Central Palma de Mallorca property report 2008

Buyers continue to “discover” Palma, which is currently enjoying a “renaissance” and market values reflect this trend. The city’s accessibility, infrastructure, cultural lifestyle, its proximity to Palma International Airport, with daily connections year round, is attracting a range of international buyers.

Report prepared by local real estate agents

Local agents reported substantial price increases in the city and although prices are now not rising as dramatically as a couple of years ago, values last year were increasing 10-16% and the predictions for 2008 will be at a similar level.

Over the past year, the local town hall has knocked down 1970’s buildings to restore the historic walls of the old city. This development has created a boom for properties on the fringes of the old town, which now enjoy uninterrupted views to the Bay of Palma. Construction of Palma’s new Congress Palace is now well underway (completion 2010) and further demolitions are planned to create an exciting area, which will launch Palma onto the international arena for congresses, exhibitions and events.

Penthouses and apartments continue to be the most popular properties in the city with an average spend for a penthouse of around €500,000 – €1 million. There is still a strong market for clients looking for properties that need renovation as Palma remains an area where clients will make an investment for a buy to let property.

Average sale periods are relatively fast – within nine months for properties which have been realistically valued and are under €1 million and the majority of vendors are achieving their asking prices. Buyers are Spanish, British, German, Scandinavian, American, Swiss and Italian and they spend, on average, between €400,000 and €750,000.

Just over 25% of buyers fall into the 30-40 year age bracket with 60% aged over 40. Approximately 40% of buyers will use their property as a second home. A growing trend has been with buyers who are using their Palma property as their first home (about 30%).

Palma continues to offer excellent medium- long term opportunities as a safe and secure investment. According to the local office, the areas of Santa Catalina, Sa Gerreria, Terreno and the Paseo Maritimo still provide good value.

Property on the Outskirts of Palma

The area sees a growing interest as the need of privacy within easy reach of Palma increases. Various new highways were completed to ensure faster access outside Palma and this has opened up many areas within a 15 kilometres radius of the city.

Last year, Son Vida, enjoyed a “boom” and was being rediscovered as a luxury, exclusive residential area. It has three golf courses, two five star deluxe hotels and great views over the Bay of Palma. Other key factors are Son Vida’s proximity to Palma and its security as a gated community with 24/7 surveillance. A new project is scheduled to create a new access road into Son Vida improving traffic flow. Generally, this is a good area for families with many top schools close by.

Properties here are at the top end of the market with prices starting at around €700.000 for an apartment increasing to €2.5 million plus for a villa In 2007, values increased by an average of 9-15% and there was an increased demand for plots with an average price of €750.000.

Further out in suburbs and villages, prices start at around €350.000 for an apartment increasing to over a €1 million for a finca. Townhouses are popular at around €600.000. Property values have increased everywhere by an average of 8% and most property sells within 12 months.

The main markets are German (35%) with an average spend of around €1.9 million, British (35% and average spend of €2.2 million) and Spanish (10%) spending under € 1 million. Scandinavians, Dutch, Austrians and Swiss are also big buyers. Recently, Russian buyers have started investing.

Only 50% of buyers look for a holiday home, 30% uses the property as a first residence. Approximately 20% buy to let. Investment prospects are still good. Around 60% of all buyers are aged between 40-50.

The local office reports increased demand for new residential developments in Son Vida. Establiments and Esporles provide good value and easy access into Palma where as the village of Puigpunyent and nearby Galilea have potential with one established five star hotel in the area and another due for completion at the end of 2008.

Central Palma Property Prices

Villa with views, 4 bed, 350m2 2.200.000 10% 7 – 9
Villa no views, 4 bed, 350m2 1.750.000 7% 9 – 12
Apartment with views, 2 bed, 100m2 600.000 15% 6 – 8
Apartment no views, 2 bed, 100m2 450.000 8% 7 – 9
Country house, 3 bed, 350m2
Townhouse, 3 bed, 180m2 900.000 7% 9 – 12
Plot m2

Outskirts Palma Property Prices

Villa with views, 4 bed, 350m2 3.200.000 10% 6 – 24
Villa no views, 4 bed, 350m2 2.500.000 10% 12 – 30
Apartment with views, 2 bed, 100m2 420.000 7% 6 – 12
Apartment no views, 2 bed, 100m2 350.000 7% 6 – 12
Country house, 3 bed, 350m2 1.000.000 7% 6 – 24
Townhouse, 3 bed, 180m2 600.000 7% 6 – 18
Plot m2 400 15% 6 – 18

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