The slump in demand for private vacation accommodation is prompting many home and apartment owners to seek their salvation on the regional rental market.
After years of rolling suitcases, Mallorca's rental market is on the move again. The reason: Due to the corona-related absence of thousands of tourists who, thanks to AirBnb & Co., have preferred to check into private accommodation instead of hotels in recent years, more and more owners are currently deciding to put their properties, which were previously offered for vacation rental, into long-term rental. Experts are certain that the resulting increase in supply will lead to a fall in rental prices in the short term.
For example, the chairman of the Balearic Real Estate Association (ABSI) Toni Gayà announced in mid-September that, depending on the municipality, up to 40 percent of all properties that were still on the market as vacation homes until the beginning of the year have recently been offered as long-term rental properties again. „Due to the growing supply, prices are expected to fall in the coming months“, says Gayà.
Following Madrid and Catalonia, the Balearic Islands have been one of the most expensive regions in the national rental price comparison for years. According to the Spanish statistics office, the average monthly rent on the islands rose by over 15.5 percent between 2015 and 2018 alone. It is currently „officially“ put at 620 euros (Madrid 780 euros, Catalonia 650), a value that sounds downright flattering at first glance, but is not very meaningful. This is because an average value distorts reality, particularly in a rental housing market such as the Balearic Islands, which is subject to strong local fluctuations. In other words: The real average price of a monthly rent in vacation and second home strongholds such as Palma, Calvià or Andratx is almost twice as much, while in smaller, remote villages such as Es Migjorn on Menorca it is just 350 euros.
The end of the housing shortage in sight?
In Mallorca in particular, the galloping prices and the simultaneous shortage of long-term rental accommodation in Palma and many other places frequented by suitcase tourists have led to a real housing shortage in recent years. And not only among local normal earners or welfare recipients, but also among seasonal workers, skilled workers or even public employees from the Spanish mainland. Thanks to international real estate brokerage platforms on the internet, which have enabled practically every homeowner between Palma and Pollensa to enter the lucrative vacation rental business with just a few clicks of the mouse, the supply of reasonably affordable long-term rental properties has melted like ice cream in the sun over the past five years.
It is not yet possible to predict how low the current crisis in the private vacation rental market will cause prices to plummet in the coming months. Spanish real estate platforms such as „idealista.com“ or „habitaclia.com“ put the fall in prices of average rents on Mallorca in August at between 0.5 percent (Palma) and 24 percent (Alcúdia) compared to the same month last year, depending on the region. Trend: continuing to fall.
