Prime prices are up 15% compared with a year earlier, according to Savills.
(Bloomberg) — It is peak tourism season on the Spanish island of Mallorca, and along with the vacationers flying in to enjoy the sun, sea, culture and Richard Branson’s new Son Bunyola hotel, more people are looking for homes.
Prices are going up, too. Prime prices rose 15% in the year to June 2023, according to research from property firm Savills, which puts Mallorca in the top five in their rankings of second home locations. Savills looks at cost among other factors such as quality of life, airport connectivity and high-end restaurant and hotel offerings, all of which Mallorca scores highly on.
The average asking price in Port Andratx in the southwest of the island was approximately €5 million ($5.46 million) in 2022, compared with €4.5 million the year earlier, according to Engel & Völkers. Country houses and finca, or farmhouse, estates near the popular village of Deia, home to a Belmond hotel, have seen asking prices rise to €4 million from €3 million the previous year.
This price boom and the upscale shift on the island has made housing more unaffordable for locals. People from outside Spain bought around 36% of properties sold in Mallorca and neighboring islands in the fourth quarter of 2022—and home prices in the Balearics are now the highest among all the Spanish regions. Spain is now one of the top global destinations for ultra-high-net-worth individuals, which is also pushing prices higher, according to analysis from Knight Frank.
“We’ve had our second-best year since we came to the island more than 20 years ago,” says Florian Hofer, managing director of Engel & Völkers in the Balearics. The Germany-based property company recorded a transaction volume of €855 million in 2022—down from €891 million in 2021, but nearly double 2019’s figures. The island has seen a surge of interest since the pandemic. “Things are returning to normal a little bit this year, but the market is still strong,” says Hofer, who refers to Mallorca as “crisis-proof.”
“The majority of people are British buyers looking for holiday homes,” says Alice Storrie, associate director at Savills, but says she’s increasingly seeing more Americans buying property on the island since direct flights to the capital, Palma, originated in 2022. The United flight from Newark International Airport is bringing over a whole new group of buyers at a time when the exchange rate has been favorable to US-based buyers. “It’s really making a difference,” says Storrie.
Charlie Hill, co-founder of Charles Marlow property, says almost 50% of clients now come from the US. “The US market has been growing from being an occasional visitor or buyer to becoming a regular occurrence,” he says. He’s handling a record number of viewings this summer, including a New York-based buyer on the lookout to buy an old hotel to relocate to Mallorca with his family.
“It’s a really hot market, and homes in the €4 and €5 million range tend to move quite quickly,” says Storrie. She says the top locations buyers are looking in are Pollensa, in the north of the island, and Son Vida, near Palma. Traditional finca properties are popular, especially the ones that have been modernized but still retail the original stone features on the outside.
Hill is based in Deia, another prime location. “Artists, musicians and writers paved the way—and for people who appreciate nature, outdoor activities and rich culture, this coastline is the place to be,” he says. He also flags Formentor, where a new Four Seasons Hotel is likely to open in 2025.
More people are also looking to relocate for more than just the summer. “Unlike other parts of the Med, there are a huge number of people who live here full time, both locals and expats,” says Storrie. “The infrastructure and airport are good, and there’s people who have decided to move here year-round too, with things like the digital nomad scheme.”
Spain’s digital nomad visa policy, which launched at the start of 2023, allows remote workers with an income of €2,334 per month to reside in the country for five years and then apply for permanent status. It gives Americans a chance to live on the Spanish island, but for Brits, it functions as a workaround from the restrictions imposed by Brexit that went into effect in 2021.
That’s a trend Hofer has noticed as well. “In the past, a lot of our market for the high-end properties was established people in their 60s or 70s who sold companies or made money during their working life and wanted to retire,” he says, “but now we’re seeing a lot of younger families looking to live in Mallorca full time.”
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