The conflict in the Middle East will drive up house prices in the Balearics even further. This became clear on Thursday during the first round table of the Mallorca Real Estate Summit 2026 – an event presented by Paula Serra, Director of Audiovisuals at Grup Serra – which was attended by the Regional Government’s Minister for Housing, José Luis Mateo; the president of the builders’ association, Climent Olives; the president of the developers’ association, Óscar Carreras; and his counterpart from the Balearic Association of National and International Estate Agents (Abini), Daniel Arenas, moderated by Javier del Hoyo (KPMG).
Olives was clear: the rise in energy costs is already having a major impact on construction projects. “All our machinery relies on diesel or electricity, which is already translating into a significant rise in costs,” he warned. Added to this is the rising cost of oil-related materials, which, in his view, will inevitably be passed on to the final price of housing. Although deadlines have not yet been affected, he warned of possible short-term delays due to supply issues.
Carreras agreed with this assessment, though he added a note of resilience: “The sector adapts”, he argued. He admitted that rising costs would be passed on to prices, but ruled out “exorbitant” increases, particularly in social housing or limited-price housing. As for investment, he acknowledged a certain slowdown in the foreign segment, particularly in the luxury market, which is more sensitive to global uncertainty, whilst demand for affordable housing “remains strong, driven by dynamics linked to tourism”.
“We rule out outrageous rises in house prices due to the Iran conflict, especially in social housing”
Along the same lines, Arenas explained that market behaviour depends on the buyer’s profile. He noted that German clients, the main market in the Balearic Islands, are more cautious in times of uncertainty, though he highlighted a possible safe-haven effect in the medium term.
“Mallorca is perceived as a safe destination, not only for holidays but also for living,” he said, pointing to a possible return of residents from unstable regions in the Middle East. For the time being, this trend is being seen tentatively in the long-term rental market, according to the president of Abini.
Against this backdrop, Councillor José Luis Mateo defended the regional government’s response with emergency aid and coordination measures with affected sectors, although he acknowledged that, should the crisis drag on, it will be necessary to expand the response, including at national and European level. “We want more affordable housing for residents,” he stated.
The private sector called for new measures. Olives asked the central government for an extraordinary review of prices for works already awarded, pointing out that the regional administration has “its hands tied” in this area. Mateo reiterated that the regional government would join this review if it is approved at national level.
Beyond the international context,the debate focused on the structural obstacles hindering housing production. Carreras highlighted the lack of land development over the last decade and called for regulatory continuity and a boost to municipal resources. “Planning permissions remain a bottleneck,” he stated, advocating for the creation of urban planning agencies and direct aid to buyers.
Arenas insisted on the need for greater administrative flexibility and institutional cooperation. He welcomed the introduction of urban planning partner bodies (ECUs) and called for their effective expansion to reduce licensing times, which can currently exceed two years. “That ultimately has a direct impact on the final price,” he said.
Olives was even more forceful: “Planning can take between 10 and 20 years, which discourages any initiative”. He also criticised the legal uncertainty resulting from constant regulatory changes and delays in sectoral reports. Mateo agreed with this assessment and highlighted the role of the ECUs and the development of strategic residential projects.
The conclusion of the debate left a unanimous message: the focus must be on increasing supply. Carreras called for housing to cease being a ‘political weapon’, and Arenas summed up the spirit of the day: ‘Housing requires finding solutions, not culprits’.
Foreign buyers keep the market stable
The Spanish property market is holding up in an international context marked by uncertainty. This was the view put forward by CaixaBank Research economist Pedro Álvarez, who outlined a scenario in which geopolitical factors, with the war in the Middle East as the main focus, are influencing economic trends without, for the time being, undermining the strength of the residential sector.
One of the pillars underpinning this demand is the foreign buyer, particularly significant in regions such as the Balearics. In the archipelago, a quarter of property sales are made by non-resident foreigners, compared to an average of 8.7% across Spain as a whole. In terms of activity, the Balearics maintain a figure of around 15,000 property transactions annually, showing remarkable stability even compared to the pre-pandemic period.
However, access to housing remains strained by rental trends and the difficulties first-time buyers face in entering the market. CaixaBank Research estimates the structural housing deficit in Spain at 740,000, concentrated in large urban areas.