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Q3& Q4 2011: SummaryFollowing a slow start to the year, the volume of Mallorca property transactions began to raise as 2011 ended, signalling a promising start to 2012, with strong interest expected at the start of the year.

Mallorca property prices began to stabilize across the market, after some jockeying to establish the current value of properties in the market. Asking prices that had dropped in the second quarter of 2011 recovered their value by the end of the fourth quarter, ending the year on an average of €2,214 per m2.

High-end luxury prices steadied in the second half of 2011. Properties in the exclusive South West Mallorca region, for example, ended the year priced at €2,955 per m2.

Rental property prices for Palma de Mallorca maintained value at around at around €8 per m2 all year.

2012 is expected to be a strong sales year for Mal-lorca, with signs that the gradual increase in the number of sales transactions and property values observed in Ibiza will transfer across to the other Balearic Isles.

The agreeable year-round climate, excellent travel links, expanding recreational opportunities – par-ticularly golf, yachting and equestrian activities – and the Island’s exceptional safety and privacy record are being increasingly noticed amongst luxury lifestyle investors looking for properties to purchase for personal use.

Our clients continue to be interested in the South West of the island but there is growing interest in Palma de Mallorca city centre, large country es-tates throughout the island and sea front houses in prime locations such as Formentor, Costa de Los Pinos and Deià.

The Mallorca Real Estate MarketWhile property transactions across the Balearic Islands showed a general downward trend across most of the year, individual months showed a more mixed picture with trading higher in Janu-ary and February and the summer months. The majority of properties sold were in areas classified as urban centres, such as Palma de Mallorca, how-

ever, sales of country properties traded at a fairly consistent rate of around 12% of all property sales throughout the year.

While there was some slowdown in the number

MALLORCA ReAL eSTATe MARkeT RePORT Q3 & Q4, 2011

“Mallorca has and continues to present a solid long-term invest-ment opportunity. The island remains one of the first choices for high end international property buyers in the Mediterranean.’’ Figure 1: Property transfers (merchanting)

– Balearic Islands 2011 Source: National Institute of Statistics (ine.es)

Figure 2: Searches for “Mallorca villa” compared with “Mallorca property”Source: Google Trends

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of property sales Q3 2011, trading rose towards the year’s end, reflecting the strong demand that Lucas Fox has experienced for high quality prop-erties at the exclusive end of the market (see also the section on foreign interest below). Global in-ternet searches for luxury Mallorca villas reached a peak during the summer months, reflecting an annual seasonal cycle. Searches originating from Switzerland, Germany and the Netherlands were the highest amongst global internet users.

Mallorca Property Asking PricesAccording to Spanish internet property portal, kyero, after a dip at the end of 2010, asking prices in Mallorca grew from an average of €420,000 per property in Q3 to €427,000 by the end of Q4 2011. Final year average asking prices ap-proached the levels first observed at the start of 2011, reaching €433,000.

At the more exclusive end of the market, kyero has reported a more stable pricing picture, with 4 and 5 bedroom properties either growing in average asking price or maintaining. At Q1 2011, 4 bedroom properties had an average asking price of €850,000 but finished the year up on €871,000 (114% above the Spanish average for properties of this size).

5 bedroom properties started the year with ask-ing prices of €1,359,000 and despite lower levels during Q2 and Q3, had returned to €1,349,000 by the end of Q4 2011.

At present there are few reliable sources for ask-ing price date on Spanish property. It is clear that on Mallorca vendors are keen to maintain or even in some cases increase the asking price of their

property. often in direct contradiction to how the market is developing.

Mallorca Property Average Sales PricesAccording to Idealista, average property prices for areas within Mallorca all had a slight downward trend between Q3 and Q4 2011. Average transac-tion values were down from the year’s highest prices recorded at the end of Q1 2011 in West and South Mallorca, while remaining fairly stable all year in Palma de Mallorca and in eastern regions of the Balearic Island. Average prices in Palma de Mal-lorca ended the year at €2,216 per m2. Properties in Calvia, West Mallorca finished the year with the highest average property prices (€2,955 per m2).

Mallorca Rental Market Data from property portals Idealista and Fotocasa show a consistent picture for average rental prices in Palma de Mallorca, where values were maintained at around €8 per m2 all year.

Airport arrivals – a strong indicator of short term and holiday rental demand – showed a healthy level of tourism growth in Mallorca throughout 2011. By the end of November 2011, airport arrivals were 8.2% higher than in 2010, with over 22 million passenger arrivals for the year.

Foreign Investment InterestWith the establishment of the new Mallorca office for Lucas Fox International Properties, 2011 saw new website growth and interest in Mallorca properties from key market segments across the globe. For Q3 and Q4, 2011, the majority of foreign interest in Mallorca properties came from our established customer base areas of the Uk, Germany, Switzerland, France, Scandinavia and the Netherlands.

Lucas Fox has also seen growing interest from luxury property buyers from outside europe in-cluding the United States, Russia, Middle east and Asia. We predict particular interest from the Rus-sian market and with this in mind Juan Antonio March, the former Spanish Ambassador to Russia has taken a position as shareholder in Lucas Fox Mallorca with the aim of assisting the company to specifically target the Russian market.

In Q3 2011, foreign investment in the Balearic islands (both Ibiza and Mallorca) reached some of the highest levels observed in more than a year, with 516 properties sold in the quarter to foreign investors. This helped contribute to Spain’s overall 24.7% growth in foreign real estate investment in Q3 2011.

Figure 3: Average asking prices Mallorca vs Spain 2011Source: Kyero.com

Figure 4: Average Mallorca property sales prices 2011Source: Idealista.com, Fotocasa.es

Figure 6: Mallorca airport arrivals 2011Source: AENA

Figure 7: Foreign interest in Lucas Fox Mallorca properties Q3 & Q4 2011Source: Lucas Fox website analytics

Figure 5: Mallorca rental prices, selected areasSource: Idealista.com, Fotocasa.es

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“Just like Ibiza, Mallorca attracts high-end buyers from the Uk and Northern europe, especially Ger-many, France, Switzerland and Scandinavia. There is increasing interest in Mallorca from buyers from the USA, Russia and the Middle east”, said Anthony Leaton, Lucas Fox Marketing Director.

Lucas Fox Analysis and Predictions for 2012

The increase in both property transactions and sales enquiries for Mallorca properties at the end of 2011 suggests that 2012 will start with increas-ing interest and demand across the island.

Mallorca’s benefits are being noticed by high-end international investors looking to combine lifestyle interests with quality property invest-ments.

“Buyers are attracted to Mallorca for the laid back lifestyle, great facilities including interna-tional schools, ease of access from all European airports and its safe and beautiful environs,” said Lucas Fox Mallorca Director, Rafael Calparsoro.

“Mallorca has and continues to present a solid long-term investment opportunity. The island re-mains one of the first choices for high end interna-tional property buyers in the Mediterranean. The last few years have been tough for the Mallorca property market, but there are signs of improve-ment and we are confident that Lucas Fox’s approach will be successful on the island. There

is increasing interest from high-end investors in properties across the island, and we are confident 2012 will be a major sales year for Mallorca.”

“We expect 2012 to be a bumper year for Mal-lorca as the buzz generated around neighboring Ibiza in 2011 extends across the Balearic Islands, and as the qualities of this island paradise become more widely recognized amongst elite property buyers worldwide,” said Alex Vaughan, Director, Lucas Fox.

About Lucas Fox Market ReportsYou can keep receiving up-to-date market re-ports from the Lucas Fox International Properties team. Subscribe to future updates at our website or bookmark our blog for the latest news on the Mallorca real estate market. For questions about Mallorca real estate, please contact one of our sales staff at +34 933 562 989.

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Anthony LeatonMarketing Manager

Rafael CalparsoroDirector

Alex VaughanDirector

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