News Hollywood actor Michael Douglas’ Mallorca finca (country estate) is on the market with Mallorca Sotheby’s International Realty set the market there spinning recently. The projections the finca may demand as much as €50 million euro reveals what most experts say is a bull market for such exclusive properties. Spain’s Balearic Islands deserve a closer look for the coming New Year.
Fincas (estates) in Spain and Latin America are ever increasingly the focus of high end real estate investment. High net worth people have gravitated to what are unique and somewhat rare real estate opportunities in places like Spain’s Baleiric Islands, have led to a “follow on effect” making such places attractive for speculators and developers. Mallorca, for those who do not know, has become a sort of European second home Mecca for the rich and famous over the last two decades. Michael Douglas is but one of a long list of famous people who opt to live part-time at least, on this magnificent island. While many opt for floating palaces moored at the the luxurious marina Puerto Portals (above), others seek solitude and the country lifestyle buying into the island’s agricultural estates.
The Island has become a sort of “Beverly Hills” of Spain, or perhaps Catalina Island is a better comparison. While some stars come to play and relax, to party and soak up the bright hot sun, other celebs like billionaire, Sir Richard Branson, or Sir Andrew Lloyd Webber have opted for residences at one time or another. Then there’s what I’d call the Germanic invasion in the Mallorca finca market by celebs like Ralf and Michael Schumacher , and Sweden’s tennis legend Bjorn Borg, who all decided to hole up near Es Camp de Mar.
The market spotlight we must note the property valuation of Michael Douglas’ finca, but also the latest trends in general. If activity is a marker, then this time last year showed increase in inquiries and visits, with sales in some areas doubling compared to previous periods. Since 2008 drew to a close, prices tumbled 10% to 30% in some areas. However, the newest trend shows overall prices steady, with select properties going at a premium to Scandinavians and Germans. The bottom line on choice Mallorca finas is, demand is driving the price up steadily. The old adage form my southern youth holds true for such properties; “They just don’t make any more of them.”
Thinking of famous frequenters of this island gem, Mallorca’s new-found celebrity home-away-from-home status is nothing new really. Back in the golden age of Hollywood stars like Charlie Chaplin, Audrey Hepburn, John Wayne, Gary Cooper, Laurence Olivier, F. Scott Fitzgerald, Douglas Fairbanks and Errol Flynn played on the island in their heydays. But famous counts, countesses, sports heroes, and movie stars do not really power Mallorca’s real estate values. Aside the 300 plus days of sunshine every year, and the 23 golf courses (such as Alcanada above) , 25 marinas, not to mention the stunning scenery, Mallorca is literally minutes away from the colder, busier spots of Europe. The bottom line for those Germans and Scandinavians is, buying into the Mallorca lifestyle is a win-win. This Sunday Times article reflects more on this.
For real estate entrepreneurs, following the “safe money” is always great advice. The Mallorca market, one that reveals conservative Germans buying back in, foretells of UK, Russian, and others following suit. Most experts agree though, the window of opportunity may close soon. This, based on the finite number of really premier fincas and luxurious villas available.
While Spain and much of Europe continue to suffer from the ongoing economic downturn, properties being bought in Mallorca and the Balearic islands by overseas investors have boosted property values to at least within 10% of pre-crisis levels. This Financial Times peace validates the trend. Apparently Asian buyers are still absent from this market, while Russians seem to be taking advantage of good flights from Moscow, and of other incentives to migrate to the Balearics. This Engel & Völkers (PDF) report for 2014 bears up under scrutiny as well showing Russians as the fourth largest buyer contingent after the British. To quote on Mallorca’s high end market demand:
“In general the most requested properties for second homes are villas with sea views or countryside fincas that look over the Sierra Tramuntana, now a UNESCO World Heritage site, that provides 92 kms of protected territory running from the south west to the north of the island.”
Finally, the same market report reveals demand for estates (fincas) like the one agency Mallorca Finca above, they’ve made many Mallorca areas a “seller’s market,” new developments in the last couple of years promise continued growth “with large scale new construction projects such as the Marina Plaza II in the fashionable Portixol area.” Meanwhile the Son Vida, the southwest, and the central region of Mallorca show the biggest price tags at an average of €1.5 million, €1.4 million, and €1 million respectively. Clearly rising demand promises interesting investment opportunities in Mallorca, just as coastal and choice real estate on the Spanish mainland affords value potential. Price drops on the mainland, they’ve driven investments and demand up too. The overall outlook for Spain now, especially the Balearics and Canary Islands, seems healthy indeed.
We’ll continue to focus on this and other interesting markets in the coming weeks.
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