Mallorca Property Market

The island of Mallorca dominates the Balearic property market, accounting for about 70% of it. Real estate in the region has been particularly resilient in recent years, characterised by a limited supply and an enduring high level of demand, especially in the luxury segment. For international buyers, the Balearic Islands, with Mallorca property leading the way, remain a secure and lucrative choice for investments, promising not only substantial returns but also a remarkably high quality of life.

Mallorca’s unique blend of an authentic Mediterranean lifestyle, stunning scenery, excellent island amenities and facilities, plus great air connectivity, has consolidated its position as a leading destination for international property investment.

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. Although entry-level apartments can be acquired for as little as 150,000 euros, 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

Mallorca is the largest island of the Balearics with an area of 3,640 km² and has a coastline of approximately 550 kilometers. Around 70% of the total property market of the Balearic Islands is accounted for by Mallorca, which has a very diverse range of property choices. From the city dwellings in the bustling historic capital of Palma to serene country homes, charming houses in coastal villages, and striking contemporary villas and apartments, there are properties to suit all tastes. Below, we take a quick look at some of Mallorca’s key areas for luxury real estate. The figures quoted are from Idealista, year ending June 2024:

Southwest Mallorca: Puerto de Andratx, Santa Ponsa, Portals Nous, Calvia

This region is particularly well known for its luxury homes, and a majority of properties in the top market segment are located in the southwest of the island. In fact, according to research by Engel & Völkers, in 2023, 40 percent of the homes for sale in this region had asking prices of over 5 million euros. Southwest Mallorca features varied, stunning landscapes, including rugged clifftops, dramatic mountainous backdrops, fantastic sea views, green hillsides with hiking trails, and a range of gorgeous. beaches. It is also the home of four luxury marinas, a selection of premium golf courses, and benefits from close proximity to the capital of Palma. Not surprisingly, discerning affluent international property investors and families are increasingly seeking this region of the island. Read more about Notable Areas for Luxury Property

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 – November 2024

As of June 2024, source Idealista, the property prices in the Balearic Islands stand at 4,686 euros per square meter. Below are the annual price changes for each month for rolling 12-month period within a 24-month timeframe:

• Nov. 2023 – Nov. 2024: +15.7 %
• Oct. 2023 – Oct. 2024: +14.8 %
• Sept. 2023 – Sept. 2024: +13.1 %
• Aug. 2023 – Aug. 2024: +13.2 %
• July 2023 – July 2024: +11.9 %
• June 2023 – June 2024: +10.7%
• May 2023 – May 2024: +11.5%
• Apr. 2023 – Apr. 2024: +11.5%
• Mar. 2023 – Mar. 2024: 12.4%
• Feb. 2023 – Feb. 2024: 13.7%
• Jan. 2023 – Jan. 2024: 13.9%
• Dec. 2022 – Dec. 2023: 12.7%

These figures indicate consistently high price increases for each 12-month period, ranging from 10.7 to 15.7%, reflecting the high demand and limited supply throughout the Balearics. This impressive growth in property prices underscores the regions’ continued appeal as a prime location for real estate investment, particularly in the luxury segment.

* Note: Idealista uses a monthly estimate of the average residential prices based on live property listings on their platform. This reflects the current offer prices as opposed to the property sales price, but it serves as a valuable market indicator for price levels and trends.

Property price trends by area within Mallorca

Based on data from Idealista, the table below shows the annual price changes for different areas in Mallorca:

Summary of Price Trends for Notable Areas in Mallorca for Luxury Property

Analysing the data above, we can see an average price of €4,825 per square metre, with an average annual variation of +14.05%. Focusing on the areas in Mallorca for luxury property sales and looking at price levels, Andratx stands out as the most expensive, with a price of €7,711 per square metre and an annual variation of +16.7%. Calvià follows, with a price of €6,567 per square metre and an annual variation of +9.4%. Santanyí also ranks highly, with €5,391 per square metre and an annual variation of +15.1%.

In terms of annual price variation, Santa Maria del Camí leads with a remarkable +40.8%, achieving a price of €4,759 per square metre. Pollença also shows strong growth, with a variation of +19.8% and a price of €4,317 per square metre. Similarly, Alaró demonstrates robust performance, with a +17.0% annual variation and a price of €3,972 per square metre. These trends highlight significant and consistent growth and value in Mallorca’s luxury property market across these prime areas, validating the island’s status as a premier destination for high-end real estate investment. 

Mallorca Property Market – Looking Forward

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 close to 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 in part accounted for 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 Real Estate

Global circumstances are putting pressure on the real estate markets 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 does present opportunities for investors, as a moderate decrease in demand since the second quarter of 2023 affords 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 have not been exceptionally high; but the prolonged period of near-zero rates was a unique anomaly. While rates have risen in recent years, 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.

Are Mallorca property prices likely to fall in the near future? This is certainly unlikely in premium locations, such as Palma and the southwest, as historical data shows that prices have remained stable in these areas even during crises such as the COVID-19 pandemic. The north, coastal regions, and the Tramuntana Mountains are also considered solid real estate investment areas.

It is also worth noting that a new, financially strong buyer demographic from the USA and the Emirates is investing in Mallorca, as evidenced by new direct flight connections. Also, 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. Also, more homeowners are using their properties year-round, rather than just during holidays. Demand for properties with home office options has risen significantly, driven in part by the growing number of digital nomads seeking flexible living arrangements. 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 Mallorca recording continuous rises in property prices over the last eight years. The general consensus by real estate analysts is that international demand for property in Mallorca will remain strong in 2025, particularly for properties in upper price brackets, with premium ocean view villas and exclusive apartments in prime locations the most sought after.