The ongoing Iran war is set to impact the European economy, with significant repercussions anticipated for the Balearics housing market, according to local architects. "It’s a domino effect," stated the dean of the Official College of Architects of the Islands (COAIB), highlighting how property prices are likely to rise while the number of available homes may decrease, "but I don’t think demand will fall"; rather, it might increase.
"Prices will rise because material costs are going up, and construction prices will soon follow," explained Nadal. Although the demand’s trajectory is less predictable, he speculates an increase driven by those fleeing conflict zones. This potential migration could be facilitated by the new air link between Palma and Abu Dhabi.
Operated by Etihad Airways, this route, initially aimed at tourism, might evolve into a migration channel. "There will probably be some capital shifting here: let's remember the direct flight from Abu Dhabi to the Balearics, and we shouldn't rule out this movement turning residential," Nadal added. This dynamic strengthens the structural demand for housing.
Rising construction permits amid high demand
Nadal, alongside Mallorca’s regional delegate Joan Cerdà, revealed data on building permits for 2025 this Tuesday. The figures show that legalisations in rural areas have been the main driver behind the surge in permits, with close to 1,700 permits issued across the Islands. Overall, construction permits increased by 28% year-on-year, while housing permits rose by 31%. This growth occurs amid strong demand coupled with limited supply, notably in social housing.
Other factors include increasing demographic pressure and ongoing administrative regularisations. The total permits issued numbered 7,448, with 4,805 pertaining specifically to housing.
Impact of regularisations and housing types
Without the extraordinary rural legalisations, construction growth would drop from 28% to 5.7%. Housing permit growth would reduce from 31.6% to 18.6%. This regularisation notably affects detached houses, although the positive trend remains evident even excluding these factors.
"There should be a balance, which is social housing," noted Cerdà, commenting on statistics showing a slight lead for multi-family homes (2,452) over detached houses (2,353). Both categories are growing, but detached homes—linked to higher purchasing power and foreign demand—are nearing their historical peak. Detached housing reached a maximum of 2,971 new units in 2006, whereas multi-family homes remain far from the 13,109 permits issued at their 2007 peak during the housing bubble, nearly five times more than last year.