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Ibiza and Mallorca property market weathering the downturn well

Overall the luxury market remains buoyant. There are fewer sales but they are higher value. There is reduced demand for the lower end of the market but correct pricing is the key to faster sales, according to the report by Engel & Völkers based on figures from their 29 offices throughout the islands.

This has led to vendors adjusting prices to a more realistic level with current market conditions and a new 'breed' of cash buyer taking advantage of some good opportunities particularly for buy to let investors as the rental market is strong and growing.

'One of the great strengths of the islands is their international appeal which means that when one market decreases, another takes its place. Although the market has slowed down at the lower end, our sales figures indicate that the market remains stable,' said spokesman Daniel Chavarria Waschke.

'Furthermore, most price adjustments of around 10 to 15% have been made mainly at lower end but this is more an indication of vendors' over inflated expectations. All our vendors will make money on their properties and at the higher end for top quality, prime location, prices have even increased,' he added.

On Mallorca there are fewer British people buying but the Germans and Scandanavians are investing more. The market in Palma is still very active and attracting buyers from all over Europe.

Inland along the Tramuntana mountain range there is increased demand for well located fincas with land as buyers are looking for traditional Mediterranean ambience and privacy. In these areas some correctly priced properties have sold literally within weeks of coming onto the market.

In the North East, sales turnover has increased and they are having their best year ever. The completion of the new faster highway from Palma to Manacor has opened up this region and brought new higher spending clients. As a result the average sale of property has increased by around 30%.

On Ibiza demand is outstripping supply at the top end of the market. The cosmopolitan appeal of Ibiza is a key factor combined with the fact that hardly any investors buy with a mortgage so the island is not impacted by the global recession.

There has been some price adjustment around 10 to 15% at the lower end of the market and the north of Ibiza still provides good value and has potential for market growth, the report concludes.

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