Oversight of Balearic Property Market - 2012

12 October 2012

Oversight of Balearic Island Property Market - 2012

Last year finished with more activity and optimism for the Balearic's second home and residential market, with an increase in interest and viewings, whilst sales in some regions increased forefold compared to 2010. 

Since the end of 2008 vendors have had to adjust their pricing strategy to sell in the current market and prices overall have reduced by an average of 15-30% depending on location. 

The reality for 2012 is that prices are steadying, the market is stable with price levels now reaching a new equilibrium. Increased sales activity from the German and Scandinavian markets in the second half of last year also reflects what most people believe – that prices will increase as demand outstrips supply, so now is the time to invest.

Investing in the Balearic Islands

Despite the worry surrounding other parts of the World at the moment, the Balearic Islands are still a very safe investment. Property prices will always remain steady due to the fact there is limited land available for new construction, so any existing properties on the island will be in high demand.

Mallorca Focus

The islands as a whole are one of the most expensive areas to buy in Spain and in respect of Mallorca for example with 300 days of sunshine every year, 23 golf courses, 25 marinas, as well as some of the most stunning scenery in Europe, plenty of Europeans consider it a sound investment. Property for sale in Mallorca.

Demand for property in Mallorca continues with 54,000 EU residents (of which 19,623 are British) now living in Mallorca permanently, together with an estimated 60,000 second home owners from UK.

Building regulations, once unheard of in Mallorca, now ensure that new homes are of a high standard; tall towers are banned in a bid to avoid Spanish mainland-style over-development; and many areas have a quasi green belt designation, so detached homes must be in large plots to avoid dense development.

Accessibility from the UK and Ireland is another major factor in the success of the Mallorca property market with reasonably priced flights of around 2 hours available from Belfast, Birmingham, Bristol, East Midlands, Edinburgh, Exeter, Glasgow, Liverpool, Leeds, Manchester, Newcastle, Southampton and all London airports plus Dublin and Shannon. Links with the rest of Europe, especially Germany and Scandinavia are also extensive.

This provides a huge market for property investors looking for long or short term rental income in addition to capital appreciation.
The Island has always understood the benefit of foreign investment and make property acquisition and legal procedures simple with no language skills required. For income tax the flat rate is 25% of the gross rental income and Capital Gains Tax is applied at 18% for E.U. non-residents and residents alike.

A resourceful infrastructure provides all the necessities for absent landlords with an abundance of property management companies providing all necessary key-holding, maintenance and security services, backed up with a proficient service industry.
The residential property market should stabilise in late 2012, with some property prices increasing slowly and only in prominent locations like coastline or countryside areas in Majorca.

The advice that many agents will offer and indeed we at Balearic Estates agree with, is that this is the time to buy. We find that many potential buyers are still weary about taking the plunge but the market will turn and when it does you may possibly regret  having "missed the boat".

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