In the space of 70 years, the Balearic island of Formentera has gone from a subsistence economy to one of the most exclusive places in the world to own a property. The scarcity of homes for sale in Formentera makes it even more exclusive.

Everybody has heard of Ibiza, but fewer people know about Formentera – Ibiza’s smaller cousin 6kms to the south – one of the most beautiful islands in the Mediterranean, and in whose municipality you will find the private island of Espalmador – the most lovely of all.

Ibiza, Formentera, and Espalmador are known as the Pityusic Islands, and together with Mallorca and Menorca to the north, they make up the Balearic Islands.

Formentera has an area of 83 km2 and around 12,000 residents, compared to Ibiza’s 571 km2 and 150,000 residents. So, in both size and population, Formentera is a lot smaller than Ibiza. You could argue it’s a bit of a sleepy backwater, which is exactly why some people love it.

Not just small, Formentera is that bit more difficult to reach, because you can only get there by boat – in most cases by ferry from Ibiza – though there are also ferries direct from Denia near Valencia on the Spanish mainland. Even the super-rich can’t fly in direct by private jet or helicopter to Formentera, as there is no airstrip or helipad for private use. Along with its small size, this access barrier is one reason why Formentera has never been a destination for mass tourism, or hordes of property investors.

That said, Formentera is easier to reach than it was twenty years ago, as there are many more ferries during the day from Ibiza that, combined with many more flights to Ibiza from all over Europe, mean you can now get to Formentera in half a day’s travel from places like London and Paris, whereas not long ago it would take the best part of a day to get to or from Formentera, or even two days. Easier access is one of the factors fueling demand for property in Formentera today.

Though not a mass tourism destination, Formentera has been remarkably popular with young Italians for the last twenty years, since they took over from Germans, who in turn took over from the French. These things seem to go in waves that last a decade or two.

The young Italians can be a bit noisy where they congregate, but they are generally well-behaved, and easy on the eye. I suspect they will slowly be priced out of Formentera, as it’s increasingly expensive (everything has to be brought in by boat) and holiday rental apartments in places like Es Pujols are disappearing with the new Balearic tourism regulations designed to stamp out holiday rental flat

Why buy a home in Formentera?

Formentera is adored by its fans for its spectacular white beaches and turquoise blue waters, and Ses Illetes beach including Espalmador is regularly voted one of the best beaches in Europe by travel sites like TripAdvisor. The island is largely unspoilt, the natural surroundings are beautiful, and the summer weather is reliably hot and sunny, though you often get a cracking storm or two in August. The best time of the year is for perfect warm weather – not too hot, and less people around. In my 20-year experience the weather is slightly more reliable than Ibiza, though there’s not much in it.

A type of laid-back paradise, Formentera is the perfect place for a holiday-home if you want to disconnect from the modern world on a small, unpretentious island surrounded by beautiful beaches and vistas, with a reasonable selection of good restaurants and fun bars, and hippy-chic shopping in the form of open air stalls. It’s a place to just relax, go to the beach, eat and sleep. There’s not much else to do beyond biking and water sports. Of course you can always nip across to Ibiza for a bit of action if you want.

Formentera is also a private place where people tend to mind their own business – a big plus for the rich and famous who want to be left alone on holiday. Those who enjoy the limelight can find it in Ibiza, those who want more privacy can head for Formentera (or to the north of Ibiza). Formentera is one of the few places where A-list celebs are hardly bothered in public, whilst the small size of the island enhances personal security for those who need it more than most.

For all these reasons, I’m told an increasing number of rich and famous people are looking for a holiday home on Formentera, but there’s a catch. There is so little property for sale in Formentera they are likely to find themselves on a waiting list, and the rich and famous aren’t used to that. Money normally solves all problems, and they usually get what they want. Tell them they can’t have it, and they want it more. Scarcity makes Formentera one of the most exclusive places to own property in Europe today.

Property for sale in Formentera

Basically, there are two distinct markets when it comes to holiday homes in Formentera, as explained to me by Lesley Hulme, head of property sales at local estate agent Astbury Formentera. I recommend you talk to Lesley if you want understand the property market in Formentera, but I warn you, she won’t show you properties on the island unless you meet the criteria of someone who is a serious candidate for buying property on the island. “So many people fall in love with the island after one holiday, and start of all enthusiastic about buyin,” she explains. “ I call it ‘Formenteritis’ but in nine out of ten cases they give up when confronted with reality. To buy a home in Formentera you need patience, determination, and resources. You also need to be sanguine about planning problems.”

For those who are serious about buying a home in Formentera, and for those who are merely curious what you get for your money in this corner of paradise, what will you find on the market today?

Holiday apartments in Es Pujols

One segment of the market is holiday apartments, mainly located in Es Pujols, on the north east side of the island. Es Pujols was developed for holiday makers, so the whole place is basically a small resort on the beach with hotels, holiday apartments, and some shops, bars, and restaurants. The housing in the town is not designed for primary housing, so it’s not the first choice for residents looking for a place to live. Holiday flats for sale is all you will find in Es Pujols.

Around the time the Euro was introduced, Es Pujols was popular with Italians buying flats as a good way to turn cash into real estate promising high returns from holiday rentals. But new regulations introduced this summer by the Balearic regional government in Palma de Mallorca imposing huge fines on anyone renting apartments to holiday makers without a licence have hammered the holiday rental business in the region, Es Pujols included.

“The market for apartments in Es Pujols has slumped,” says Lesley. “I feel sorry for people who bought holiday rental investments there, as that’s what the place is for.” The new regulations are meant to ease the housing crisis in the Balearics, but in a place like Es Pujols, which only offers holiday accommodation, they make no sense.

But apartment prices in Es Pujols are still astronomical compared to other parts of Spain. For example, Lesley has a 40m2, one-bedroom flat for sale for €250,000. That money would buy you a much bigger property in other parts of Spain where tourist rentals are legal. It’s difficult to justify such a high price for a second home you only use a few weeks a year and can’t rent out. Unsurprisingly, Italians are now mainly to be found on the vendor side, but demand has gone soft. It’s possible prices will come down somewhat, though scarcity will limit any decline.

Villas for sale in Formentera

The market for villas and country houses set back from the coast, also plots of land to build a new home is a different story. Demand outstrips supply, prices are high and look set to rise, and there is no reason to believe anything will change for the foreseeable future.

With the exception of the main house on the private island of Espalmador, there are no large, historic properties in Formentera like the ones, known as ‘posesiones’, to be found in Mallorca. Before the advent of tourism in the late 50’s and early 60’s, Formentera was not a wealthy place like it is now. The economy ran on subsistence farming and fishing, which does not produce the economic surplus you need to build large homes. So the old housing stock basically consists of modest rural dwellings and some village housing.

Things started to change with the arrival of tourists, who brought with them money and holiday-home buyers. Of the few villas and country houses for sale in Formentera today, many of them were built in the decades after the 60s. In those days water was (and still is) scarce, so swimming pools were uncommon. If a house doesn’t already have a pool, you’re not likely to get planning permission to put one in (but there’s always the sea to swim in, and never far away).

Homes between €500,000 and €1.5m are hard to find, and are likely to be small and basic. Starting at around €1.5m you can get a three or four bedroom villa between 150m2 and 300m2 built a few decades ago, possibly with some land, probably with mains electricity, but at this price it is unlikely to have a pool. The higher the price, the better the location, size, and features.

At the high end you might find a house with five to six bedrooms, 350m2 above ground living space and maybe the same below ground, 15,000m2 to 20,000m2 of land, a pool, electricity connection and sea views in a place like Es Cap with a price tag of €4m or more. You can spend up to around €7m, but would be pushed to spend much more than that on Formentera itself.

Another option is to buy a plot and build your own home. The first challenge here is finding a plot with building permission. You need 15,000m2 of land in an area zoned as agricultural where home building is legal, and such plots are hard to come buy. You will pay at least €750,000 for the plot, and a million or more for the best plots with sea views or waterfront access. Strict zoning means there is very little building land in stock for the future.

The next challenge is getting planning permission, which can take several years, and building can take a couple of years, so it might take you up to five years to if you buy a plot to build from scratch.

Another challenge is getting mains electricity, which these big modern houses full of machines like aircon need these days. It will cost you €25,000 or more to get hooked up to the mains by underground connection.

When buying an existing home, be aware that over the years many owners have made changes to their homes without planning permission, so you often find things not reflected in the deeds (same story in Mallorca, Ibiza, and pretty much everywhere in Spain, and the crap planning system is largely to blame). It’s difficult to get anything legalised these days, so you have to be sanguine about planning irregularities when buying in Formentera. If you find a property you want to buy, but there are doubts about the legality of some of its features, consult a good local lawyer to weigh up the risks before you do anything.

Who is buying property in Formentera?

Where is the demand for second homes in Formentera coming from? As I understand it demand for holiday apartments in places like Es Pujols has gone cold, but demand for villas is very strong, with buyers such as Swiss bankers, French industrialists, French mandarins from the top echelons, also buyers from the Netherlands and the US, and quite a few people who live in London but aren’t necessarily British, often hedge fund managers. There are also a few British buyers, including a family who recently spent €4m on a home in Formentera. At this end of the market, Brexit is almost irrelevant.

Reasons not to buy a home in Formentera

Dream all you like about a holiday-home in paradise, but don’t waste your time looking for property in Formentera if you don’t have the dosh to afford the luxury of a place that is not that easy to reach, that can be a pain to manage, that is dead quiet out of season, and where planning problems are a more common feature than swimming pools. You’ll get more for your money in other nice places, but of course, they will never be as cool as Formentera.