No doubt, property agents in Mallorca have been noticing that it is getting harder and harder to bring buyers and sellers together. Supposedly, about 2 years ago it had been easier to close a deal for an attractive home within a few weeks. At the current price range, buyers ask themselves whether the price is justified and if there is indeed upside potential. Average prices have gone up disproportionately. While it used to be penthouses, exclusive locations or a rather enticing view that determined the price, it seems that speculators call for average prices that are nothing less than excessive. Disillusioned clients…
So have prices risen disproportionately or could we take a more differentiated look at this market?
A bit of both. On the one hand it is clear that there is a positive, high demand for real estate in Palma. Owing to the continuous and strong interest of clients from all over the world for a second or permanent home, prices are rising. The law of the market. However, that prices rice in all areas, is not typical. The majority of clients used to be looking for property in the old town or nearby the port. Moreover, property featuring outdoor space, historical old town character and a magnificent view, were on the top priority. In general, the share of this kind of property is very limited. One reason for the disproportional increase in the last years. Meanwhile, even prises for in the past rather unpopular houses, like dark flats, without outside space and no views, are growing. Even more, places that have not been in the focus of foreigners, outside of Santa Catalina, Portixol or the Paseo Maritimo, climb into a completely offbeat range of financial value. While a general price increase is comprehensible, a price explosion is not. These regions have never been undervalued, but have been adapted to offer and demand on the market. If the price per m2 doubles within 2-3 years one has to be careful.
Attractive, new building projects with a modern design but partly questionable quality of construction come upon disappointed customers who finally come across their supposedly dream home. However, that prises do not differ from top locations and a differentiation between A-B or C locations doesn’t exist anymore, is indeed shocking.
Nevertheless, there are areas that are still developing. These have become real alternatives to the established premium spots. This could be due to the overcrowding in the old town, but also with changes of the infrastructure, gastronomy, hotels and other leisure centres. A price increase is justified here, and is not solely based on speculations but a sound demand and limited availability. A higher dynamic in these regions are therefore to be expected and should be seen as a chance. Even more, if you are able to identify these regions before the overwhelming majority. Nice investment opportunities are a plus.
As one can tell, it is very difficult to get the right picture of this complex market and to correctly assess opportunities and risks. Therefore, it is even more important to have an experienced and sincere partner at your side, who is able to oversee the market and advise you openly and with expertise.
With more than 10 years of experience in active real estate marketing and project development in Mallorca, we are the ideal partner for you and look forward to your real estate challenge!