Since 2012, property sales have been rising steadily in the Balearic Islands of Mallorca, Ibiza, Menorca and Formentera. In 2012 annual sales were just under 8,000 and in 2017 they were just under 16,000. However, 2018 tells a very different story: the year-on-year figures in May were 45% down and another 18% in June. On the other hand, the other parts of Spain popular with overseas buyers have seen an increase in the number of sales, so what has happened in the popular islands?
According to real estate agents operating in this market who spoke with Spanish Property Insight’s Mark Stücklin, the Balearics, which have a particular appeal to upmarket buyers, have enjoyed the longest and strongest recovery in property sales since the Spanish market turned around. However, that couldn’t last forever and it was inevitable that there would be a slow down at some point. One of the causes of this downturn are the restrictions that create a shortage of land to build on, and as they are islands, there really is no place left to go for developers.
Spokespersons from the major real estate agencies, the building contractors and developers all have a view on what is happening in the region.
For example, Marc Pritchard, Sales & Marketing Director of Taylor Wimpey said, “Much of the declining sales rate is actually attributable to a significant shortage of available properties at affordable prices on the islands,” but added, “demand is still strong and Taylor Wimpey has seen reservations go up by 25% in 2018.” His view is that the market is still strong, but looks weaker because of supply problems.”
Lone Schaefer of Kelosa Selected Properties in Ibiza said, “I think it’s probably a blend of factors including a shortage of homes that people want or can afford, the holiday-rental restrictions turning off some buyers, but some segments completely unaffected, such as the large villas and country estates.”
In Mallorca, Alastair Kinloch, RICS surveyor and head of Property Works remarked that “only premium properties are shifting easily and those seen as ‘development opportunities.” He also believes that prices may have risen too steeply in the last couple of years and more competitive pricing is needed.
It would therefore appear that the depressing sales figures for 2018 are not a reflection of demand for this successful Spanish market – supply simply can’t keep up with it in the sectors below the most expensive properties.