Leading local estate agents Engel & Völkers Mallorca posted total sales transaction volume of 662 million euros in 2023, which was up by 38 percent on the 10-year average representing the third-best year in Engel & Volkers’ 34-year history in Mallorca. Last year, the average price of property brokered by Engel & Volkers Mallorca increased by 14% over 2022.
“In 2023 we saw a return to normality in the island’s real estate market after the extraordinary activity of the previous two years, this “soft landing” has given way to a more sustainable market. Our data also demonstrates a sustained growth in prices underpinned by strong demand and limited supply”, comments Florian Hofer, Managing Director, Engel & Volkers Balearics.
Mallorca represents approximately 78 percent of the entire real estate market in the Balearic region. According to the Spanish Ministry of Housing, total sales transactions in Mallorca in the first three quarters of 2023 were 3.3 billion euros, 38 percent above the ten-year average of 2.4 billion euros and the third-highest level on record.
Price Development of Mallorca's Premium Real Estate Segment
Overall prices were stable in 2023 and according to the National Statistics Institute (INE) for the first nine months of last year, the average price of property in the Balearics increased by 4 percent and by 9 percent for new constructed property.
Looking over the past eight years an even clearer picture of price development emerges, aside from the years of pandemic and the resulting boom, the Spanish Housing Ministry data for the first nine months of each year from 2015-2023, indicate that the average property price in Mallorca has increased by 50% or more in most areas and by 8 percent or more in 2023 which underlines the steady demand.
Engel & Volkers data over a similar period demonstrates the development of Mallorca’s premium real estate segment; since 2013 the company’s sales transaction volume increased by 227 percent, the number of sales transactions by 88 percent and the average price of property sold by Engel & Volkers Mallorca increased by 74 percent.
In 2023 the average price of property sold by Engel & Volkers on the island was 1.88 million euros which represented a 14 percent increase over 2022 when the average reached €1.64 million.
Rural property market
In 2023 rural property sales in the Balearic region accounted for 26% of the total market (source: National Statistics Institute) making it the third best year for rural property sales over the past decade and 6.7% above the 10-year average of 3.272 transactions.
In Mallorca, Engel & Volkers registered a similar increase for property in the countryside and villages focused on traditional houses with modern-day comfort and amenities. Post-pandemic there has been a shift in thinking as more and more clients want self-sufficient properties with eco-technology to save water and energy. They also want to grow their own produce including wine, olive oil, fruit, and vegetables etc… An underlying respect for the cultural and natural heritage of the island drives these purchases which strongly focus on the authentic architecture and Mediterranean lifestyle of the island.
Average listing prices vary greatly in this market depending on location. For example, according to Engel & Volkers Mallorca Central area, a rural house (finca) in a top location such as Santa Maria can fetch an average of 4 million euros. Further away from Palma, in villages such as Algaida, Llubi, Selva and Montuiri, average prices will range from 2-3 million euros.
International buyers underpin Mallorca’s prime real estate
Latest figures from the Spanish Registrars registered that 60 percent of all real estate transactions in the Balearics, with a value of €500,000 and above, were made by overseas investors in 2023. These international buyers are dominated by German investors (44%) followed by the UK (10.5%), France (5%), Italy (4%), Sweden (4%), Netherlands (3%) and Switzerland (2%).
Engel & Volkers Mallorca 2023 data indicates a similar nationality breakdown of German, British, Spanish, Swiss, Swedish, Czech, and Dutch buyers. There is also increasing interest from overseas buyers from the Americas and Eastern Europe, a trend that is growing as we move into 2024. In recent years, the company’s buyer demographic has become younger as people are considering not just buying a holiday home, but to relocate permanently to the island with their families.
Outlook: Sustainable growth and price increases in the premium segment
Mallorca continues to lead economic growth and employment creation in Spain assisted by the strong recovery of its tourism sector which boosted job creation and consumer spending. According to Caixa Bank research, the Balearic GDP grew by 3.8 percent in 2023, which was above the Spanish average of 2.5%.
The island’s easy access and modern infrastructure is supported by Palma International Airport with direct flights throughout Europe and the US. This factor, combined with its thriving tourism industry, which is attracting major investment by key international brands such as Four Seasons and Mandarin Oriental. These factors make Mallorca a highly desirable destination in the Mediterranean with year-round appeal for second-home investors.
Concludes Hofer: “Many people re-discovered the island post-pandemic, so demand continues and there’s confidence in Mallorca’s real market which has a proven track record of providing solid long-term returns on investment. It remains a leading second-home destination in the Mediterranean and is increasingly being considered as a primary residence for families”.