Mallorca – a leading destination for property investors

The internationalisation of the Mallorcan market continued last year. In addition to German and British buyers, who made the greatest investments in properties in Mallorca, Swedish investors became more prevalent in the market in 2014. As reported by the daily newspaper Ultima Hora, the number of buyers from Sweden has increased by 70 percent over the past three years, investing mostly in properties on the coastline between Palma and Port d’Andratx.

Thanks to affluent international clients, a greater demand for luxury properties, including new builds, has been seen in Mallorca. In the south-west of the island in particular, sale prices for high-end properties often start at five million euros. Luis Heymann, from the Finest Selection Group in Palma, has noticed that the market for luxury properties valued at more than two million euros has picked up in general. “The top-end segment has recovered and is attracting more interest than ever before. Luxury properties that were once sold for two million euros are now reaching the five million mark,” states Heymann. Figures from a range of Mallorcan estate agents indicate that this sector was virtually non-existent before 2007.

Meanwhile, the average sale price has risen from 750,000 euros in 2013 to 1.2 million euros last year, with 2015 getting off to an even stronger start. In the first quarter of 2015, transactions have increased again by 28 percent in comparison to the same period last year. Growth in the south west of the island is especially impressive, as the average price for properties sold in this region rose from 1.36 million euros in 2013 to 1.9 million euros in 2014, representing an upturn of 27 percent. The highest prices per square metre were also seen on this part of the island.

New builds have once again played an increasingly important role since the financial crisis. In the luxury sector in particular, it has become apparent that greater care and attention is being paid during high quality building projects and that the use of premium materials has become more widespread. In South West Mallorca, prices range from 5,240 euros per square metre for properties of less than 1,000 square metres to 8,450 euros per square metre for properties of more than 10,000 square metres. The added cost for sea views is of particular interest to investors. For example, an unobstructed view of the Mediterranean costs on average an extra 23 percent in Mallorca in 2014. In contrast, in the coastal region of Calvià and Andratx, this additional cost rises to a staggering 46 percent.

International buyers are most likely to invest in the luxury segment in terms of both the construction and interior fittings of properties. In fact, besides a greater number of construction companies in Mallorca, various renowned interior design firms have established subsidiaries on the island. “All in all, it sounds as if Mallorca would top the list of destinations for ‘lifestyle investments in private holiday homes’ and for ‘investors on the lookout for a guaranteed return’,” believes one estate agent based in Palma.

Substantial investments are also currently being made in the luxury hotel sector. For example, exclusive boutique hotels are being opened in Palma’s old town, while new five-star establishments can be found in the north of the island and a Hyatt Resort is located in Canyamel. In Puerto Portals, the Portals Hills Miami-inspired boutique hotel is setting a new standard and offers outstanding luxury and comfort. Developed by Luis M. Heymann and his Finest Selection Group the Portals Hills also provides investors with a new and attractive way of investing their money, as by introducing the condo hotel model to Mallorcan shores, it gives them the opportunity to buy property within the hotel and use it as a long-term source of income.

All figures indicate that in 2014 Mallorca was once again able to capitalise on its position as an ideal location for property investors thanks to its variety of recognised positive attractions. These include its ease of accessibility from the majority of European cities, abundance of traditional and unspoilt villages as well as the wildly romantic cliffs on the west of the island, not to mention its more than 200 spectacular beaches and bays, the hiker’s paradise found in the Tramuntana mountains and its capital city of Palma on the Mediterranean coast.

The island also offers a myriad of culinary delights of unrivalled quality. From market stalls selling simple yet fresh delicacies to elegant star-rated restaurants, Mallorca is home to a never-ending assortment of surprises for food lovers. What’s more, the wines available in the more than 50 bodegas on the island are now sought after worldwide.

Mallorca’s medical care services are becoming increasingly significant to prospective international investors. Hospitals in Palma, Inca and Manacor provide a high standard of healthcare, while the modern public hospitals opened on the island attract doctors from around the world as an appealing place to work. Families searching for a luxury home also require outstanding schools and Mallorca does not fall short on this front either. A good dozen of the international schools not only take into account the range of languages spoken on the island, but also teach pupils in line with global standards.

Over the years, the largest Balearic island has stepped away from merely offering traditional sun and beach holidays to provide an unbeatable selection of leisure activities. For example, the island now entices a greater number of sports enthusiasts and active holidaymakers, from those seeking land-based pursuits such as hiking or cycling to those wishing to try out water sports like yachting or sailing. Moreover, prestigious sports events with international stars have now become a regular feature on the island. Alternatively, with world-famous classical musicians and top DJs such as David Guetta taking to the stage in Mallorca in 2015, those with a taste for culture need not feel left out.

The island’s infrastructure has also visibly improved in recent years. Its network of roads and cycle lanes has been steadily expanded, making it easier to access numerous towns and villages. A new connection is currently being constructed between the motorway towards Inca and the motorway to and from the airport. The route from Palma to Campos is also being extended all the way to the famous Es Trenc Beach with its Caribbean-like turquoise waters.

When it comes to the increase in property values seen in 2014, the old saying “location, location, location” still applied. A study conducted by the Center for Real Estate Studies on Mallorca found that properties with sea views were 53 percent more expensive than average and that in favourable locations the price per square metre exceeded 5,000 euros, often reaching 7,000 euros. The study also concluded that international buyers have continued to invest in the island despite the financial crisis and that Mallorca’s reputation as an attractive place for investors has therefore survived the crisis. All in all, the situation is looking extremely bright for investors – including in 2015.