Mallorca: A sought-after market for luxury holiday properties as an investment
Mallorca undoubtedly has its charm - both as a dream destination for tourists and seniors, as well as for investors. Because despite factors such as inflation and rising interest rates, the Balearic island continues to have the highest real estate prices in Spain - which continue to rise year after year. The island is a popular destination, particularly when it comes to luxury holiday properties. Find out more about the price development, the best locations and how private investors can also purchase a - tokenized - piece of island luck.
Rising prices — particularly in the luxury segment
The high demand, particularly in the luxury real estate sector, and the attractive returns make Mallorca an interesting investment destination for investors. Despite the already high prices, there is still plenty of potential for value growth, particularly in emerging regions of the island.
In As of January 2023, the average price per m2 of property in Mallorca was at 3,706 euros. This data from the Spanish National Institute of Statistics (INE) represents an average annual price increase of 10.5 percent compared to 3,459 euros per square meter at the beginning of 2022.
In 2024, the average price per square meter for a holiday property is around 5,800 euros. This resulted in a recent Analysis carried out by the STI Center for Real Estate Studies (CRES) on behalf of the broker Porta Mallorquina Real Estate carried out. This increase shows a high degree of stability compared to the German real estate market, which is tending to decline this year.
The luxury segment remains the most important price driver on the Balearic island, with an increase of 13 percent. You even have to pay up to 18.8 percent more for excellent sea views, and there are major regional differences: The most expensive region is still the southwest, followed closely by the increasingly popular Palma City. In areas such as these, luxury properties paid an average of more than 10,000 euros per square meter for the first time. As prices rise, the number of properties for sale continues to decline.
In the high-priced segment, the market is almost empty. If you exclude properties that have not yet been completed, the supply of holiday properties has fallen by 11.5 percent compared to last year. Especially in the southwest, such as in the highly sought after Andratx Region, according to the CRES study, this is noticeable: The range of properties here has fallen by 41 percent.
Good climate for investors
Overall, real estate prices in Mallorca have risen by up to 78 percent since 2015 and experts do not see an end to the boom. This positive development is supported by various factors: Mallorca's attractiveness as an easily accessible travel destination, the quality of life and political stability compared to other holiday regions. In addition, a new, financially strong group of buyers from the USA and Emirates is increasingly interested in the island, which is also reflected in the increasing number of direct flight connections from these destinations.
In addition to the attractiveness of the island, there are also new financial benefits for property buyers. Until the end of last year, the state wealth tax, in which residents and non-residents paid progressively between 0.28 and 3.45 percent of net worth annually, was above the allowance of 700,000 euros. But since January 1, 2024, the wealth tax allowance has been increased from 700,000 euros to three million euros per registered owner, which of course makes Mallorca even more attractive for investors.
Mallorca real estate trends
But what criteria do property buyers on the Balearic island use to select their dream property? Several trends can currently be observed:
- Luxury real estate: There is an increasing demand for luxury real estate. Buyers are willing to pay higher prices for high-quality equipment and exclusive locations. Properties with sea views, private access to the beach and pool are particularly popular. According to data from the CREA study, there is a price premium of almost 75 percent for a particularly luxurious swimming pool compared to properties without a pool; houses with a normal pool are around 50 percent more expensive.
- sustainability: Properties with environmentally friendly construction methods are gaining in importance. Properties with solar systems, sustainable materials and a good energy efficiency class are in particular demand.
- Long term rentals: In addition to classic holiday properties, long-term rental properties are also on the rise. Many international buyers use their properties not only as a holiday home, but also as a second home.
- Diversification of locations: While traditional hotspots such as Palma and the southwest coast remain popular, there is an increasing demand for real estate in lesser-known but equally attractive regions of the island, such as the north and interior of the island.
Mallorca's flair, easy accessibility, pleasant climate and positive development of real estate prices should ensure that the island remains a sought-after address for investors. FINEXITY has with Solara One! There is currently an interesting luxury property on offer in the trendy southwest and could thus build on past successes: FINEXITY's first Blanes One project from 2020 has already been sold and achieves the best possible return of 9.4% p.a. for FINEXITY investors. A Mallorca investment is not only reserved for VIPs, because Thanks to digitized shares, even retail investors can purchase a “piece” of luxury property starting at just 500 euros and benefit from potential return opportunities.
