After the evolution in the real estate market in 2016, everything indicates that 2017 was the year of consolidation of the sector. Hence, many analysts predict that it is a good time to invest in housing.

Profitability growth is expected, in part thanks to the increase in the sale and rental price. Investment in housing was 899 million in the Balearic Islands in 2017, with an increase of 32.91%. According to a recent real estate study, the return on housing as an investment has reached 6.3% from 5.5% the previous year. In addition, it relates the sale price and the rental price of the house, from which its gross profitability is obtained. In the same way, they point to an increase in the rental price at a rate higher than the sale price of the home.
This situation has made investing in housing one of the investors’ favorite options. In fact, buying a flat and renting it is 4.2 times more profitable than investing in government bonds.

In terms of tourism investment, 335.8 million in total, 5.9% higher than 2016, has been unequal among the islands. In Ibiza and Formentera it has decreased by 27.2%; in Menorca it has increased by 64% and in Mallorca it has grown by 11.8% to 251.7 million.

In terms of construction, investment increased by 17.6% in 2017, to 1,729 million euros, an increase that the sector values but reveals that it can’t be called a “boom” since it is still lower than that of 15 years ago, when 1,820 million were reached in 2002. There is a fairly significant investment in single-family homes, but they do not represent the investment desired by the sector. The builders are concerned about the lack of a strategic plan for public investments, as well as the lack of incentives for private investment and the proliferation of moratoria. In the same way, they consider insufficient investment in officially protected housing, and there is a significant lack of incentives in the tourism sector to continue investments.

The real estate market, through the SOCIMI, which are listed companies, returns with renewed strength. It is a type of investment in which you can get 6% -7% per year, counting the dividend and the revaluation of assets. Many investors can’t buy a house and rent it, that’s why SOCIMIs are an alternative way, very suitable for the investor that wants to diversify. It is estimated that they accounted for 40% of all real estate investment in 2017. During 2018 they will face a stage of consolidation and enhancement of the assets acquired in recent years, focusing mainly on their management.

In Ripoll & Mateu we work to get total satisfaction of our customers effectively by offering legal services and personalized assistance in civil matters, obligations and contracts of all kinds, especially those who follow and especially highlighting the urban-administrative matters.
Foreign investment area offers legal assistance with regard to funds from other countries for investments in real estate and commercial Islands. Our team has extensive international experience, we also have cooperation agreements with international firms and are members of the AIPP (Association of International Property Professionals).

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The forecasts of risk measurement agencies say that prices of housing will continue growing in Spain from this year until 2019 to reach 4.7% per year.

This will have a positive effect on bank’s balance sheets and the behavior of mortgage companies. In this sense, the specialists affirm that there is therefore no risk of a mortgage bubble, since for every four euros that were granted in 2007 today is allocated one euro for this purpose. The president of the European Central Bank (ECB), Mari Draghi, ruled out any danger in the euro area of a new housing or credit bubble.

The average price of second-hand housing has been in the Balearic Islands at 2,272 euros per square meter in April, a figure that represents an increase of 6.83% over the same month last year. Palma has been the second city where the price of used housing has increased the most from year to year, with 6.84%, registering an average price of 2.227 euros per square meter, just behind Barcelona.

Balearic Islands is in the sights of foreign investors looking to buy a home. Last year, the volume of transactions by international buyers – mainly European – exceeded 1.6 billion, which was a historical record and a 50% increase over two years ago. The luxury property is the most sought after by European buyers, more interested in purchasing than in renting, which has caused a significant increase in the average price in the last year in several areas of Mallorca

It should also be considered the boom of purchase by Swedish citizens. Property sales to Nordic citizens with high purchasing power have increased by up to 30% in the last three years. In the last four years the number of transactions on the island captained by these citizens has increased by 100% and the trend continues to rise. A demand that has skyrocketed mainly in Palma, where it has gone from three to thirteen specialized real estate agents in Scandinavian market in approximately ten years.

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Among the top areas for the Scandinavians are Palma center, the old town and the municipalities of the Part Forana, especially Serra de Tramuntana. There’s a neighborhood in Palma in which all Swedes want to live, Santa Catalina. Some people call it Little Sweden. The investment boom in the Palencia neighborhood has been spectacular in recent years.

If you are going to acquire a property in Mallorca do not hesitate to contact Ripoll & Mateu Solicitors Mallorca. We advise, defend and represent our clients at all levels. Our greatest asset is an infrastructure of professional leaders in each field of action, especially Real Estate and Tax, as well as our international vocation and multilingual capacity.

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Recent data from the Balearic Government confirm that the economy of the islands grew by 4.1% in 2016, the highest growth in the last 16 years. There were increases in all quarters, highlighting the good behavior in tourism in seasons in which traditionally presents less activity.

In the same report, the Government believes that the ‘Brexit’ will have little impact on the Balearic Islands during this year, following the same line of what happened in 2016 since the process is still in a negotiating moment.

It’s expected that the Mallorcan economy will not be unduly prejudiced in the short term by the UK decision to leave the European Union, despite receiving more than three million British tourists a year and has a population of almost 20 000 residents.

The Balearic economy is in a bullish process

Balearics is experiencing exceptional tourist seasons thanks to the quality of its services and the collateral consequences of the difficult situation being experienced by other countries that in the past were direct competitors in this sector.

Following in the line of these data, it’s to emphasize that in January Balearics received a total of 107,087 foreign tourists. A figure that translates to the arrival of almost 5% more tourists than in January 2016. According to INE data, Germany remains the main emitting country of the Islands, with 46.4% of tourists; Followed by the United Kingdom, which sent to the Balearic Islands 10.4% of visitors.

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The Balearic Islands will continue to grow in 2017, with a forecast of 3.6% after two years of growth. The Government expects that 2017 will also be one of the highest values recorded in the last 16 years, close to the results of 2016, and will represent an accumulation of growth of 11% in the last three years.

The forecast for 2017 places the Balearic Islands in a process of “normalization” of the growth cycle.

Growth is expected between 3.2% and 3.7% in all Islands. By sectors, the gross value added shows positive increases in all activities: the service sector is the one that grows the most, 3.8%.

Another significant finding is that the number of home mortgages increased by 14% in 2016 over the previous year, to 281,328, thus earning its third consecutive annual increase after seven years of declines.

With these very positive conditions, we can consider that it is a good time to invest in the Balearics, especially in Mallorca.

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The demand of luxury properties exceeds to the supply in the most exclusive areas in Spain mainly in Mallorca while the national real estate market attracts international investors with attractive prices and very competitive conditions.

The exclusive properties are sold in short time spaces for its excellent conditions such as valuations at market prices and excellent locations. The foreign buyers investment is considerably growing, the the analysis by source country shows that the British still represented the largest percentage of buyers. After the UK, the increased demand for luxury homes in Spain comes from France, the United States and Sweden.

Large international fortunes, with ability to purchase homes over half a million euros are active at the time of invest. The closing prices of luxury properties purchase operations are higher and timing of operations are being reduced between three and six months. This buyer’s profile, also known as “investors in lifestyle”, is not just focused in the potential appreciation of the property, they significantly value other aspects relating the quality of life of the country. Enjoy a good weather all year, a unique gastronomy offer such as sea views or frontline locations.

Mallorcan premium market is in a growth cycle. The most exclusive areas of the island (Andratx , Son Vida and Deià) remain being favorites between British, German and Scandinavian buyers. Building of new homes on the island practically came to a standstill since 2008, but in 2016 has experienced an increment of 55% in the number of requests for new residential projects compared to data recorded in the same period of 2015. This is the highest increment of the last ten years, in data of the Balearics Statistical Office (IBESTAT). The forecast for next year’s is of price growth between 3% and 5% and net sales will be almost half of what was sold in the maxima of the most successful years of real estate sales. In the same way, it’s confirmed as an attractive segment for investment.

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If you intend to purchase a property in Majorca from a foreign country like England or Germany, you should consider that both the jurisdiction and the processes to be carried out and the roles of professionals involved in it are different. Throughout the whole process, the presence of a lawyer is essential to be responsible for providing obligatory advice to clients on legal, tax and legal liabilities acquired during the action of sale.

At Ripoll & Mateu Solicitors Mallorca we advise, defend and represent our clients at all levels. Our greatest asset is an infrastructure of professional leaders in each field of action, especially Real Estate and Tax, as well as our international vocation and multilingual capacity.

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Below we offer you the latest information relating to the situation of the property market in Mallorca when only missing four months to finish the year.

  • Balearic Islands is the most powerful area of the Spanish real estate market, as both Mallorca and Ibiza and Formentera are in a clear recovery process.
  • During the first quarter of this year were sold in Balears 3,066 homes, 541 more than during the same period last year, representing an increase of 21.4%. Of these, 2,361 were used and 705 new.
  • In March were sold 972 homes in the islands, 24.5% more than in the same month of 2015amply surpassing average increase of the country, 16.8%. During the month of June, home sales increased 19.4% over the same month of 2015.
  • The acquisition of private housing by foreigners continues to rise. International investors, show high confidence in the property market on the island.
  • Mallorca has become the main destination of Swedes when buying a home in recent years, because since 2013 this trend have enjoyed spectacular growth at around 80%. They have become the third nationality at the time of acquiring housing, after British and German.
  • The type of media operation is around 350,000 euros in the Bay of Palma, although in Deia, Valldemossa and in the rest of Mallorca investment far exceeds 800,000 euros.
  • In Spain, the finished housing prices has moderated in July with an increase of 0.3% over the same month of 2015, compared to 1.5% June. In the case of the Balearic Islands, the finished housing (new and used) has experienced a rise of 1.7% in July, according to the appraisal firm Tinsa.
  • In the Balearic Islands have registered in June the highest rates of annual variation of sale of estates (20.2%), according to data from the National Statistics Institute (INE).
  • According to the record of the sale of registered homes, Balearics is the community with the highest number of transmissions (136) per 100,000 inhabitants.
  • The price per square meter of housing in the Balearic Islands stood in the first quarter at 2,122 euros, the second most expensive of all communities after País Vasco, which stood at 2,190 euros, according to the General Council of Notaries.
  • The markets of the rental and resale property in the Balearic Islands are experiencing a boom evident reflecting increased demand experienced in recent times.
  • Balearic Islands is experiencing strong upward pressure by foreign demand, especially in high-end and luxury sector, which has led to an increase in
  • Calvia, is one of the most expensive areas of Spain, at a rate of 2,835 euros per square meter, and and is encouraged at a rate of 11.4% interannual and could regain its highest price in just over a year.

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As a specialist in Real Estate Law in Mallorca, we offer comprehensive advice in the process of buying and selling property. If you intend to purchase a property in Mallorca from a foreign country like England or Germany, you should consider that both the jurisdiction and the processes to be carried out and the roles of professionals involved in it are different. The presence of a lawyer is essential to be responsible for providing obligatory advice to clients on legal, tax and legal liabilities acquired during the action of sale. No doubt to contact us, we will attend you with no obligation.

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Balearics is one of the places in Spain with more interest in permanent homes, vacation rentals and other. The current moment is perfect to investing in a property in the islands since the constant revaluation is maintained for months and also has better facilities for mortgage loans; an excellent combination to generate good prospects in the sector.

Based on data from the INE (National Statistics Institute), Balearics is the community in which   more grown the interannual housing prices, at 4%.
Real estate activity has picked up significantly by the good performance of the economy in the islands, especially the last two tourist seasons, which has generated greatest richness and economic dynamism. Banks have increased granting credits for the purchase of properties, in this regard has also increased the number of companies and individuals who now see in properties a warranty investment.

Acquire housing for rent represent a gross annual return of 5%, a higher percentage than banks offer deposits and more at a time of rising prices. International investment in real estate product has grown exponentially in recent years. Of the approximately 1,100 million direct investment received in 2012 it went to 1,892 million the following year in 2014 rose to 3,010 million euros in the year. The past fiscal year, the figure increased to 3,012.5 million euros and a further increase is expected for this year.

The increase of international interest aroused by the Spanish real estate activity has, likewise, much to do with price stabilization that it has stopped falling across the board.

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Similarly, one of the major revolutions that has lived the Spanish real estate sector in recent years is the consolidation of the SOCIMI (listed companies investment in the property market), an investment linked to the rental market, which has been gaining projection in Spain. Retail customers also have the opportunity to enter the real estate sector through specialized investment funds. Most of these funds takes stakes REIT (investment vehicles in the real estate sector) carrying consolidated decades in countries like the UK, Holland and France, and are dedicated to buy buildings, offices or malls, put them in rent and distribute dividends to its shareholders.

We offer legal assistance regarding funds from other countries for investment in real estate and business. Our team has extensive international experience and cooperation agreements with international firms. We are also members of the Association of International Property Professionals (AIPP).

Our clients know to turn to us with any legal matter, and that if the particular issue is beyond the scope of our practice areas, we will assist them in finding the professional assistance that is required.

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