to statistics from notaries and land registries, almost 17,800 properties with a total value of 7.544 billion euros were sold in 2022. The number of individual properties thus increased by almost 26 percent compared to 2021.

Minkner & Bonitz
According to Lutz Minkner, managing director of the real estate company Minkner & Bonitz in Santa Ponsa, the result is sensational given the economic environment with almost double-digit inflation rates. However, Minkner differentiates between the domestic market in the lower and middle price segment and the market of international demand, which is in the middle to upper price segment.

According to this, the vast majority (60%) of the 34% of foreign real estate buyers came from Germany; investors from the UK accounted for twelve percent. These 34 percent accounted for an estimated 45% of the total turnover, equivalent to 3.4 billion euros.

These are the other estimates from Minkner & Bonitz:

The year 2023

No reliable figures are yet available for 2023. Estate agents and property developers continue to record good sales, albeit with a sideways movement. A study by the Steinbeis Transfer Institute forecasts a price increase of 10.2% for 2023. Prices are being driven up by the fact that demand is greater than supply. The rise in mortgage interest rates is certainly weighing on the domestic market. The market for foreign demand is less affected by this, as foreign buyers rarely finance.

What is in demand?

Our own findings and reports from competitors show that the foreign market in the first 6 months of 2023 was predominantly in demand for apartments and villas in the price segment between 800,000 and 2 million euros. There are also reports of good sales in the high-end segment between 5 million euros and 20 million euros. We can confirm these figures based on the sales figures provided by Minkner & Bonitz. As always, demand is particularly strong in the southwest with the towns of Port Andratx, Camp de Mar, Santa Ponsa, Costa d`en Blanes, Bendinat and Palma up to Son Vida. But there is also good demand in the center of the island around Santa Maria, in the southeast around Santanyi and in the north around Pollenca.

Wait and see or go for it?

We have known Mallorca's real estate market for 30 years. It has rarely been worth waiting, because Mallorca's real estate market for luxury properties has only gone in two directions for 30 years - up and down, never back. Anyone who needs to finance should calculate with a sharp pencil and then make a decision. However, interest rate cuts are not to be expected in the foreseeable future.

Perfect Mallorca
Estate agent and real estate expert Jürgen Dreckmann from "Perfect Mallorca" in Cala Murada sees the answer to the question of "buy or wait and see" with regard to Mallorca as split:

The argument in favor of waiting is that the proportion of foreign buyers on Mallorca must be higher than that reported throughout Spain. I cannot imagine that only 2 out of 10 properties in Mallorca go to foreigners. One argument in favor of buying: demand has calmed down somewhat, but in my view only in the second quarter. At the moment it is even more pronounced, but this may also have something to do with the summer vacations in Germany. Nevertheless, this lower demand is still being met by low supply.

Rückblick 2023

Demand decreased over the course of the second quarter. Demand remained high in the first quarter.

What's on the cards

I would need a crystal ball to make a precise statement, says Dreckmann. I'm noticing that things are getting tamer in all categories here (south-east). The smaller properties have the advantage that most of them have the money and only have to decide whether or not to buy. Larger properties are often tied to financing, so it depends on the situation of the prospective buyer. Everyone is surprised that the conditions offered by our local banks are lower than interest rates in Germany. For a long time, interest rates were higher here because nobody could finance at 0.5 or 0.6%. Now the tide has turned again. The current mortgage last week: 2.9% variable interest rate.

As I said before, lower demand is currently meeting a very tight supply. This means that I don't expect prices to really move. However, in recent months and weeks – in the hot period – some owners – with the help and support of some estate agents – have got greed in their eyes. Offers have landed on the market that are simply not in line with value and sometimes not even close. These will certainly have to be corrected - or they will simply stand still.

The other side is that if there is a property that fulfils the dream - we don't sell properties that you need, it's the realization of dreams and wishes - then I can only recommend everyone to go for it if the price-performance ratio is right. I do not expect a major slump in the market under the current conditions.

De Haas Immobilien

For De Haas Immobilien in Artà, demand remains strong. However, there has been a slight slowdown, as Frank Steinhoff from DHP explains.

There is money for good money again, even for simple fixed-term deposits. As a result, the pressure to invest has eased somewhat for some potential buyers.

The first two quarters in Mallorca showed a similar trend to the previous year. All types of properties are in demand (apartments, townhouses, chalets, fincas, etc.). However, demand for apartments has increased significantly. We also have a wide range of property price categories. We cannot say anything about the regions in general, as we specialize in the northeast of Mallorca.

We do not see a downward price trend. So if you want to fulfill your dream of a vacation property in Mallorca, you should buy now and not wait.

Schober & Partner S.L.

We are seeing a reluctance to buy, says Managing Director Matthias Schober. This is particularly noticeable in the residential market, especially for new-build apartments. Demand has fallen significantly at the current prices in the new-build sector. We are also receiving this feedback directly from developers.

Second hand in demand
The real estate market for second-hand apartments remains good. Of course, this is only the case if a reasonable asking price is called for, which must be found together with the owner. Fortunately, colleagues in our profession who advertise with unfounded sales promises and unrealistic prices are having increasing difficulties with this method.
There has been little change in the demand from dealers and landlords, probably also due to the fact that there is usually no need to resort to financing. However, the buyer can also be more critical again without having to worry that the next interested party will be ready to buy immediately.

Be careful with estate agents who urge potential buyers to close the deal with other interested parties. This is 99% out of thin air. Nevertheless, it is frightening to realize that there are still many interested parties who do not reject such a sales pitch and tolerate this dubious approach.

The asking price of resale properties is largely in line with the market. If you find the right property, you should buy it immediately. In the case of new builds, it may be that holding back for a short period of time is also successful in terms of pricing. However, this does not apply to all developers and should be checked on a case-by-case basis.  

The location and also the construction work is still very decisive and can justify a comparatively higher offer price.

New government

The new Balearic government will certainly also have an influence on the further development of the real estate market. While the outgoing left-wing government had brought a restriction on real estate sales into play, the new, conservative government does not want to pursue this plan any further.

Recently, the new housing minister Marta Vidal told the newspaper "Diario de Mallorca" that wealthy foreigners were not a problem for "the middle class" on the islands. Buyers from abroad mainly bought luxury properties, Vidal continued.
The real reasons for the housing shortage in Mallorca cannot be concealed by blaming others, she said. In Vidal's opinion, restricting sales is also incompatible with the law.

Nothing against buyers

In principle, the new housing minister has nothing against foreign buyers and investors. She considers herself to be middle class and it doesn't affect her if someone comes and buys a luxury property, a house by the sea or a penthouse apartment in Palma's old town.

Rather, her task is to provide enough affordable housing for the middle class, she continued. Housing should not become objects of speculation.

She called for the long-planned "housing observatory" to be brought into being. This is the only way to get an overview of the situation, said Marta Vidal.

Legal harms

Vidal announced her intention to take massive action against illegal vacation rentals. The possibilities offered by a law passed in 2017 made it possible to rent out vacation apartments practically everywhere. This has led to an increase of around 100,000 guest beds to a total of 300,000, she said. However, these beds are only a fraction of the total illegal supply.

Vidal rejected the possible restriction of real estate sales, as demanded by the Més party at the beginning of last year. This would not be compatible with EU law. The EU Commission had already pointed out in March of this year that the current legislation within the EU simply prohibits restrictions on the movement of money for the purchase of real estate to non-residents.

Marc Fischer