Hans Lenz is the Managing Director of Engel & Völkers in the all important south west region. Born on the island, Hans has a degree in tourism management. After a successful career in aviation, he has been fully dedicated to real estate since 2007. In addition, he is the president of the ABINI real estate association and the chairman of the foundation Mallorca Preservation. Here he talks to Jason Moore about the property market and conservation.
1. What is the overall shape of the real estate market in Mallorca?
“On an island with limited and a well-protected territory, real estate is always a solid asset. The Balearic Islands have an unbroken appeal for millions of people who wish to have a better life. There has been no obstacle for the real estate market on the islands: the financial crisis, the Covid pandemic and more recently the rise of interest rates and inflation have had little to no effect on the resilient property market in the Balearic Islands. Far from a coincidence, this is a mature industry delivering top-quality design, construction and concepts which are highly regarded and which stand the test of most discerning purchasers. The downside is that there was no plan for affordable housing. This is now being corrected and the debt towards the residents, who can barely pay the increased rental and purchase prices, has to be paid back as soon as possible.”
2. Will property prices continue to rise?
“Yes. After the explosive demand of 2021-2022 when prices rose by 20 per cent, they should now stabilise around 5-6% per annum. One important thing, however, is that pricing is always individual; one must analyse each property, its location, materials and how it is presented individually.”
3. How would you resolve the present housing crisis?
“If there was only one button to press this would be easily done. First of all, it is important to realise that without a close collaboration between the public and private sector it will be impossible to solve this challenge. There has been a move away from searching for a scapegoat to this problem to working together on a series of short-term and mid-term solutions. The new initiative of Limited Price Housing (HPL) is affordable housing that is reserved for residents renting or purchasing their primary home. It is developed on land that had different uses and planning rights and which had not been developed in the past years (services, residential infrastructure, sports, cultural or social uses). On the other hand, it will now be possible to convert office or retail space into affordable housing and in Palma the skyline can be adopted in order to equal the size of buildings, only in favour of affordable housing. These are quick actions which will be followed this year with a much more complete plan within the new Balearic Housing Law. The measures that we will see in the Housing Law will have a longer-lasting effect, but they will also take longer to establish. In order to monitor the challenges and the effects of the measures taken, both the Balearic government and Palma town hall have established a Housing Observatory, which will identify and track all important parameters.”
4. Do you think buying a home on Mallorca is a good investment?
“Always, but please take professional advice from reputable advisors and let go of the idea that you will find a bargain in a market like this.”
5. Do you think there should be more control over the real estate market?
“The real estate market is responsible for over 25% of the Balearic Islands GDP. The real estate services activity, which includes the intermediation of real estate agencies, is responsible for 4,571 bn € (16,7% of the Balearic GDP). In the last ten years, the number of companies has doubled (1,443) and more than 5.600 people work in the sector. However, 99% are micro-enterprises (fewer than ten workers). It is reckless and a risk for consumers that there is no prior requirement, no minimum training and no control over an activity that deals with something as sensitive as renting or buying a home. The activity of real estate intermediation needs a regulation in order to protect consumer rights. In addition, estate agents will have to be a necessary part of the balancing process in the property market.”
6. You are the chairman of the Mallorca Preservation organisation? Could you tell us about about its work?
“Mallorca Preservation is a wonderful common project of eco-conscious individuals and caring companies that work to protect and restore the damage we have made upon the nature around us. The foundation is now in its sixth year of activity and it will soon pass the million euro mark in donations raised in support of local environmental projects. Mallorca Preservation is a member of the Conservation Collective, which connects the local environmental associations in the Balearics Islands, various Mediterranean, Caribbean, Asian and African locations in a local approach with global extent. It is a truly exciting approach where the Balearic Islands are exporting their expertise in Posidonia to other locations in the Mediterranean that are just starting to consider its protection. Local environmental projects that Mallorca Preservation support are, for example, the study of the bottle new dolphin population and its threats in Cabrera, a forest management project in Son Torrella in the Tramuntana Mountains, the elimination of plastics and introduction of digital monitoring of pests in ecological agriculture, and restoration of damaged wetlands. A very important part is opening these activities and the knowledge to the young in an effort that not only connects local residents and visitors, but also stretches over generations in our quest to preserve the natural beauty and fragile ecosystems of Mallorca.”
7. What is your favourite part of the island?
“I love it all, its beauties and its imperfections!”
8. Do you think the new Balearic government is doing a good job?
“So far yes. The approach is very different and it was shaped after looking deeply into the opportunities and challenges the Balearic Islands face. On one hand, the new Balearic government admits and respects the fact that tourism is and will remain to be the main industry on the islands. Respecting liberty of choice and the legal framework of the EU is welcome and, at an environmental level, the objective is to combine economic growth with a stronger and goal-oriented approach in favour of the use of resources, restoration of natural spaces and a respectful tourism. Investment is also not frowned upon and the islands economy aims to diversify by making business on the islands attractive.”