Balearic Islands property market faring better than rest of Spain
Residential property prices in Spain are still falling with overall values down 5.2% over the 12 months to the end of June but the figures reveal that some locations such as Mallorca are faring better than others.
Most notable the Balearic Islands are proving to be more resilient than the Spanish mainland. While places like Alicante have seen prices fall by 7.7% and Huelva by 8.2% in the last 12 months, according to the official House Price Index published by the Government, Balearic prices have fallen by 4.5%.
On a quarterly basis the Balearic Islands have also fared well, with prices falls of 1.5% in the second quarter of the year whereas Alicante has seen a quarterly decline of 2.95, Huelva is down 2.1% and Almeria down 2.5%.
Mallorca has not suffered as much in the downturn, especially at the top end of the market where there is simply not the same oversupply as you would find on for example the Costa del Sol, according to Stephen Dight, managing director of Mallorca Sotheby's International Realty.
He warned that buyers and sellers need to be aware that the official figures are skewed as they only deal with the average property. ‘Things are very different in the upper echelons where price reductions have been far less marked. Sometimes clients approach us with an ill advised perception that they can pick up bargain property in Mallorca. It's simply not the case,’ he explained.
‘Once we have a buyer's specific requirements we can pretty much show them every house that fits that criteria in one day. There just isn't an abundance of quality property on the market and therefore any need for huge discounting,’ added Dight.
Another factor is that there are many different nationalities participating in the real estate market on the islands.
‘Over the years Germans have made up the majority of foreign homeowners in Mallorca and their recession is behind them so there is not a huge supply of motivated sellers on the Island. Contrast that with the Costa del Sol where over 50% of the foreign homeowners are British. Many of them are now hugely motivated to release the capital tied up in their second homes in order to fund their businesses and their interests back in the UK at a time when the British banks have effectively stopped lending,’ said Dight.
‘As sterling has depreciated, these vendors are prepared to slash prices in the knowledge that the exchange rate will protect them against huge losses. This scenario has not existed in Mallorca,’ he added.
Sotheby’s believes that prices in Mallorca have reached the flat line of the U and will fall no further. ‘If a suitable property becomes available there is little benefit to be gained from waiting any longer to buy. At Mallorca Sotheby's International Realty we are now genuinely busy but the market is not on fire to the extent that anything will sell. Only correctly priced top quality, not necessarily top priced, homes are selling and they must be virtually faultless in terms of their presentation and location,’ explained Dight.
Mallorca is always popular with foreign visitors and this is good news for the real estate industry, especially those in the buy to let and holiday home sector. In the first weekend of August Palma International Airport broke its own record, handling 160,000 passengers in a single day according to officials.
Palma's Airport is one of the top twenty busiest airports in Europe, ranked 16th in 2010 when over 21.1 million passengers passed through as well as being the third busiest in Spain, after Madrid Barajas and Barcelona El Prat.
According to Ignacio Osle, sales and marketing director of house builder Taylor Wimpey de España, more tourists and visitors help to boost the local economy which included the property market.