Authored by the expert who managed and guided the team behind the Spain Property Pack
Yes, the analysis of Palma de Mallorca's property market is included in our pack
This guide covers everything a foreign investor needs to know about renting out residential property in Palma de Mallorca in 2026, from legal requirements to realistic yield expectations.
We constantly update this blog post so you always have the freshest data on Palma de Mallorca rental investments.
And if you're planning to buy a property in this place, you may want to download our pack covering the real estate market in Palma de Mallorca.
Can I legally rent out a property in Palma de Mallorca as a foreigner right now?
Can a foreigner own-and-rent a residential property in Palma de Mallorca in 2026?
As of early 2026, foreigners can legally buy and rent out residential property in Palma de Mallorca without needing Spanish residency, and the process is well-established since roughly one-third of property buyers in the Balearic Islands are non-Spanish nationals.
Most foreign investors in Palma de Mallorca hold property directly in their personal name using a Spanish tax identification number (NIE), although some choose to set up a Spanish limited company (Sociedad Limitada) if they plan to own multiple properties or want certain tax structuring benefits.
The main practical difference for foreigners is not permission to rent but rather paperwork and taxes, specifically obtaining an NIE, filing non-resident income tax returns via Modelo 210, and, if pursuing short-term tourist rentals, navigating the Balearic Islands' strict licensing system that currently caps and heavily restricts new permits.
If you're not a local, you might want to read our guide to foreign property ownership in Palma de Mallorca.
Do I need residency to rent out in Palma de Mallorca right now?
No, you do not need to be a Spanish resident to rent out a property in Palma de Mallorca, as the Spanish tax system specifically accommodates non-resident landlords through the IRNR (Non-Resident Income Tax) framework.
However, you do need a Spanish tax identification number (NIE) to legally collect rental income in Palma de Mallorca, and this NIE is also required for buying property, signing contracts, and setting up utilities.
While Spanish law does not strictly require a local bank account, having one in Palma de Mallorca makes collecting rent and paying bills much simpler because tenants, property managers, and utility companies typically use SEPA transfers and Spanish direct debits.
Managing a rental property in Palma de Mallorca entirely from abroad is practically feasible if you hire a local property manager to handle tenant relations, maintenance, and compliance, while you file taxes remotely through Modelo 210 submissions to AEAT.
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What rental strategy makes the most money in Palma de Mallorca in 2026?
Is long-term renting more profitable than short-term in Palma de Mallorca in 2026?
As of early 2026, long-term renting offers the highest risk-adjusted returns in Palma de Mallorca because short-term tourist rentals face strict licensing caps, heavy enforcement, and fines reaching up to 500,000 euros for illegal operators.
A well-managed long-term rental in Palma de Mallorca typically generates around 14,000 to 18,000 euros per year (approximately 15,000 to 19,500 USD) for a standard two-bedroom apartment, while a legally compliant short-term rental might gross 25,000 to 35,000 euros (27,000 to 38,000 USD) annually, but higher operating costs and seasonal vacancy often narrow the net difference to just a few thousand euros.
Properties best suited for short-term renting in Palma de Mallorca are single-family homes or detached villas in coastal areas like Playa de Palma or Portixol that already hold a valid ETV license, since apartments in residential buildings cannot obtain new tourist permits under current Balearic regulations.
What's the average gross rental yield in Palma de Mallorca in 2026?
As of early 2026, the average gross rental yield for residential properties in Palma de Mallorca is approximately 4.3%, calculated from the city's average rent of 18.3 euros per square meter and average purchase price of 5,086 euros per square meter.
Gross rental yields in Palma de Mallorca realistically range from about 3.0% in premium neighborhoods like Portixol-Molinar to roughly 5.2% in more affordable districts like Las Avenidas, depending on the balance between purchase price and achievable rent.
Studios and smaller one-bedroom apartments typically achieve the highest gross yields in Palma de Mallorca because they command a higher rent per square meter due to strong demand from singles, couples, and expats seeking compact central housing.
By the way, we have much more granular data about rental yields in our property pack about Palma de Mallorca.
What's the realistic net rental yield after costs in Palma de Mallorca in 2026?
As of early 2026, the average net rental yield for long-term residential rentals in Palma de Mallorca lands between 2.8% and 3.4% after accounting for all typical landlord expenses.
Most landlords in Palma de Mallorca experience net yields ranging from about 2.5% for premium coastal properties to around 3.8% for well-located value neighborhoods, with the spread depending heavily on purchase price and management efficiency.
The three main cost categories that reduce gross yield to net yield in Palma de Mallorca are community fees (gastos de comunidad) which typically run 80 to 250 euros monthly for apartments, the IBI property tax which averages 500 to 1,000 euros annually, and professional property management fees which usually take 8% to 12% of collected rent.
You might want to check our latest analysis about gross and net rental yields in Palma de Mallorca.
What monthly rent can I get in Palma de Mallorca in 2026?
As of early 2026, typical monthly rents in Palma de Mallorca are approximately 650 to 850 euros (700 to 920 USD) for a studio, 950 to 1,250 euros (1,030 to 1,350 USD) for a one-bedroom apartment, and 1,300 to 1,750 euros (1,400 to 1,890 USD) for a two-bedroom apartment.
A decent entry-level studio in Palma de Mallorca realistically rents for 600 to 750 euros per month (650 to 810 USD), with the lower end found in neighborhoods like Camp Redo or Plaza de Toros and the higher end in more central locations.
A typical mid-range one-bedroom apartment in Palma de Mallorca commands 900 to 1,200 euros monthly (970 to 1,300 USD), with Santa Catalina and the Old Town (Ciutat Antiga) pushing toward the upper range due to strong expat and lifestyle demand.
A standard two-bedroom apartment in Palma de Mallorca rents for 1,250 to 1,600 euros per month (1,350 to 1,730 USD) in most central neighborhoods, climbing above 1,800 euros (1,950 USD) in premium areas like Portixol or Bonanova.
If you want to know more about this topic, you can read our guide about rents and rental incomes in Palma de Mallorca.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Spain versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
What are the real numbers I should budget for renting out in Palma de Mallorca in 2026?
What's the total "all-in" monthly cost to hold a rental in Palma de Mallorca in 2026?
As of early 2026, the total all-in monthly cost to hold and maintain a typical rental apartment in Palma de Mallorca ranges from 250 to 550 euros (270 to 595 USD) for long-term rentals, excluding any mortgage payments.
This holding cost range covers most standard apartments in Palma de Mallorca, with smaller units in modest buildings at the lower end and larger properties with premium community amenities like pools or gardens at the higher end.
The single largest contributor to monthly holding costs in Palma de Mallorca is typically the community fee (gastos de comunidad), which ranges from 80 to 250 euros monthly and covers building maintenance, insurance, cleaning, and shared utilities in apartment complexes.
You want to go into more details? Check our list of property taxes and fees you have to pay when buying a property in Palma de Mallorca.
What's the typical vacancy rate in Palma de Mallorca in 2026?
As of early 2026, the typical vacancy rate for well-priced long-term rentals in Palma de Mallorca is approximately 4% to 10%, translating to roughly half a month to one month of vacancy per year.
Landlords in Palma de Mallorca should realistically budget for 0.5 to 1.5 months of vacancy annually because tenant changeovers, minor repairs between tenancies, and occasional slow periods still occur even in a high-demand market.
The main factor causing vacancy rates to vary across Palma de Mallorca neighborhoods is pricing relative to local demand, where overpriced units in any area sit longer while competitively priced apartments in central or expat-popular districts like Santa Catalina often rent within two weeks.
The highest tenant turnover in Palma de Mallorca typically occurs in late summer (August to September) when seasonal contracts end and students or temporary workers relocate, creating a brief window of higher vacancy before the autumn rental season picks up.
We have a whole part covering the best rental strategies in our pack about buying a property in Palma de Mallorca.
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Where do rentals perform best in Palma de Mallorca in 2026?
Which neighborhoods have the highest long-term demand in Palma de Mallorca in 2026?
As of early 2026, the three neighborhoods with the highest overall long-term rental demand in Palma de Mallorca are Santa Catalina for its walkable lifestyle and restaurant scene, Ciutat Antiga (Old Town) for its historic charm and central location, and Portixol-Molinar for its seafront appeal and strong expat community.
Families seeking long-term rentals in Palma de Mallorca gravitate toward Son Rapinya, La Vileta, and the Bonanova-Sant Agusti corridor because these areas offer quieter residential streets, proximity to international schools, and larger apartments with outdoor space.
Students looking for affordable long-term rentals in Palma de Mallorca concentrate around Son Espanyol and the UIB university corridor, as well as budget-friendly neighborhoods like Camp Redo and Plaza de Toros that offer good bus connections to campus.
Expats and international professionals in Palma de Mallorca most commonly seek long-term rentals in Santa Catalina, Portixol, El Terreno, and the Bonanova area because these neighborhoods combine walkability, coastal lifestyle, and an established international community.
By the way, we've written a blog article detailing what are the current best areas to invest in property in Palma de Mallorca.
Which neighborhoods have the best yield in Palma de Mallorca in 2026?
As of early 2026, the three neighborhoods with the best rental yield in Palma de Mallorca are Las Avenidas at approximately 5.2% gross, Playa de Palma at around 4.8% gross, and the broader city average zones at roughly 4.3% gross.
These top-yielding neighborhoods in Palma de Mallorca typically deliver gross rental yields ranging from 4.5% to 5.5%, compared to premium lifestyle areas like Portixol or Ciutat Antiga where yields often fall between 3.0% and 3.6%.
The main characteristic allowing these Palma de Mallorca neighborhoods to achieve higher yields is that purchase prices remain materially lower than trendy coastal or historic zones while rents stay relatively strong due to solid working-class and local professional demand.
We cover a lot of neighborhoods and provide a lot of updated data in our pack about real estate in Palma de Mallorca.
Where do tenants pay the highest rents in Palma de Mallorca in 2026?
As of early 2026, the three neighborhoods where tenants pay the highest rents in Palma de Mallorca are Bonanova-Sant Agusti at approximately 23 euros per square meter (25 USD), Santa Catalina-Son Armadans at around 19 to 20 euros per square meter (21 to 22 USD), and Ciutat Antiga (Old Town) at roughly 19 euros per square meter (21 USD).
A standard two-bedroom apartment in these premium Palma de Mallorca neighborhoods typically rents for 1,600 to 2,200 euros per month (1,730 to 2,380 USD), with sea-view properties or renovated units in Bonanova and Portixol often exceeding 2,500 euros (2,700 USD).
The main characteristic that makes these Palma de Mallorca neighborhoods command the highest rents is their combination of walkable access to the waterfront, established dining and lifestyle amenities, and a concentration of renovated or modern housing stock that attracts tenants willing to pay premium prices.
The typical tenant profile in these highest-rent neighborhoods includes senior executives at international companies, remote-working professionals from Northern Europe, well-funded retirees seeking Mediterranean lifestyle, and diplomatic or consular staff who prioritize quality housing in central locations.
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Spain. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
What do tenants actually want in Palma de Mallorca in 2026?
What features increase rent the most in Palma de Mallorca in 2026?
As of early 2026, the top three property features that increase monthly rent the most in Palma de Mallorca are air conditioning (essential due to humid Mediterranean summers), a private terrace or balcony (outdoor space is highly prized in dense central neighborhoods), and an elevator in buildings above three floors (many older Palma buildings lack one).
Air conditioning alone can add approximately 8% to 15% to achievable rent in Palma de Mallorca, since summer temperatures regularly exceed 30 degrees Celsius and many older apartments lack this feature that tenants now consider essential.
One commonly overrated feature that landlords invest in but tenants do not pay much extra for in Palma de Mallorca is high-end designer kitchens, since most renters prioritize functionality and space over luxury appliances or premium countertops that add significant renovation cost.
One affordable upgrade that provides a strong return on investment for landlords in Palma de Mallorca is installing quality window insulation or double glazing, which reduces street noise in busy central areas, improves energy efficiency, and costs a fraction of a full renovation while noticeably increasing tenant satisfaction.
Do furnished rentals rent faster in Palma de Mallorca in 2026?
As of early 2026, furnished apartments in Palma de Mallorca typically rent approximately one to two weeks faster than unfurnished units, with popular neighborhoods like Santa Catalina and Portixol often seeing furnished properties leased within 10 to 14 days compared to three to four weeks for unfurnished equivalents.
Furnished rentals in Palma de Mallorca generally command a rent premium of 10% to 20% over unfurnished apartments, reflecting strong demand from expats, relocating professionals, and mid-term tenants who value the convenience of moving into a ready-to-live space without purchasing furniture.
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How regulated is long-term renting in Palma de Mallorca right now?
Can I freely set rent prices in Palma de Mallorca right now?
Landlords in Palma de Mallorca can generally set initial rent prices freely when signing a new lease, as there is no mandatory rent control on starting rents for most residential contracts in the Balearic Islands.
However, annual rent increases during a tenancy are capped by Spain's official IRAV reference index published by the INE (National Statistics Institute), which replaced inflation-linked increases for many contracts under recent housing law reforms and typically limits annual raises to around 2% to 3% depending on the index value.
What's the standard lease length in Palma de Mallorca right now?
The standard residential lease length in Palma de Mallorca is typically one year with automatic renewal, but Spanish law gives tenants the right to extend up to five years if the landlord is an individual (or seven years if the landlord is a company), meaning landlords should plan for potentially long tenancies.
The maximum security deposit (fianza) a landlord can legally require in Palma de Mallorca is one month of rent as the standard legal deposit, plus up to two additional months as extra guarantees, for a practical maximum of three months' rent (approximately 3,000 to 5,000 euros or 3,240 to 5,400 USD for a typical apartment).
At the end of a tenancy in Palma de Mallorca, landlords must return the security deposit within one month of the lease ending, after deducting only documented costs for unpaid rent, damages beyond normal wear and tear, or outstanding utility bills.
We made this infographic to show you how property prices in Spain compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
How does short-term renting really work in Palma de Mallorca in 2026?
Is Airbnb legal in Palma de Mallorca right now?
Airbnb-style short-term rentals are not automatically legal in Palma de Mallorca, as operating tourist accommodation requires a valid ETV (Estancia Turistica en Vivienda) license and apartments in residential buildings are currently banned from obtaining new permits.
To operate a legal short-term rental in Palma de Mallorca, you need a tourist rental license issued by the Balearic tourism authority, but new licenses have been frozen since 2022 with the moratorium potentially extending through 2026, and the city caps registered tourist homes at around 639 units.
There are no official annual night limits for licensed tourist rentals in Palma de Mallorca itself, but the practical constraint is that new licenses simply are not being issued, making the question of night caps largely irrelevant for most investors considering this strategy.
The most common penalty for operating an unlicensed short-term rental in Palma de Mallorca is a substantial fine that can reach up to 500,000 euros under Balearic Decree-Law 4/2025, plus mandatory removal of the listing from platforms like Airbnb, which now share liability for hosting unlicensed properties.
What's the average short-term occupancy in Palma de Mallorca in 2026?
As of early 2026, the average annual occupancy rate for legally operating short-term rentals in Palma de Mallorca is approximately 60% to 65%, reflecting strong seasonal demand balanced against a quieter winter period.
Most short-term rentals in Palma de Mallorca experience occupancy rates ranging from about 45% for poorly positioned or overpriced listings to over 75% for well-managed properties in prime locations with competitive pricing and strong reviews.
The highest occupancy rates for short-term rentals in Palma de Mallorca occur during summer (June through September) when Mediterranean beach tourism peaks, with July and August often reaching 85% to 95% occupancy for quality listings.
The lowest occupancy rates in Palma de Mallorca typically fall during the winter months (November through February), when tourism slows dramatically and many short-term rentals see occupancy drop to 30% to 45%, making year-round revenue planning essential.
Finally, please note that you can find much more granular data about this topic in our property pack about Palma de Mallorca.
What's the average nightly rate in Palma de Mallorca in 2026?
As of early 2026, the average nightly rate for short-term rentals in Palma de Mallorca is approximately 150 to 180 euros (162 to 195 USD), reflecting the city's position as a premium Mediterranean destination with strong tourist demand.
Nightly rates in Palma de Mallorca realistically range from about 80 euros (87 USD) for basic studios in less central areas to over 300 euros (325 USD) for well-appointed two-bedroom apartments in sought-after neighborhoods like Santa Catalina, Portixol, or the Old Town.
The typical nightly rate difference between peak summer season and off-season winter months in Palma de Mallorca is approximately 50 to 100 euros (54 to 108 USD), with August rates often exceeding 200 euros (216 USD) while January rates may drop to 100 to 130 euros (108 to 140 USD) for similar properties.
Is short-term rental supply saturated in Palma de Mallorca in 2026?
As of early 2026, short-term rental supply in Palma de Mallorca operates under an unusual dynamic where legally licensed supply is strictly capped at around 639 registered tourist homes, while authorities estimate over 15,000 listings operate illegally, creating a saturated illegal market alongside an artificially constrained legal one.
The trend in active short-term rental listings in Palma de Mallorca is effectively frozen for legal supply due to the ongoing license moratorium, while illegal listings face increasing enforcement pressure with coordinated crackdowns between city authorities, the Consell de Mallorca, and platform compliance requirements.
The neighborhoods most oversaturated with short-term rentals in Palma de Mallorca are Santa Catalina, La Lonja, and Playa de Palma, which have been officially designated as "tourism saturation zones" with blocked permits for new hostels and bars alongside heavy STR enforcement.
Neighborhoods in Palma de Mallorca that might theoretically have room for new short-term rental supply, such as peripheral residential areas like Son Rapinya or Establiments, still face the island-wide license freeze, meaning practical entry into the STR market requires purchasing a property that already holds a valid and transferable tourist license.
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What sources have we used to write this blog article?
Whether it's in our blog articles or the market analyses included in our property pack about Palma de Mallorca, we always rely on the strongest methodology we can … and we don't throw out numbers at random.
We also aim to be fully transparent, so below we've listed the authoritative sources we used, and explained how we used them and the methods behind our estimates.
| Source | Why it's authoritative | How we used it |
|---|---|---|
| Instituto Nacional de Estadística (INE) | Spain's official statistics office publishing the legally relevant rent index. | We used it to explain how rent increases are capped for residential leases in early 2026. We also used it to avoid relying on blogs for rent-index rules. |
| Agencia Tributaria (AEAT) | Spain's tax authority and the official source for non-resident filing processes. | We used it to ground the tax section in primary documentation. We used it to explain what renting remotely means in practice for foreign landlords. |
| BOE (Spain's Official Gazette) | The official published text of Balearic Decree-Law 4/2025 on tourist rentals. | We used it to explain short-term rental regulatory risk in Palma de Mallorca. We also used it to avoid relying on press interpretations alone. |
| idealista (Rent Reports) | Spain's largest property portal with a transparent, regularly updated rent index. | We used it to estimate citywide and neighborhood-level rents in early 2026. We used it to build rent ranges for studios, one-beds, and two-beds. |
| idealista (Sale Price Reports) | A widely cited, methodology-documented index for sale prices by district. | We used it to estimate purchase price baselines for yield calculations. We used it to compute district gross yields consistently. |
| Colegio de Registradores | Spain's Land Registrars' official statistics on transactions and foreign buyers. | We used it to support the context that foreigners buying in the Balearics is common. We used it as a reality check on the typical buyer profile. |
| BBVA Research | A major bank research unit with method-driven housing supply and demand analysis. | We used it to support the macro driver behind Palma de Mallorca's rents. We used it to justify conservative vacancy assumptions. |
| AirDNA | One of the most referenced datasets for Airbnb performance and STR occupancy. | We used it to estimate short-term occupancy and daily rates in early 2026. We used it as one leg of triangulation with enforcement news. |
| Global Property Guide | A long-running international dataset comparing yields across cities consistently. | We used it to cross-check our Palma de Mallorca yield estimates. We used it to verify our gross versus net numbers are realistic. |
| CAIB (Balearic Government) | The Balearic Government's own portal summarizing tourism containment rules. | We used it to describe the regulatory direction toward stricter enforcement. We used it to support practical investor guidance on long-term strategy. |
| IBESTAT (Balearic Statistics Institute) | The official statistics agency for the Balearic Islands. | We used it to anchor the structural demand story in local official data. We used it to validate local context beyond national averages. |
We have made this infographic to give you a quick and clear snapshot of the property market in Spain. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.