The Spanish island of Mallorca is experiencing a property price surge, driven by an influx of international buyers seeking upscale residences. Research from Savills reveals a 15% rise in prime property prices, placing Mallorca among the top five second home destinations. However, the escalating costs are rendering housing unaffordable for locals. Foreign purchasers, accounting for 36% of sales in Q4 2022, are contributing to Mallorca having the highest property prices in Spain. The island's appeal to ultra-high-net-worth individuals, including an emerging American market, coupled with improved flight connectivity, are reshaping its real estate landscape.
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In the year leading up to June 2023, prime property prices on the Spanish island of Mallorca increased by 15%. This information comes from a study by property firm Savills, which ranks Mallorca among the top five destinations for second homes. Savills considers various factors including cost, quality of life, airport access, and upscale dining and lodging options. Mallorca excels in these areas.
For instance, the average asking price for properties in Port Andratx, located in the island's southwest, was around five million euros (S$7.4 million) in 2022, up from 4.5 million euros the previous year. Similarly, country houses and estate properties near the sought-after village of Deia, which is home to a Belmond hotel, have seen their asking prices climb from three million euros to four million euros in the span of a year, according to Engel & Volkers.
The surge in prices and the trend toward more upscale properties on the island have led to housing becoming less affordable for local residents. Non-Spanish buyers accounted for approximately 36% of property purchases in Mallorca and nearby islands during the last quarter of 2022. As a consequence, property prices in the Balearic Islands now stand as the highest among all regions in Spain. An analysis by Knight Frank suggests that Spain has become a preferred global destination for ultra-high-net-worth individuals, which is further driving up prices.
According to Alice Storrie, associate director at Savills, the majority of property buyers are British individuals seeking vacation homes. However, she noted an increasing number of American buyers entering the market due to the initiation of direct flights to the capital, Palma, in 2022. The availability of a United flight from Newark International Airport has introduced a fresh wave of buyers, particularly benefiting from a favourable exchange rate for US-based purchasers.
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