Market study of real estate in Majorca 2020 – Price gap continues to widen

The brokerage company Porta Mallorquina Real Estate has been analyzing the holiday property market in Majorca for the past five years. The institute that carried out the work was, once again in 2020, the STI Center for Real Estate Studies (CRES) in Freiburg.

We have summarized the main results of the 6th market study of holiday real estate in Majorca for you here. At the end of the article you can download the complete study free of charge.

Real estate available in Majorca 2020

Around 4,600 holiday properties in Majorca were on offer at the beginning of the year. This meant that the number of houses and apartments for sale on this popular island had decreased slightly by 6% compared to the previous year.

The regional distribution remained relatively constant, with every third property being located in the southwest and the rest evenly distributed throughout the island. Only properties for sale in the area around Palma fell significantly from 13% in the previous year to 6%.

In 2020, the supply of holiday properties declined slightly, the strongest region remains the southwest.

In 2020, the supply of holiday properties declined slightly, the strongest region remains the southwest.

Luxurious interiors define the market

So far as holiday properties are concerned, Majorca is characterized primarily by upmarket or luxurious properties; market researchers were able to assign every sixth available property to the “upmarket” or “luxurious” category. Only around 18% of the properties, on the other hand, were simply equipped.

The prices for luxury real estate were, on average, more than €9,500 per square meter. Most of these properties are also characterized by an above-average-sized pool and a great sea view and are most likely to have a jacuzzi.

The following illustration of the regional distribution of supply by standard of property shows that, as in previous years, there are large regional differences. In the southwest (32%), Palma (21%) and surrounding areas (18%), the range of luxury properties available is above average. In these areas, high-end properties also account for most of the properties available.

  Holiday properties in Majorca tend to be of a high standard. Almost half of the properties on offer are luxurious or upmarket.

Holiday properties in Majorca tend to be of a high standard. Almost half of the properties on offer are luxurious or upmarket.

In the north, northwest and south, most of the properties are equipped in a standard or simple way. In the center of the island, the simpler properties predominate, followed by those with standard fittings. Luxury properties, on the other hand, are comparatively rare in these areas.

Price comparison list 2020

After years of sometimes significant price increases, the market has stabilized somewhat in 2020, with prices remaining more or less at the previous year’s level in most regions. At €5,324 per square meter, the average price at the beginning of the year was just below that of the previous year.

More significant fluctuations only occurred in the areas around Palma and in the south, but the fall in prices there can be attributed less to a general drop in prices in these areas than to a change in the supply structure, as director of studies, Prof. Dr. Marco Wölfle, explains:

“The supply of luxury properties in the areas around Palma and in the south decreased disproportionately from 2019 to 2020, which has a direct impact on the average price level.”

And in 2020, a significant widening of the price gap can already be detected. In the case of relatively simply equipped properties, average prices fell, whereas luxury properties increased in price compared to the previous year.

Across the island, the average prices now range from around €3,800 for the more simply equipped properties to just under €6,900 per square meter for properties with upmarket furnishings. For luxury properties, the market researchers found average square meter prices of over €9,500, which corresponds to a price increase of 22% compared to the previous year.

 

The 2020 holiday property market is relatively stable in price. Only in the south and areas around Palma does the high proportion of simply- equipped properties affect the regional price level.

The 2020 holiday property market is relatively stable in price. Only in the south and areas around Palma does the high proportion of simply- equipped properties affect the regional price level.

Porta Mallorquina Real Estate Managing Director Timo Weibel confirms the trend towards luxury properties, based on the day-to-day work of a real estate agent:

“Many customers want a” ready-to-go “package: buy property, get key and that’s it. Expectations of fixtures and fittings have increased, but buyers are also willing to pay higher prices.”

The least expensive area continues to be the middle of the island at around €3,200 per square meter, followed by the south which, after a price jump in recent years, is on average well below €4,000 per square meter in 2020.

The three northern regions have remained relatively stable and also show a similar price level. In the capital, Palma, the time for big price increases seems to be over. After significant growth rates in recent years, the square meter prices rose by only two per cent in 2020 to just under €6,300.

The most expensive area remains the southwest, where average prices have remained constant at around €7,300 per square meter compared to the previous year.

Increase of a third in real estate prices since 2015

Compared to 2015, the market researchers for Majorca real estate found an absolute price increase of around 31 per cent, which corresponds to an annual rate of increase of 5.6 per cent.

“Healthy growth that is still below the level in Germany”,

states Prof. Wölfle. The market expert sees no signs of a property bubble in Majorca.

However, not all regions benefited equally from this positive performance. In the past five years, prices in the southwest and Palma have increased by around 44 per cent, followed by the areas around Palma and the south, where square meter prices have increased by a good twenty-five per cent since 2015.

The north and the northeast have seen price increases of around 20%; in the southeast there have been price increases of around 12% since 2015. The least movement in prices was seen in the northwest (+ 2.7 per cent) and in the middle of the island, where prices even fell by 0.3 per cent compared to 2015.

For Timo Weibel a sign that prices are stable:

“Securing wealth is an important issue for our customers. Historical price developments show that all regions of Majorca are a safe investment.”

A sea view drives up prices most

Spain has the strictest coastal protection laws in Europe, which is why Majorca, despite its island location, has far fewer properties right by the sea than one would imagine.

A view of the Mediterranean alone increases the value of a property by an average of 19 per cent. If it is right on the coast, the premium is, on average, over 75 per cent. This means that a location right on the beach has become much more expensive than last year.

 The shortage of properties right by the sea causes prices to rise further.

The shortage of properties right by the sea causes prices to rise further.

Luxurious new builds

The price gap between existing properties and new builds continues to widen. The average premium for a new-build last year was around a third, in 2020 almost 40 per cent.

The square meter prices for new builds, even in comparatively inexpensive regions such as the middle of the island or the south, are well over €4,000, and in the southwest and Palma well over €8,000.

 The premium for new builds was around 40 per cent in 2020.

The premium for new builds was around 40 per cent in 2020.

Every tenth holiday property in the portfolios of major brokers in Majorca is a new build. The majority of properties available are in the southwest (37 per cent), followed by Palma itself (16 per cent) and the south (10 per cent).

A positive forecast

If you look at performance since 2015, the Center for Real Estate Studies assumes that prices will not fall in the future but will continue to rise by around 6 per cent a year under the same market conditions.

 The Center for Real Estate Studies continues to predict a positive performance for Majorca.

The Center for Real Estate Studies continues to predict a positive performance for Majorca.

The fact that average prices are stagnating in seven out of nine regions and have even fallen in the area around Palma and in the south, will not fundamentally change anything, according to the market researchers, because the higher quality fixtures and fittings, especially in the new-build sector, will compensate for this.

“High premiums continue to be paid for new-builds. In the three most expensive regions – the southwest, Palma itself and the surrounding area – over 90 per cent of new construction projects are built with upmarket or luxurious fixtures and fittings,”

says the study.

 Top locations are the safest investment in Majorca, as elsewhere.

Top locations are the safest investment in Majorca, as elsewhere.

According to market researchers, the area around Palma has the greatest appreciation potential of all the regions. Here Prof. Wölfle and his team see potential for growth of 10% or more.

But even in the southwest and in Palma itself, they believe that the final price level has not yet been reached. The south encourages buyers with its attractive entry prices and high potential for growth, but this only applies to coastal locations. Inland, experts tend to expect prices to stabilize.

Infographic of Majorca Real Estate 2020

Infographic of Majorca Real Estate 2019

Infographic of Majorca Real Estate 2020

Market study to download

Mallorca holiday estate market study 2020

To download the 6th market study on Majorca real estate 2020 please click on the picture or here: Market study on Majorca real estate 2020

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