All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.
Yes, the analysis of Palma de Mallorca's property market is included in our pack
Thinking of investing in real estate in Palma de Mallorca? You're not alone!
Many people are fascinated by Palma de Mallorca's island beauty and dream of owning a charming villa or a stylish apartment there.
Would it be a profitable investment, though? Are property prices increasing in Palma de Mallorca? What is the current trend? Should I buy property in the Old Town or Santa Catalina? Are there any hidden fees? Where can you get a yield above 7%?
In this article, everything is sorted out for you.
The Investropa team knows this market like the back of their hand. Actually, we've organized all our findings in a pack. Get it now.
In this article, we'll provide you with helpful information.
How's the real estate market in Palma de Mallorca?
When evaluating the strengths of a property market, everyone has their own opinion. We do things differently - we rely on data and actual facts.
Property types
In Palma de Mallorca, there are various types of properties available for sale.
These include apartments, perfect for individuals or small families seeking convenience and city living with amenities nearby.
There are also charming townhouses, ideal for those looking for a blend of traditional architecture and modern comforts. For those desiring more space and privacy, detached villas are a popular option, often featuring gardens and swimming pools.
Additionally, rustic fincas (country houses) offer a tranquil escape with a touch of traditional Mallorcan charm.
Whether you prefer the bustling city or a serene countryside setting, Palma de Mallorca offers a diverse range of properties to cater to different preferences and needs.
Should you buy or rent?
(If you plan to use it yourself and not as a rental)
Whether you're considering settling in Palma de Mallorca or already living there, you might be pondering the buy vs. rent decision in this beautiful Spanish island city.
Generally, buying is a better choice than renting in Palma de Mallorca due to the city's steady property market and potential for capital appreciation.
However, if you prefer flexibility, go for renting.
Property prices in Palma de Mallorca
On average, according to the last data from Ministerio de Fomento, purchasing a property in Palma de Mallorca would cost you around $6,500 per square meter.
Naturally, property prices are quite spread out. The value of a square meter for a property in Palma de Mallorca might differ from an apartment in Cala Major. We actually offer a more in-depth analysis in our pack for buying property in Palma de Mallorca and in Spain.
To put things in perspective, it means that, instead of purchasing a flat in Manhattan, you can become the owner of 2 properties in Palma de Mallorca.
Also, housing prices in Palma de Mallorca are 24% cheaper than in Ibiza.
The most expensive neighbourhoods in Palma de Mallorca are probably Portopí, Son Vida and Son Armadams, while the cheapest ones are likely to be Portixol, S'Arenal and El Molinar.
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 in Palma de Mallorca.
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 in Palma de Mallorca it's a positive signal because when the economy grows, people often experience an increase in wealth, it typically translates to a surge in housing costs.
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 in Palma de Mallorca
It can be difficult to buy property in Palma de Mallorca due to a lack of reliable and up-to-date information. That's why we have created the pack to buy property in Palma de Mallorca and in Spain.
Buying process
In our pack, we've laid out all the steps involved in the buying process, including the required documents, taxes to be paid, and guidance on finding properties.
Now, we're giving you a more straightforward version to help you grasp the information more easily.
This is the step-by-step process to purchase a property in Palma de Mallorca:
- Research the Palma de Mallorca property market and set a budget.
- Engage a local real estate agent familiar with the area.
- Visit properties in Palma de Mallorca that match your preferences.
- Verify the "Nota Simple" document for property details at the Land Registry.
- Obtain the "Cédula de Habitabilidad," certifying the property's habitability.
- Negotiate the price and terms with the seller, considering local market trends.
- Hire a lawyer experienced in Spanish property law to review the contract (Arras or Contrato de Arras).
- Sign a reservation agreement and pay a deposit to secure the property.
- Apply for a Spanish tax identification number (NIE) at the police station or Spanish consulate.
- Secure financing from a local or international bank and obtain a mortgage offer.
- Sign the official purchase contract (escritura de compraventa) before a notary public.
- Pay the remaining balance, property transfer tax (ITP), and registry fees. The notary will register the property in your name at the Land Registry.
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.
Make a profitable investment in Palma de Mallorca
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Where to find a property
Discover properties in Palma de Mallorca through these websites:
- Idealista - A real estate platform in Spain with properties for sale and rent, holiday homes, mortgage services, and property-related resources.
- Fotocasa - A property portal that offers homes for sale and rent across various Spanish cities, along with mortgage and insurance services.
- Habitaclia - A real estate platform providing properties for sale, rent, and new builds across various Spanish regions.
- Pisos - A real estate portal in Spain featuring properties for sale and rent, including houses, flats, and commercial spaces.
- YaEncontre - A real estate portal offering a wide array of properties for sale and rent across different 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.
What you can get
As mentioned before, the average price per sqm in Palma de Mallorca is $6,500. A 1-bedroom property with a size of 60 square meters would cost approximately $390,000, and a 2-bedroom property with a size of 85 square meters would cost approximately $553,000.
However, the cost of properties will fluctuate depending on both their characteristics and their location.
Top neighborhoods in Palma de Mallorca typically come with higher price tags. For approximately $1,580,000, you could get a residence in Santa Catalina, but an apartment in Portixol could be priced at $690,000.
Still, some spots are more wallet-friendly. You may find a residence in Playa de Palma for $640,000, or you could encounter a residence in Arenal priced at $410,000.
Find a more detailed breakdown in our full pack for buying property in Spain.
Mistakes to avoid
Here are the main pitfalls when buying a property in Palma de Mallorca, Spain:
- Compliance with regional building codes and permits (e.g., Islas Baleares-specific regulations).
- Tourist rental restrictions affecting potential income.
- Ensuring the property has a valid tourist rental license (EOT/VT number).
- Potential issues with "rustic" or rural properties lacking proper utilities or accessibility.
- Impact of "coastal law" (Ley de Costas) on beachfront properties.
- Beware of illegal constructions (obras ilegales) and their legal implications.
- The impact of "land classification" (suelo rústico/urbano) on future development plans.
- Local community fees (comunidad de propietarios) and regulations for shared facilities.
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 in Palma de Mallorca
Living in Palma de Mallorca is an amazing experience, offering a great quality of life with its stunning beaches, vibrant culture, and Mediterranean climate.
Cost of living
The cost of living in Palma de Mallorca is generally higher than in other parts of Spain, but still relatively affordable compared to other European cities. Prices for food, accommodation and entertainment are all generally higher than the national average.
Here are some examples to better understand the cost of living in Palma de Mallorca:
- A "pomada" (local drink with gin and lemon) at a bar in Santa Catalina: $4.50.
- Rent for a one-bedroom apartment in the historic Old Town: $1,500 per month.
- "Pa amb oli" (local bread with oil, tomato, and toppings) in La Lonja district: $8.
- "Café descafeinado" (decaffeinated coffee) at a local café: $1.80.
- Groceries from the "Mercat de l'Olivar": $40 per week for one person.
- Ticket to Palma Aquarium: $20.
- Monthly membership at a local "Poliesportiu" (sports center): $50-$70.
- A bottle of "Palo" (local anise-flavored spirit) at a liquor store: $15.
Neighbourhoods
We want to show our information in an easy-to-understand way. So, we made a summary table that lists all the neighborhoods in Palma de Mallorca. For yields, prices and rents, check our property pack.
| Neighborhood | Description | Strengths | Weaknesses |
|---|---|---|---|
La Lonja | La Lonja is a trendy and vibrant area with narrow streets, offering a mix of boutique shops, art galleries, and excellent seafood restaurants. | Rich cultural scene, lively nightlife, and picturesque architecture. | Can be crowded with tourists, limited parking options. |
Santa Catalina | Santa Catalina is a bohemian neighborhood known for its bustling food market, diverse culinary options, and a laid-back atmosphere. | Great variety of restaurants and cafes, close to the city center. | Can get noisy at times, limited green spaces. |
El Terreno | El Terreno is a peaceful residential area nestled between the Bellver Castle and the marina, offering beautiful sea views and a tranquil ambiance. | Scenic views, close to nature, and a quieter pace of life. | Limited shopping and entertainment options, hilly terrain can be challenging for some. |
Genova | Genova is a charming hillside neighborhood known for its traditional Mallorcan restaurants, making it a haven for food enthusiasts. | Authentic local dining experience, peaceful surroundings. | Limited public transport access, fewer entertainment facilities. |
Portixol | Portixol is a picturesque seaside neighborhood with a sandy beach, promenade, and a variety of seafood restaurants along the coast. | Beautiful beachfront views, lively beach atmosphere. | Higher property prices, crowded during peak tourist seasons. |
Life in Palma de Mallorca
Palma de Mallorca is a major economic hub in the Balearic Islands, with a strong tourism sector and a number of international businesses based in the city. It has also become a major center for finance and banking, with numerous banks and financial institutions based in the city.
What expats usually like the most in Palma de Mallorca is the pleasant Mediterranean climate and the stunning views of the city's historic architecture. They also enjoy the vibrant local culture, excellent cuisine, and the many outdoor activities available in the area.
A good point for a property investor - Palma de Mallorca has a modern mass rapid transit system, known as the Palma Metro.
In Palma de Mallorca, access to healthcare is generally good, with a range of both public and private healthcare services available.
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Renting out in Palma de Mallorca
If you're considering purchasing property solely for renting and earning income, you'll find valuable information in this section.
Long-term
Tenant Profiles in Palma de Mallorca
According to the data reported by Wikipedia, the home ownership rate in Spain is 76%, which is average.
It means that, if you decide to buy and rent out in Palma de Mallorca, there will be a good number of people who can become your potential tenants.
If you decide to buy and rent out to long-term tenants, you should target young professionals, students, and families looking for an affordable cost of living in a vibrant city. Alternatively, you can target tourists looking for short-term accommodation in the summer months.
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 Center | Young professionals, expats | Central location, city amenities | $800 - $1,500 |
Studio in Santa Catalina | Artists, creatives | Trendy neighborhood, cultural scene | $600 - $1,200 |
2-Bedroom Flat in El Terreno | Families, young professionals | Residential area, parks | $900 - $1,800 |
Beachfront Apartment in Portixol | Beach lovers, retirees | Seafront location, leisure activities | $1,000 - $2,500 |
Penthouse in La Lonja | Well-off individuals | Exclusive area, historic charm | $1,500 - $3,000 |
Apartment in Génova | Retirees, families | Quiet area, panoramic views | $800 - $1,500 |
Villa in Son Vida | Affluent individuals, expats | Luxury living, golf courses | $2,000 - $5,000 |
Rental yields
Nowadays, Palma de Mallorca offers some opportunities in terms of rental yields. Actually, you can easily achieve 7 or 8% due to the high demand for short-term holiday rentals in the city.
Palma de Mallorca offers excellent rental yields for properties in central locations close to amenities, such as shops, restaurants, and transport links, as they are in high demand from tourists and locals alike. Properties with outdoor space, such as terraces or gardens, also tend to achieve higher rental yields due to their attractive features.
For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.
Finally, be aware that rental incomes in Palma de Mallorca are taxed at 19%, which is rather good.
Short-term
You could also decide to rent short-term to tourists visiting the city, as well as business travelers attending conferences or events in Palma de Mallorca. Additionally, seasonal workers and students studying in the city may be interested in short-term rentals.
If you decide to go with that option, look for properties in the Old Town, Santa Catalina, and El Terreno. These areas are popular among tourists and offer great rental potential.
Currently, there are approximately 2,315 active Airbnb listings in Palma de Mallorca, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $191, which is quite high.
You have the opportunity to generate a nice additional income stream then. Based on feedback from online testimonials and data analytics platforms such as AirDNA, Guesty, and Inside Airbnb, people who offer short-term rentals in Palma de Mallorca can make around $3300 per month. Also, the average occupancy rate is estimated at 83%.
Is it worth buying real estate in Palma de Mallorca then?
Buying a property in Palma de Mallorca can be a fantastic idea if you're in it for the long haul. The city offers a stable property market with the potential for solid capital appreciation. Plus, if you plan to rent out your property, you could enjoy impressive rental yields, particularly from short-term holiday rentals in well-located areas.
Palma de Mallorca's charm, Mediterranean climate, and vibrant culture make it an attractive destination for those seeking a high-quality lifestyle. Whether you fancy city living or a serene countryside retreat, you can find a property that suits your needs.
However, if you're looking for a quick buck or lack the financial flexibility for hefty upfront costs, buying property in Palma de Mallorca might not be your best bet. Speculative investments and short-term gains aren't guaranteed, and the initial expenses, including property transfer taxes and notary fees, can be substantial.
Renting can offer more flexibility, especially if you're unsure about your long-term plans. Lastly, while the current real estate trends in Palma de Mallorca seem positive, market conditions can change, so it's essential to consider potential risks and conduct thorough research before diving into property ownership in this beautiful Mediterranean city.
Make sure you understand the real estate market in Palma de Mallorca
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.