Mallorca: Historic demand creates upturn on real estate market

The Mallorca real estate market is once again proving itself to be an anchor of stability underpinning the economic development of the Balearic Islands as well as offering attractive returns with the highest quality of living to buylers with long-term investment goals in their sights. “Residential real estate on the Balearics is a crisis-proof investment promising high returns. This can be seen from the average year-on-year appreciation in value of the properties we have brokered of approximately nine percent since 2012,” says Florian Hofer, Managing Director of Engel & Völkers on the Balearic Islands. This consistent rise in property prices results from the sustained level of demand among affluent Europeans who appreciate the appeal of Mallorca as a year-round destination and are increasingly placing importance on sustainability and eco-technology when looking for property. Engel & Völkers Mallorca can look back on the highest turnover performance in its 30-year history on the island, with a transaction volume of 891 million euros in 2021.

International buyers bringing renewed dynamism to market for second homes

The island’s ongoing transformation into a quality destination has seen Mallorca’s status as a location for luxury holiday homes come increasingly to the fore. With 156 direct flight connections, Palma de Mallorca Airport is the busiest airport in the Mediterranean. During the pandemic in particular, the Balearic island has been visited by clients from all over the world drawn by its convenient accessibility, its excellent infrastructure for remote working, and the Mediterranean quality of life it offers. Buyers from Northern and Central Europe have dominated the market for many years now. The majority of clients come from Germany (66 percent), followed by buyers from the UK (9 percent), Spain (8 percent), Scandinavia (6 percent), Switzerland (4 percent), Austria (2 percent), and France (1 percent). Clients with long-term investment plans are drawn by the benefits of secluded living, while at the same time enjoying year-round access to top recreational and cultural activities, as well as the broad choice of 17 international schools. “The pandemic prompted many buyers to opt for a strategic re-location in order to enjoy all that Mallorca has to offer and work remotely from here. The trend towards more extended stays or a complete move to the Balearic island has become widespread among many wealthy clients in the last two years.” says Hans Lenz, Managing Director of Engel & Völkers Mallorca Southwest. 

Palma de Mallorca: Stable property prices in the Mediterranean city

The array of magnificent properties, combined with its rich cultural heritage and cosmopolitan flair, have made Palma de Mallorca a real focal point attraction for quality-conscious property buyers. In 2021, average asking prices for apartments in the historic Old Town and the nearby harbour area of Portixol were 800,000 euros. Meanwhile, even higher prices were recorded for truly exceptional properties. Besides historic penthouses and apartments with terraces or balconies, buyer interest focuses primarily on new energy-efficient properties built to sustainable construction standards and with top-end interiors. Thanks to the modernisation of the Club de Mar marina and the realisation of environmentally friendly mobility concepts, the island capital is set to become even more attractive as a residential location in the future.

Son Vida and Southwest: Premium homes with sea views and ROI to offer

“The trend towards year-round residences is also evident in Son Vida, where an extremely limited number of properties are coming onto the market and clients are being forced to make purchase decisions much faster than in the past,” says Gabriela Muñoz, Managing Partner of Engel & Völkers Palma Surroundings & Son Vida. The district with its upmarket villas and world-renowned golf courses is highly sought after by many affluent families, couples, and well-known personalities from the sporting world. Last year saw another upturn in prices, with average asking prices of 5 million euros (2020: 4.7 million euros). 

In addition to Son Vida, Port Andratx in the southwest is ranking among the most exclusive and highest priced residential locations on the island. In 2021, the average asking prices for villas in the traditional harbour town rose to 4.5 million euros (2020: 4.3 million euros). Newly built properties in hillside locations with sea views and a blend of contemporary architecture and Mediterranean design are in particularly high demand here. Due to the consistently strong international interest and the extremely limited local availability of properties in the premium segment, prices in the southwest of the island will reach new highs in the future.

Price rises across island for residential and holiday homes in prime locations

“Besides ROI aspects, emotional motives, and the investment in quality of life also play a key role when buying a residential or holiday property on Mallorca,” says Christina Deutsch, Managing Partner of Engel & Völkers Mallorca Centre & South, adding: “Searching clients are increasingly interested in their own private residency plans and are placing stronger demands on the location, size, construction and furnishings of their property.” Demand is correspondingly high for properties offering a substantial amount of living space, exclusive interiors, private gardens, and panoramic views of the Mediterranean or the Tramuntana Mountains. The limited availability of such properties means that prices for residential property across the entire island have risen to an all-time high. At the centre of the island, the average price for traditional finca estates in Santa María is 3 million euros.

In the picturesque coastal resorts and historic villages to the west of the island, average prices for houses in the Deià regions rose to 3.5 million euros (2020: 2.9 million euros). Properties in the very good locations in the north have also witnessed price increases, averaging between 2 and 3 million euros (2020: 1.5 to 2.5 million euros) around Pollensa. In the prime locations near Artá and Colònia St. Pere in the northeast, villas and fincas with average prices of 1.9 million euros (2020: 1.7 million euros) offer future potential for appreciation in value. In the region around Cala Blava and Son Verí Nou in the south, prices average out at 2.5 million euros (2020: 1.6 million euros). In the southeast, Santanyí and the coastal locations around Cala Llombards and Porto Colom are highly desirable. Finca estates located here commanded average asking prices of 1.8 million euros (2020: 1.65 million euros).

Outlook: Positive growth prospects and growing sustainability trend

The local sustainability initiatives are in alignment with Mallorca’s ambitions to establish itself as a pioneer for quality tourism and take a leading position in the Mediterranean as a residential and investment location. In view of the strong revenue performance and the boom in demand, the experts at Engel & Völkers are confident about a positive development of the market over the course of the year. “The sustained rise in prices and the continuous appreciation in value of properties on Mallorca for more than a decade now clearly prove that the Balearic island is one of the world’s safest addresses with an incredible quality of life to offer,” Florian Hofer concludes.