Mallorca Property Market

Mallorca stands as a robust pillar in the Balearics property market, accounting for about 70% of it. The property market in the Balearics has been particularly resilient in recent years, characterised by a limited supply of space and an enduring high level of demand, especially in the luxury segment. For financially affluent buyers, the Balearic Islands, with Mallorca at the forefront, remain a secure sanctuary for investments, promising not only substantial returns but also a remarkably high quality of life.

The confluence of luxury, exclusivity, and demand has moulded Mallorca into a hotspot for high-end real estate. Properties ranging from opulent villas to sophisticated apartments are sought after, reflecting the island’s appeal to those who value luxury and elegance in a Mediterranean setting. The enduring appeal of Mallorca’s diverse landscapes, lifestyle options, and the promise of a serene yet upscale living experience continue to drive the property market, making it a focal point for investors seeking both stability and luxury.

Mallorca Property Market Segmentation by Price

Mallorca is one of the most attractive and diverse real estate markets in Spain, particularly appealing for those seeking to invest in the luxury sector. In 2023, according to Engel & Völkers, 49 percent of homes for sale on Mallorca had asking prices in excess of 500,000 euros:

• 3 percent of properties were on the market for over 5 million euros.
• 23 percent of properties had a price tag between 1 million and 5 million euros.
• 23 percent of properties were on sale for between 500,000 and 1 million euros.
• 51 percent of properties had asking prices below 500,000 euros.

Notable Regions in Mallorca for Luxury Property

Southwest: Puerto de Andratx, Santa Ponsa, Portals Nous

The majority of properties in the top market segment are located in the southwest of the island. In 2023, 40 percent of the homes for sale in this region had asking prices in excess of 5 million euros. Families are increasingly drawn to the southwest of the island all year round, in part due to the wide range of international schools.

Palma and the Surrounding Region: Son Vida, Esporles, Puigpunyent

Buyers will also find a high density of high-end properties worth more than 5 million euros in the region around Palma, particularly in Son Vida. This residential area of Palma is surrounded by green hills away from the city center and offers an excellent infrastructure with golf courses and schools. It attracts affluent families and couples alike.

Center of the Island: Santa Maria, Alaró, Selva, Bunyola

The center of the island is especially popular with buyers drawn to authentic villages that still retain their old customs and traditions. The undulating countryside is home to large country houses built in a typical Mallorcan style, olive groves, vineyards, and the finest wineries on the island.

North: Pollensa, Puerto de Pollensa, Puerto de Alcúdia

Prospective property buyers will find traditional finca properties and modern villas in the north of the island. Places like Pollensa offer the perfect combination of impressive mountain scenery and proximity to the sea with idyllic bays and beaches nearby.

Southeast: Santanyí, Portocolom, Cala Llombards

In the Santanyí region, the town of the same name is very popular, in addition to the coastline stretching from Portocolom to Cala d’Or and Cala Llombards. The region boasts many fishing ports and has retained its picturesque rural charm. Water sports enthusiasts will also be in their element here.

Nationality of Mallorca Property Investors

According to the National Institute of Statistics of Spain (INE), Germans are the leading buyers of real estate in Mallorca, accounting for 38% of all transactions. The United Kingdom follows, with British buyers responsible for 10% of the transactions. French buyers represent 8% of the transactions, while Italians make up 5%. Northern European countries, including Sweden, Finland, and Norway, contribute to 4% of the transactions. The remaining 35% of transactions are conducted by foreigners from various other countries.

Mallorca Property Market – Price Trends 2024

As the market for Mallorca accounts for 70% of the total market of the Balearics, we can get a very good indication of price trends for Mallorca by looking at data for the Balearics as a whole:

Summary of Property Prices in the Balearic Islands – June 2024

As of June 2024, source Idealista,  the property prices in the Balearic Islands stand at 4,379 euros per square meter. This represents a significant growth in the market:

• A 1.3% increase compared to May 2024.
• A 4.0% rise compared to March 2024.
• A notable 10.7% surge compared to June 2023.

These figures indicate a steady upward trend in property prices over the past year, reflecting the high demand and limited supply in the region. The consistent growth in property prices underscores the Balearic Islands’ continued appeal as a prime location for real estate investment, particularly in the luxury segment.

Property price trends by area within Mallorca

Summary of Price Trends for Key Luxury Property Areas in Mallorca – June 2024

The luxury property market in Mallorca continues to flourish, with significant price trends observed in several key areas known for their high-end real estate.

Calvià remains a top choice for affluent buyers, with property prices reaching 6,254 €/m² in June 2024, reflecting an annual increase of 7.1%. This underscores Calvià’s enduring appeal for those seeking exclusive residences.

Andratx, another prominent luxury destination, has seen property prices surge to 6,705 €/m², marking a substantial annual increase of 10.1%. This area continues to attract high-net-worth individuals with its stunning coastal views and exclusive amenities.

In Puerto de Pollenca, property prices have climbed to 4,831 €/m², demonstrating an impressive annual increase of 28.4%. This area’s combination of beautiful landscapes and luxury properties makes it highly desirable.

Palma de Mallorca, the island’s capital, also shows robust growth, with property prices at 4,144 €/m², reflecting an annual rise of 9.4%. This highlights the city’s ongoing attractiveness to both local and international buyers.

Santanyí is another notable area, with prices reaching 5,068 €/m² in June 2024, showing an annual increase of 7.6%. The region’s picturesque settings and premium real estate offerings make it a preferred choice for luxury property seekers.

In the interior, Bunyola stands out with prices at 3,771 €/m², reflecting a significant annual rise of 31.1%. This area attracts buyers looking for a blend of traditional Mallorcan charm and luxurious living.

Mallorca demonstrates strong upward trends across these key areas, highlighting the island’s status as a premier destination for high-end real estate investment. The consistent price growth in these regions underscores their desirability and the enduring demand for luxury properties on the island.

Mallorca Property Market – Outlook for 2024

Spanish Property Market – Setting the Context

The Spanish property market has shown remarkable resilience over recent years, even amidst significant economic and geopolitical challenges such as the ongoing Ukraine war and rampant inflation. In 2022, the market reached levels reminiscent of the 2007 boom, with property prices consistently trending upward. Although the market began to cool slightly towards the end of 2022, 2023 still saw the second-highest sales in over 15 years, with sales figures 24% above the 10-year average. This performance was bolstered by strong foreign demand, particularly in regions of interest to international buyers such as the Balearics and Alicante.

Foreign buyers played a crucial role in maintaining market stability, with the number of transactions involving international purchasers remaining significantly higher than pre-pandemic levels. Despite a 6% decline in foreign sales compared to 2022, they were still 41% higher than in 2019. House prices in Spain increased by an average of 4.5% year-on-year in 2023, driven by firm demand and a chronic shortage of homes, particularly in major cities and popular coastal areas. This upward trend in prices contrasts with declines observed in other EU countries, highlighting the unique resilience of the Spanish market.

Outlook for Mallorca in 2024

Global circumstances are putting pressure on the real estate market worldwide, with ongoing conflicts and increased interest rates creating challenging conditions for primary markets. However, the demand for luxury property in Mallorca remains strong, even though the market has felt some impact. Prime properties in the best locations are staying on the market longer, as are some new builds and renovation projects. This situation presents opportunities, as the slightly decreased demand since the second quarter of 2023 offers better grounds for negotiation compared to previous boom years. Additionally, the recent wealth tax cut has been favourable for buyers and the real estate sector.

Historically, interest rates are not exceptionally high; the unique historical anomaly is the prolonged “zero interest rate phase.” Despite these factors, property prices in Mallorca’s hotspots have continued to rise, particularly over the past three years, with double-digit percentage increases annually. This trend is driven not only by high demand but also by the scarcity of land, rising costs of building materials, and the high standards of construction and equipment found in premium new builds on the island.

Will Mallorca property prices fall in 2024? It is unlikely in desirable locations. Historical data shows that prices have remained stable even during crises, particularly in sought-after areas like Palma and the southwest. The north, coastal regions, and the Tramuntana Mountains are also considered solid real estate investment areas. Furthermore, a new, financially strong buyer demographic from the USA and the Emirates is investing in Mallorca, as evidenced by new direct flight connections and the benefits of the Golden Visa.

Tax breaks have made the Balearic Islands more attractive for buyers of properties worth between 700,000 and 3 million euros. Effective January 1, 2024, the wealth tax burden has been reduced, raising the tax-free threshold from 700,000 to 3 million euros per person. This means only assets exceeding 3 million euros per person will be taxed for Balearic tax residents and non-residents.

Environmental consciousness is also increasingly influencing property buyers, who are now seeking homes equipped with eco-technology to reduce water and energy consumption sustainably. Properties with expansive outdoor land are in demand, allowing residents to grow their own produce or rear animals. Moreover, more homeowners are using their properties year-round, rather than just during holidays. Demand for properties with home office options has risen significantly. Additionally, the trend of relocating primary residences to the island, which began during the pandemic, continues to grow. The presence of numerous international schools is also encouraging younger families to move to Mallorca permanently. Many new arrivals initially rent with the intention of purchasing property later.

The island’s popularity continues to grow year by year, with a continuous rise in property prices over the last eight years. Analysts expect demand from international buyers to remain high in 2024, particularly for upper-segment properties. Premium villas with sea views and exclusive apartments in prime locations are especially sought-after, commanding high sale prices. Mallorca is set to remain a leading location for first-class real estate in the Mediterranean in 2024 and beyond.

Mallorca continues to be one of the most attractive real estate investment locations in Europe. Those who can secure their dream property through good negotiations now are likely to see an increase in value, despite higher mortgage costs. This is due to the expected positive price trend and the belief that interest rates will likely decrease in the medium term, according to most experts. The high standard of living on the island, characterised by security, modern infrastructure, and optimal year-round flight connections across Europe, remains a crucial factor in maintaining stable prices and steady growth.