-Sales up by approx. 35 % on Mainland Spain
-Big buyers are back with large transactions
-Increased demand for rentals
Report prepared by local estate agents
2010 looked set to be another tough year throughout the Spanish Mainland and the Balearics. However, several major sales from 4 – 13€ million has brought renewed optimism to the quality residential market demonstrating that major investors are now entering the market. Fur-thermore, this trend looks set to continue through 2011, according to local agents.
In the Barcelona area two large sales of 8€ and 13€ million got the year off to a flying start and in the last two months on Mallorca a handful of sales at the top end from 4€ million to 8€ million have finished the year on an unexpected high with several large sales pending the no-tary at the beginning of 2011.
In the Marbella area there is strong demand for apartments in exclusive developments with prices range from approximately 500,000 – 700,000€ and potential buyers are carefully watching the market to jump in at the right time. Demand for rental properties is higher than supply and many vendors are now considering offering their property for sale or rent.
Older buyers nearing retirement are attracted to Tenerife where prices have decreased by ap-proximately 25%-30% now representing a level similar to that of 1998. As prices are not ex-pected to rise in the foreseeable future this is an interesting area for investors. This year de-mand has focused on apartments, villas or chalets with an average sale price of 450,000€. Clients are generally looking for smaller properties for family houses or properties in need of refurbishment.
Says one local agent “Apart from our large sales the average purchase has been around the 800,000€ mark. Areas that have performed particularly well this year include Barcelona (city and surroundings), Marbella and Tenerife. In addition, we are seeing an increased demand for rentals with a trend to offer property either for sale or rent”.
Major infrastructure developments on the Spanish Mainland include the new AVE fast train service between Madrid and Valencia cutting the journey time down to a total of 1 hour 35 minutes.
On the island of Mallorca total sales for this year will end on the same level as in 2009 with average sales value in the south west around the 1€ million level and 850,000€ in the north. Currently, demand is clearly focused on properties in prime locations either with seafront lo-cations or with spectacular rural views and traditional villages have become increasingly popular. However, the apartment and terraced house market is still more prone to price reduc-tions. Main buyers this year are German speaking with a slight reduction in British buyers to 15% down from 19% in 2009.
Demand for long term rentals has increased by approximately 10% this year in the south west, particularly at the top end for long term rentals from 1,000 – 20,000 € per month where potential investors want to experience living on the island before they buy. Average rental price for a villa is around 4,000€ per month and 1,500€ for an apartment. In the north of the island long term rentals are up by 32% over last year. Monthly rental prices range from 900 – 2,500€ and rural “fincas” range from 3,000 to 20,000€.
Says Daniel Chavarria Waschke, an agent in Mallorca; “2010 looks to close better than we expected following a slow summer. Our indicators show that the market is stable with slight price increases, if any, expected towards the end of 2011. Some important sales around the island combined with a recent surge of internet requests, which accounts approxi-mately 30% of all sales leads, demonstrate that those buyers who have held on for this win-dow of opportunity will come into the market in 2011”.
National and foreign investment continues in Mallorca, which arguably has the most so-phisticated infrastructure of any Mediterranean island, with a new public hospital, “Son Es-pases” located on Palma’s outskirts and the new superyacht marina at Puerto Adriano is scheduled for completion in late 2011.
On the neighbouring island of Ibiza the year will end almost 50% up over 2009 achieving average sale values of 1.2€ million with a handful of large sales of up to 2.8 € million. Clients are either focused on contemporary style seafront properties or authentic traditional fincas. The “crisis” appears to be over for Ibiza for top end property where prices have started to rise again. The rental market is focused on high end holiday rentals producing an average weekly yield of 8,000€ plus.
On Menorca the market has been quite flat this year. However, access from the UK has im-proved with Monarch Airlines operating regular flights throughout the winter months from Birmingham, Manchester, Luton and Gatwick. There is still interest from a wealthy British market sector for prime property of around 1-2€ million. The international market also appears to be opening up with the news of new direct flights from St Petersburg and Moscow starting in 2011 which has brought interest from new Russian clients looking to spend 1 to 5€ million.