Majorca's Luxury Property Prices Continue to Rise

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According to European real estate brokerage Engel & Völkers, the upturn on the Majorcan residential property market continues unabated in 2014.

The upturn in property prices started in 2013, when Engel & Völkers reports having brokered more properties in the premium segment than at any time during the previous 15 years in which the company has been operational on the island. In addition to the number of sales, prices too have increased significantly over previous years.

Top prices per square meter currently range from 6,800 euros in the south, between 7,000 to 8,000 euros in the island's interior, in the north and in Palma, 10,000 euros in the northeast, 18,000 euros on the west coast, right through too far in excess of 20,000 euros in the region surrounding Palma and in the southwest. For top properties in the exclusive resort of Puerto de Andratx, prices per square meter of as much as 25,000 euros are now being reached. In 2013, the highest price achieved from the brokerage of a luxury property by Engel & Völkers was 10 million euros. The average sale price on the entire island for a villa directly on the coast with five bedrooms and top-quality fittings was 5 million euros in 2013.

Engel & Völkers further reports that investors and private buyers are in strong competition for the best land plots.

"This development shows that private owners and investors continue to place their trust in the value stability of the Majorcan property market. The overall stabilization of Spain's economy is also having a positive impact on the already high level of demand," said David Scheffler, Managing Director of the Regional Office of Engel & Völkers in Spain.

According to Scheffler, reductions in property prices are now extremely rare. Investors and developers are reacting to the high level of demand in the luxury segment. The upturn on the market is resulting in a considerable increase in the amount of new properties being built, and private buyers are competing with investors for the best land plots. "Every once in a while this leads to a veritable bidding battle as investors are worried that they might miss out on potential opportunities. This in turn means that the scope for negotiation is reduced considerably," said David Scheffler.

The market upturn is being carried primarily by affluent international second home buyers who usually acquire homes without any outside financing. According to the Spanish Association of Notaries, the overall number of property purchases by foreign buyers has doubled on the three Balearic Islands of Majorca, Menorca and Ibiza - from 1,642 properties in 2008 to 3,571 properties in 2012. The main buyer group for holiday and luxury properties on Majorca originates from the German-speaking world, followed by clients from the UK, Scandinavia and Russia. "Most international buyers in the luxury segment are currently over 50 years old. But interested clients are becoming increasingly younger," David Scheffler observed.

Location, high comfort and convenient connections are most important purchase criteria Villas and penthouses are most in demand, as well as historic properties in a traditional "finca" style in an attractive location with sea views or sea access, or looking out over the mountains. There is also very strong interest in modern building developments with the latest standards of technology and fittings. These properties are sometimes even sold "off plan", meaning that the sale takes place whilst they are still in the planning or construction phase. Top-floor apartments affording views of the sea and the cathedral in Palma as well as historic townhouses, so-called "Palacios", in Palma are also very popular, especially in the sought-after districts of Portixol, Calatrava and Santa Catalina. In addition to the location, the most important purchase criteria for any type of property include high comfort and quality of life, as well as convenient connections to the center of Palma.

"Good plots in Majorca's prime locations are becoming increasingly rare. Around 40 percent of the island is designated as a nature protection area, whilst the entire island is subject to very strict building regulations. We anticipate that premium properties in Majorca's most desirable locations will continue to appreciate in value in the long term," David Scheffler added.