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Yes, the analysis of the Balearic Islands' property market is included in our pack
Thinking of investing in real estate in The Balearic Islands? You're not alone!
Many people are intrigued by the Balearic Islands' Mediterranean beauty and dream of owning a stylish apartment or a luxurious villa there.
Would it be a good investment, though? Are property prices increasing on the Balearic Islands? How much does it cost? Is it more profitable to buy in Mallorca or Ibiza? What about the taxes? What yields can I expect?
We've figured it out for you.
The Investropa team knows this market inside and out. As a matter of fact, we've compiled all our findings in one pack. Get it now.
In the lines below, we'll provide you with helpful information.
How's the property market on the Balearic Islands?
Is the property market on an upward trend or a downward trend? Let's examine the data.
Types of properties
In the Balearic Islands, you can find various types of properties for sale.
These include apartments with stunning sea views, charming townhouses nestled in historic villages, spacious villas with private pools and gardens, rustic fincas or country estates surrounded by nature, and plots of land for building your dream home.
Whether you're looking for a modern beachfront getaway, a cozy traditional home, or a piece of land to create your vision, the Balearic Islands offer a diverse range of property options to suit different preferences and lifestyles.
Should you buy or rent?
(If you're purchasing for personal use and not for renting)
Whether you've already made the Balearic Islands your home or are contemplating them for the future, you might be wondering about the advantages of buying versus renting in this Spanish archipelago.
Generally, buying is a better choice than renting in the Balearic Islands due to the increasing property prices and the potential for rental income.
Nevertheless, if flexibility is your main concern, renting is the recommended choice.
Property prices on the Balearic Islands
On average, according to the last data from Ministerio de Fomento, purchasing a property on the Balearic Islands would cost you around $7,000 per square meter.
Naturally, property prices are quite spread out. The value of a square meter for a beachfront property in the Balearic Islands might differ from a villa in Mallorca. You'll get a more detailed in our pack for buying property on the Balearic Islands and in Spain.
To put things in perspective, it is 2.7 times less than the property prices in the center of New York.
Also, it's worth noting that housing prices on the Balearic Islands are cheaper (-7%) than in the Greek Islands.
The most expensive places on the Balearic Islands are probably Ibiza Town and Palma de Mallorca, while the cheapest areas are likely to be the smaller towns and villages.
Trends
First and foremost, we have to acknowledge that Spain offers, today, a lot of stability to investors. The last Fragile State Index that has been reported for this place is 44.4.
Keep this in view when pondering the viability of buying a property in on the Balearic Islands.
Also, according to the International Monetary Fund (IMF), Spain's economy is expected to soar by 8.4% in the coming 5 years, resulting in an average GDP growth rate of 1.7%.
If you intend to invest in real estate on the Balearic Islands it's a good thing because when the economy grows, people tend to become wealthier, which usually results in higher housing prices.
Also, in Spain, the average GDP per capita has changed by -1.1% over the last 5 years. It's a bit concerning.
Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Spain right now.
Buying property on the Balearic Islands
It can be difficult to buy property on the Balearic Islands due to the lack of reliable and up-to-date information available. That's why we have created the pack to buy property on the Balearic Islands and in Spain.
Buying process
In our pack, we've explained the entire process of buying properties in a detailed way. We've pointed out the mistakes to steer clear of, shared tips for finding properties that give you the best returns, and provided information about taxes and necessary documents.
Now, we're giving you a simplified version of the buying process.
This is the step-by-step process to purchase a property in Balearic Islands:
- Research the Balearic Islands property market and set a budget.
- Hire a reputable local real estate agent familiar with the area.
- View properties and shortlist based on preferences and location.
- Conduct due diligence on property ownership, restrictions, and permits.
- Make an offer and negotiate the price with the seller.
- Sign a pre-purchase agreement and pay a deposit (arras) to secure the property.
- Appoint a notary to oversee the transaction and prepare the sales contract (contrato de arras).
- Obtain a Spanish tax identification number (NIE) for non-resident buyers.
- Finalize financing and mortgage arrangements, if necessary, with a Spanish bank.
- Sign the official deed of sale (escritura pública) before the notary.
- Pay the remaining balance and relevant taxes like the Transfer Tax (ITP) or Value Added Tax (VAT).
- Register the property in your name at the Land Registry (Registro de la Propiedad).
Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Spain.
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Where to find a property
Discover properties in the Balearic Islands with the help of these websites.
- Idealista - A real estate platform in Spain, offering properties for sale and rent, holiday homes, mortgage services, and property-related resources.
- Fotocasa - A property portal offering homes for sale and rent in various cities across Spain, along with mortgage and insurance services.
- Habitaclia - A real estate platform offering properties for sale, rent, and new builds in various regions of Spain.
- Pisos - A real estate portal in Spain, offering properties for sale and rent, including houses, flats, commercial spaces, and more.
- YaEncontre - A real estate portal offering a wide range of properties for sale and rent across various regions in Spain.
Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Spain.
Which properties for which budget?
As mentioned before, the average price per sqm on the Balearic Islands is $7,000. A 1-bedroom property with 60 square meters of space would cost approximately $420,000, while a 2-bedroom property with 85 square meters of space would cost approximately $595,000.
However, prices will differ based on the attributes of the property and its specific location.
Investing in real estate on the Balearic Islands' prime locations often comes with a heftier cost. In Ibiza Town, a residence could cost you around $1,700,000, while a house in Santa Eulalia might be priced at $1,230,000.
Some spots will be friendlier to your wallet. You could find an apartment in Formentera for $230,000, or you may discover an apartment in Ibiza priced at only $190,000.
Find a more detailed price list in our full pack for buying property in Spain.
Risks and pitfalls
Here are the main pitfalls specific to buying property in the Balearic Islands, Spain:
- "Tourist rental licenses": Obtain the correct license for renting out the property to tourists legally; failure to comply can result in hefty fines.
- "Protected areas": Verify if the property is located in a protected natural zone, as building restrictions may apply.
- "Coastal laws": Familiarize yourself with strict coastal protection laws that can limit construction near the shoreline.
- "Economic changes": Consider the impact of the local economy's reliance on tourism, as it can affect property demand and value.
- "Urbanization plans": Investigate potential future urban development projects that might affect the property's surroundings.
- "Local taxes": Be aware of regional property taxes and their rates, which can differ from the mainland.
- "Water rights": Check water supply rights and ensure the property has access to a stable water source.
- "Renovation permits": Understand the requirements for property renovations to avoid legal complications during the process.
We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.
Everything you need to know is included in our Spain Property Pack
Living on the Balearic Islands
The life on the Balearic Islands is a paradise of sun-soaked beaches, vibrant nightlife, and stunning scenery, making it the perfect place to buy a property and enjoy the Mediterranean lifestyle.
Cost of living
The cost of living on the Balearic Islands is generally higher than other parts of Spain due to its popularity with tourists. Prices for basic necessities such as groceries, transportation, and housing can be quite expensive.
Here are some examples related to the Balearic Islands:
- Hierbas Ibicencas: A traditional herbal liqueur made on the island of Ibiza.
- Ensaimada: A popular local pastry, especially in Mallorca, often enjoyed with hot chocolate.
- Es Vedrà: A mystical rocky island near Ibiza, believed to have spiritual energy.
- Palma's Old Town: A charming neighborhood with narrow streets, historic buildings, and boutique shops.
- Xoriguer Gin: A gin brand from Menorca, known for its distinctive flavor.
- El Corte Inglés: A well-known department store in Palma de Mallorca offering a variety of products.
- Talayotic Culture: Prehistoric stone structures found on the islands, such as taulas and talayots.
- Paseo Marítimo: The scenic promenade in Palma where locals and tourists enjoy leisurely walks by the sea.
Areas and spots
We want to show information in a way that is easy to understand. So, we made a summary table that shows the different parts of the Balearic Islands. For yields, prices and rents, check our property pack.
| Place | Description | Strengths | Weaknesses |
|---|---|---|---|
Palma de Mallorca | Palma is the capital and main city of Mallorca, offering a vibrant real estate market with a mix of historic properties and modern apartments. Its thriving tourism industry and strong demand make it an attractive investment option. | High rental demand, diverse property options, strong tourist appeal. | High competition among investors, potential saturation in some areas. |
Ibiza | Ibiza is famous for its nightlife and beautiful beaches, making it a hot spot for tourists. Investing in properties here can yield high returns through short-term rentals and vacation homes. | High rental income during peak seasons, international appeal, constant influx of tourists. | Seasonal demand fluctuations, potential regulatory restrictions on short-term rentals. |
Menorca | Menorca is known for its tranquil atmosphere, stunning landscapes, and prehistoric sites, attracting a more laid-back clientele. It offers opportunities for long-term rentals and holiday homes. | Relatively affordable property prices, preserved natural beauty, steady rental demand. | Limited direct flights, quieter market compared to Mallorca and Ibiza. |
Formentera | Formentera is a paradise island with pristine beaches and a focus on eco-tourism, attracting high-end tourists. Investing here can lead to luxury villa rentals and exclusive property sales. | High-end clientele, exclusive market, strong potential for luxury property appreciation. | Smaller market, limited year-round demand, strict building regulations. |
Mallorca (Other Areas) | Outside of Palma, Mallorca offers various towns and coastal areas with different charms and investment opportunities. From the picturesque villages of Sóller and Deià to the bustling beach resorts of Alcúdia and Cala d'Or, investors can find a range of properties to suit different preferences. | Diverse property choices, scenic locations, strong tourism in various areas. | Varied property regulations, seasonality in some locations, potential saturation in popular areas. |
Minorca (Other Areas) | Beyond Menorca's capital, there are several charming towns and coastal spots like Ciutadella and Fornells that offer attractive investment prospects. These areas cater to tourists seeking a more authentic and relaxed experience. | Authentic appeal, tranquil settings, potential for long-term rentals. | Less developed infrastructure, limited property options in some areas. |
Life on the Balearic Islands
The Balearic Islands are a popular tourist destination, with a thriving tourism industry that has been the main driver of economic activity for many years. In recent years, the islands have seen increasing investment in the technology and renewable energy sectors, creating more job opportunities and diversifying the economy.
What expats usually like the most on the Balearic Islands are the stunning beaches, crystal clear waters, and vibrant nightlife. They also enjoy the Mediterranean climate, diverse cultural activities, and delicious local cuisine.
The access to healthcare on the Balearic Islands is generally considered to be good, with a range of public and private health services available.
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Renting out on the Balearic Islands
If you're interested in buying property not to live in, but to rent out and generate income, this section is for you.
Long-term
According to the data reported by Wikipedia, the home ownership rate in Spain is 76%, which is average.
When people buy on the Balearic Islands it's usually to live there, and not to rent out (or at least not to long-term tenants).
If you decide to rent out long-term, you might want to target people looking for a relaxed lifestyle, such as retirees, digital nomads, or people looking for a second home in a sunny Mediterranean climate.
Here is a little summary table we've made for you.
| Property type and area | Profiles of potential tenants | What they are looking for | Expected monthly rent in $ |
|---|---|---|---|
Apartment in Palma de Mallorca | Urban professionals, expats | City living, cultural attractions | $1200 - $2500 |
Villa in Ibiza | Tourists, partygoers | Beach access, nightlife | $2000 - $5000 |
Country house in Menorca | Families, retirees | Tranquil living, nature | $1000 - $2200 |
Finca in Formentera | Escapists, artists | Rural charm, simplicity | $1500 - $3000 |
Now, you will probably ask us about the yields. Unlike for other places, it would be difficult to give you the average rental yields for the Balearic Islands due to insufficient long-term rental properties available for analysis. Also, it's quite diverse. For example, rental yields in Palma de Mallorca and Ibiza Town differ from those in less frequented areas.
Finally, know that, in the Balearic Islands, the taxes stand around 20% of the total rental income.
Short-term
You could also decide to rent short-term to tourists looking to enjoy the beaches and nightlife of the Balearic Islands, or to business travelers looking to take advantage of the islands' convenient location near mainland Europe.
If you decide to go with that option, look for properties in Palma de Mallorca and the beach areas of Cala Ratjada, Cala D'or and Magaluf on Mallorca, and Ibiza Town, San Antonio and Santa Eulalia on Ibiza.
There are approximately 3,000 active Airbnb listings in the Balearic Islands, reflecting a dynamic short-term rental market. The average daily rate stands around $150, which is quite high.
You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals on the Balearic Islands can make around $2000 per month. Also, the average occupancy rate is estimated at 62%.
Is it worth buying real estate in the Balearic Islands then?
Buying a property in the Balearic Islands can be a great idea for those seeking a Mediterranean getaway or a long-term investment opportunity. The islands offer beautiful beaches, a vibrant nightlife, and a stable real estate market with the potential for property appreciation. Renting out your property can also provide a significant income stream, given the high demand from tourists.
However, if you're looking for quick returns or value flexibility in your living situation, buying property in the Balearic Islands may not be the best choice. Real estate investments typically take time to appreciate, and selling a property can be a lengthy and costly process. The higher cost of living in the islands, driven by tourism, can also be a consideration. Navigating local regulations and potential market saturation in prime tourist areas can present challenges.
In conclusion, while the Balearic Islands offer attractive opportunities for property ownership, it's essential to assess your goals, budget, and willingness to navigate local regulations carefully. Thorough research, expert advice, and consideration of your personal circumstances are crucial to making the right decision.
Make sure you understand the real estate market in the Balearic Islands
Don't rush into buying the wrong property in Spain. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.
The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.