Palma City Council has set next spring as the deadline to have the zoning provided for in the tourism law that will determine which areas of the city can be leased multifamily housing and which are not.

In this sense, the City Council already has several reports prepared to approve the moratorium on tourist establishments affecting:  Palma centre, first Eixample, Santa Catalina and Playa de Palma. Decisions must be accompanied by technical and legal reports to support them.

In addition, meetings will be held with the corresponding entities in order to know the Plan of Intervention in Tourism Areas (PIAT) that is drafted by the supramunicipal institution.
This document, among other things, sets the ceiling of places, both hotel and rental, that can be authorized in each area. In the case of Palma this plan proposes the reduction of the places. It is therefore very important to have up-to-date data on the number of single-family and multi-family dwellings since, although the former may be the subject of holiday leases, they also count in the global number of tourist places allowed.

palma-old-town

In another order, and regarding the current season, the Directorate General of Tourism is processing the 1,500 tourist places, corresponding to 264 homes that were engaged in commercial holiday rental. Of the total number of tourist houses, 153 had registered the declaration responsible for starting tourist activity between 2016 and 2017, but they are floors in multi-family buildings and semi-detached houses, which were not authorized to be marketed at the time of registration.

These homes were registered prior to the entry into force of the law that regulates the tourist rental and that establishes a moratorium of new authorizations of commercialization of tourist stays in houses until the island consoles and the Palma City Council establish the zoning. The Ministry of Tourism has begun the process of the definitive removal of 111 tourist houses authorized prior to 1999, in which the Inspection Service has found that there is no longer any tourist activity.

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Balearic Islands are one of the great economic engines of Spain thanks to the good behavior of the tourism sector. So much so they lead in 2017 and will lead in 2018 the growth of the Gross Domestic Product.

Never before, the Balearics had grown as much as now. According to recent banking data, the economy of the islands is advancing at a year-on-year rate of 4.4%, a growth so strong that there is no precedent in this century.

In this sense, the complex situation that is going through the Balearic real estate market is fundamentally due to several factors:

– The investment funds, which are buying buildings in different areas of Palma, mostly in the Old Town and, as is the current regulations, are dedicated to making hotels of tourism inland.

– On the other hand, there are the SOCIMI companies that are dedicated to buying real estate assets to subsequently offer a rents to their clients. They buy flats or lots of flats through the bad bank and then rent them.

balearics-properties

Foreign investment will continue to reinforce price increases in some high-value areas and will lead to “real estate oases” that will persist over time. Thus, the new fragmentation of the real estate market must be made aware, and there are significant differences within the big cities. However, the distortions generated by the dynamism of some areas, will end up causing many savers to re-consider real estate investment as an option.

The profitability of deposits is close to 0% when the Bank of Spain estimates the gross profitability of housing per rent at 4.29% and puts it at 9.54%, once its revaluation is accounted for. Potentially attractive figures, although conditioned by two important issues: the costly maintenance of a home and its lack of liquidity in stress moments.

Real estate investment is in the center of attention but, unlike the “boom” of the past, we will have to be very selective since the population trend will not accompany in the long term and the additional push of foreign investment will only be felt in specific areas.

Our team is committed to providing the best work processes to provide our customers with the best results, in a constant quest for professional excellence. We establish external collaboration when circumstances require and are firmly committed to transparency and honesty in our actions.

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Few weeks after the start of the summer season, the Balearic Islands Government, entities and companies continue to laps with the Holiday Rental Law.

Earlier this month, the bill that will regulate holiday rentals in the Balearic Islands was approved by the Government Council after incorporating 200 of the 294 allegations it received in the public information period to which it was submitted.
These days, fourteen entities have adhered to the manifesto “Quality tourism for all”.
This manifesto has been promoted by the Association of Holiday Rental Apartments and Homes of the Balearic Islands (APTUR) in defense of the holiday rental, with the aim of obtaining the highest number of accessions and demonstrating social support towards holiday rentals.

The entities that have signed the document are: PIMEM, PIMECO, AFEDECO, ACOTUR,  municipal markets of Santa Catalina, Pere Garau, El Olivar and Inca, AMAT (Mallorcan Association of Tourist Attractions), ABONE (Balearic Association of Nightlife and Entertainment), Municipal Taxi Automotive Association (AMTAT), the Association of Golf Courses of the Balearic Islands, the Business Association of Rental of Vehicles and the Association of Nautical Companies of the Balearic Islands (AENIB).

The signatories argue that holiday rental is an aid to the local development of areas that could not have had the opportunity to access the income generated by tourism with the offer of traditional accommodation. APTUR-Balears states that vacation rental is a complementary accommodation model where the end user decides based on privacy and flexibility arguments. It also stresses that it is transverse from the point of view of sharing the benefits of tourism between the complementary offer and helps reduce the seasonality.

The entities affirm that they are looking for a regulation of the appropriate sector in which everyone can develop this activity with guarantees and fulfilling their fiscal responsibilities.

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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.

floor clause-mallorca

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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