According to Mallorca Property Partners, recent statements as to the state of the property market are misleading. As Mallorca is part of Spain it’s all too easy to think that property prices must have been hit by the economic downturn.
This assumption is backed up by the latest figures from TINSA , a company that specializes in international real estate valuations. Their statistics show a price decline in the Balearic and the Canary islands of 26.9% from March 2007 to March 2013, compared to an average of 35.2% across the whole of Spain. However a prominent developer and a leading estate agency have both claimed that Mallorca property prices haven’t been hit by significant price declines in recent years. These conflicting views make it very difficult for buyers to accurately judge values, and to make any sort of purchase with confidence.
Overall Mallorca Property Partners thinks the TINSA figures are an accurate reflection of the market, but feel that what isn’t reflected are the variations in different sectors of the property market. They point out that buyers need to remember that Mallorca isn’t very big, but that it does have an unusually dynamic and fragmented property market. Although it can be misleading to refer to prices as having bucked the trend wholesale, average prices across the island are of limited use to sellers and buyers.
MPP points out that a property is “worth what someone will pay for it.” The key is to identify who that someone is, and this can vary considerable according to the sector of the property market. Some buyers are looking for “lifestyle assets” or in other words a secure place to hold some of their wealth. These buyers originate from a number of different countries in particular Scandinavian countries. Prices in the sector have remained resilient throughout the economic crisis, as for example it’s surprisingly difficult to find a good quality property with open sea views. However this type of property only accounts for a tiny percentage of the total stock across the island.
At the other end of the spectrum are the mass market properties in package holiday resorts. Before the economic crisis sales of this type property were driven by credit. Nowadays it’s quite a different story and there is a surplus supply for which there’s no immediate end in sight. Within this sector the prices can vary considerably according to the location and quality of the property, and whether or not it has any special features such as sea views.
The market is further confused by the fact that so many buyers come from overseas and may be supported by strong currencies and economies. All these things make blanket statements as to the state of the Mallorca property market almost meaningless.