Foreign property investment in Mallorca has caused the prices of single-family homes to skyrocket. ‘Now people are paying between 6,000 and 4,000 euros a month in rent for houses, chalets and townhouses that used to cost half as much,’ according to the president of the Association and College of Real Estate Agents (API) in the Balearic Islands, José Miguel Artieda.
He argues that the demand for renting isolated properties has increased significantly in the last two years. In his view, the main reason is that tenants used to rent on a seasonal basis and pay between 5,000 and 10,000 eurtos per month, but are now opting for long-term rental contracts. In some cases, the reason is that they have liked Mallorca so much that they have opted to work remotely and return to their countries of origin on specific days, while others continue to live in their usual residences due to the island’s good connections, which allow them to come back some weekends.
The president of API points out that the areas most in demand for single-family homes are some in Palma, such as Los Colegios, as well as municipalities in the Part Forana, such as Santa María, Calvia and Andratx, although they extend to practically all traditional or coastal villages. In terms of profile, they are generally Germans looking for a detached property, i.e. a single-family home that offers them more privacy and comfort than an apartment.
Artieda stresses that this is a completely new phenomenon, as until now rents exceeding 3,000 euros per month were common in luxury real estate, but have now spread to the rest of the sector. When asked why these people do not choose to buy instead of renting, the president of API says that there are several factors at play. One of them is that, as it is a rental, they can leave if they feel it does not meet their expectations. Another is that the cost of these properties is very high, increasing dramatically every year.
They also choose to rent in order to settle into the island and look for a permanent home to buy. However, Artieda points out that ‘one of the main reasons is the fear of not finding a suitable property, which is why they choose to secure a rental’. Artieda stresses that, although it may seem surprising, there is also more demand for single-family rentals than supply, as is generally the case, so estate agents have to carry out very exhaustive searches. In fact, some properties are not even advertised on estate agent websites.