Real estate Mallorca - status and development
These days are the time to look back and look to the future. Also and especially for real estate.
The pandemic years were not easy, travel was almost unthinkable, which is why interest in property on the island declined. This year then saw a noticeable recovery. But has the market really recovered? And what will happen next? We asked the most important real estate experts on the island for their opinions.
The result is a serious picture of the current market situation and an interesting outlook for the future.Interest rate developments and political action play a major role in this.
Current events, such as the war in Ukraine and its consequences, the uncertainty surrounding
possible renewed coronavirus restrictions and rising inflation are also causing uncertainty.
All experts can confirm one thing: A property in Mallorca is a safe investment that is independent of developments on the financial markets. And: there are more offers in the six-figure range.
2022 is almost over, how do you see the year and its development?
2022 can certainly be described unreservedly as a seller's market. In the first half of the year, real estate market fever broke out and you had to be quick to get the hammer down on decent properties. Prices could only go in one direction: upwards. On the other hand, ever-increasing prices for new builds created a problem for builders and developers. Despite high market prices for real estate, rising material costs have become a problem. The current interest rate trend has taken the fever out of the market. Investors are no longer driven by penalty interest rates, and when financing is required, interest rates continue to rise. No one can really be sure where the journey will take us. The market situation is currently stable. There are still good prices to be achieved and we expect business to be good for the rest of the year.
What opportunities and risks do you see for your industry in 2023?
2023 also depends somewhat on interest rate policy in the residential sector. In addition, new construction will depend heavily on whether material prices become more predictable again. Inflation will still make the real estate market interesting. I assume that there will also be good demand on the real estate market in 2023. Social housing will have to become more and more important (this is where politics comes in - a populist discussion about expropriation and purchase restrictions will not lead to the desired result) as continued good demand from foreign investors will keep the already high prices stable.
"Search for valuable investments" Litz Minkner, Minkner & Partner
2022 is almost over, how do you see the year and its development?
After 2021 was the strongest year in terms of turnover in our 30-year company history, 2022 has followed on seamlessly, so we expect at least as good, if not even better, results. However, it should be noted that we work exclusively in the luxury segment with international buyers, where the investment driver is the concern about a loss of capital value due to inflation and the search for valuable tangible assets such as Mallorca real estate. We hear from colleagues who work in the purely Spanish market that the market there is stagnating or declining. The reasons for this are the increase in the cost of mortgages due to the rise in Euribor and inadequate support measures by the Balearic government.
What opportunities and risks do you see for your sector in 2023?
Because of the continuing inquiries in the luxury segment, we also see good sales at a high level in 2023. Developments in the entry-level segments and in the purely Spanish market will depend on how the economy and people get through the winter. The gap will – unfortunately – continue to widen.
"The demand is significantly higher than the supply" Markus Weinbrenner, de Haas & Partner
2022 is almost over, do you know the year and the development?
2002 was another very good year for real estate. Demand is still considerably higher than supply. This applies to all properties, whether apartments, townhouses, chalets or fincas, and in all price categories. Existing properties with large pools and vacation rental licenses were in particularly high demand. At the moment, there is a very slight reluctance on the part of German customers due to high inflation in energy prices, the war in Ukraine and the uncertainty surrounding the coronavirus measures in Germany. However, we see no reason why the high demand should be significantly lower in 2023 either.
What opportunities and risks do you see for your industry in 2023?The opportunities for 2023 are the same as this year. Of course, we are hoping above all for more properties to come onto the market. Since corona, the number of customers who are able to spend more time on Mallorca thanks to working from home has also increased. This is also increasing the demand for „winter-proof“ properties.
The risks for prospective German buyers certainly lie in the unforeseeable developments in the areas of high inflation, energy prices, the Ukraine war and coronavirus.
"There is no guarantee" Antonio Rey, Engel & Völkers
2022 is almost over, how do you see the year and its development?
2022, like the years before, was or is a positive year for sales and rentals. Customers continue to see Mallorca as an interesting, beautiful and safe island and can well imagine having their first or second residence here. In terms of development, we are not currently experiencing any decline in our region, but potential buyers may be somewhat more cautious than they were 1 to 2 years ago due to the current economic situation.
What opportunities and risks do you see for your industry in 2023?
There is no guarantee, but as Mallorca continues to be popular, also due to the good flight connections, the opportunities in our industry are positive. There will always be risks, either due to the economic situation or for other reasons; however, Mallorca has often recovered quickly from other restrictions in the past.
Jürgen Dreckmann, Perfect Mallorca
2022 is almost over, how do you see the year and its development?
All in all, 2022 was a seller's market that was felt by both buyers and estate agents themselves - there were not enough properties on the market to meet demand.
In our view, the remaining months of 2022 will be quieter than before, while prices will remain stable.
What opportunities and risks do you see for your industry in 2023?Opportunities and risks in 2023 are very close together in Mallorca. The emerging economic issues in our target markets will change the behavior of both buyers and sellers. The supply of real estate is still low, therefore the market can absorb more real estateoffers without this having a direct impact on price levels and/or buyers.
But, we only sell properties that nobody needs– it is the fulfillment of wishes and dreams, and these have other priorities in times of crisis.
"On the way to the island of the rich" Walter Hüther, Hüther & Partner 
2022 is almost over, how do you see the year and its development?
We had a sharp drop in customer demand of over 60% in the price ranges up to 500,000 euros and even 80% above that by September 2022, which may now be reversed by investors by the end of the year. In terms of transactions, we have nevertheless had a similarly good year so far in 2021. Supply on the real estate market has become tighter and average prices only know one way up!
What opportunities and risks do you see for your sector in 2023?
Inflation will continue to drive prices upwards. Owners with higher market prices will have to adjust their prices to the market price if they want to sell in the short to medium term, because people will no longer buy at any price. Interest in real estate in Mallorca will continue unabated. As average prices continue to rise, fewer and fewer customers will be able to afford a property in Mallorca over time. Mallorca is on its way to becoming an island of the rich.
2022 is almost over, how do you see the year and the development?
The year was very positive, similar to 2021. There is still very strong interest from customers from German-speaking countries in Mallorca properties for sale or long-term rental. However, more and more clients from other Eastern European countries are also looking to invest their money in Mallorca.
What opportunities and risks do you see for your sector in 2023?We have a positive outlook for 2023, as Mallorca offers a stable real estate market and a secure price level for investors. The market will also remain interesting for investors in 2023. Demand is increasing, particularly in the luxury segment and in prime locations. Prices in the mid and lower price segments will remain largely stable.
