An update on property price reductions in Mallorca

An update on property price reductions in Mallorca by Jan Westwood of The Property Finders. See below for contact details.

The market in Mallorca peaked in late 2007/early 2008. Despite denials by property professionals that the island’s micro market would be largely unaffected by the general downturn, by the last quarter of 2008, the large chains reported sales were down 30-35% compared to the previous year. Apartment promoters were then prepared to give generous discounts to offload, albeit the sort of units in Palma and the suburbs which would not normally attract overseas buyers. The top end of the market still remained firm.

However, in the run up to Christmas, agencies began openly publishing the odd price reductions and by January whole pages appeared, with red banners across property photos showing original and discounted asking prices.

Southwest Mallorca apartments

Now, if you are shopping around for an apartment there are a few interesting deals to be made even though, unlike the costas of mainland Spain, there is no vast oversupply of developments. In the SW, some promotors left with new build units are prepared to take a deposit with two years or more to complete. A potential buyer recently placed a local advertisement offering his yacht valued at €700,000 in part exchange for a luxury penthouse, with cash top up, and received three replies from private vendors.

In the luxury bracket, there’s a three bedroom apartment near Puerto Portals in a prestigous, front line community with 24 hour security, manicured gardens and spa facilities, which has dropped by €750,000 to €2.5m. A second apartment in the same community has dropped from €1.9m to €1.425m.

Southwest Mallorca villas and fincas

In the villa/finca sector, there are reductions up to 30% island wide, but although many look good on paper, there’s often a downside. In the boom time, their prices were set unrealistically against “similar” properties but they may not be the best build quality and are not in prime positions. A few appealing exceptions in the southwest would include a villa frontline to the golf course which has gone from €4.95m to €3.6m and a Karig style, seaview villa in Cala Moragues (Andratx) reduced from €3.65m to €2.4m. Of note is also a three bedroom house in a community next to Santa Ponsa golf course, reduced from €725,000 to €595,000.

Mallorcan coastline
Mallorcan coastline

A stone faced, detached home in the centre of the highly sought after village of Capdella (10 minutes from the coast) has reduced its asking price from €1.9m to €1.5m. The four bedroom property, with pool, sits on a private plot of 1,200 sq metres and is within walking distance of local tennis courts.

This week, one promoter has offered to take any property in part exchange, up to 30% of the sales price, for a newly constructed, stone finca with pool near Port Andratx, asking €4.59m, reduced from €5.95m. The six bedroom property on 35,000 sq metres with own well, has wide ranging views over Sa Coma valley.

Palma city property

In the Casco Antiguo, the old part of Palma city, a three bedroom, refurbished apartment is reduced from €750,000 to €595,000 whilst a two bedroom apartment asking €395,000 is now asking €270,000. In general, the apartment market has readjusted 10-20% down. Just west of the city, a garden apartment in a quiet community of eight with own garage and easy access to the Via Cintura motorway has dropped from €775,000 to €599,000.

Southeast Mallorca

Although the apartment market has also dropped away on the southeast coast, it’s the one region which seems to have done better than most according to the Santanyi office of a large franchise chain. They actually reported 20% up on finca and villa sales for the last quarter of 2008 compared with the previous year. In general, though, there are long lists of unsold, country houses between €1.1m and €2.5m in this sector, and the first signs of visible price readjustment have appeared, e.g. A five bedroom finca with 11m x 6m pool in C’as Concos previously asking €2.2m has reduced to €1.9m. Top end properties are in fairly short supply but as they are not shifting either, may now be more open to offers.

Inland, north and east Mallorca

Unlike Andalucia where properties inland often change hands between spanish families, there are many more opportunities in rural Mallorca. Since improvements to the road network in the mid 90s, foreigners, in particular from the yachting industry, have been moving inland. They now account for 20.5% of registered home owners in Llucmajor, 33% in Andratx and 35.5% in Calvia.

In Montuiri (the very centre of the island), a four bedroom, rustic finca with pool formerly asking €2.45m has reduced its price by €500,000 to €1.95m. The land comprises 30,000 sq metres with its own well.

In the north and north east, prices have readjusted 10-25% down.

Sterling exchange rate

Due to the dramatic slide of sterling against the Euro, buyers from UK had dropped by 50% by the end of 2008. Buyers from Germany, Scandinavia, Switzerland, Russia and other parts of Spain picked up. However, as prices are dropping to more realistic levels, some properties are already 15% cheaper than last spring when the exchange rate was favourable, so the British are watching carefully, especially those with cash available whose negotiating power is phenomenal.

Jan Westwood is a buying agent with specialist knowledge of the market in Mallorca
Tel: +34 971 233 207

Copyright Jan Westwood 12/02/09