According to the most recent reports from the CEPREDE – the Spanish Economic Prediction Center, the year 2018 will close with a 2.7% economical growth in the Balearic Islands. This is one tenth above the 2.6% national average.

The same circumstances are predicted for 2019 but with slight lower numbers. Still above European levels, Spain’s economic growth remains positive, but is loosing strength – the economy is expected to keep growing, but at a slower pace: 2,4% national average and 2,5% specifically in the Balearic Islands. Also with 2,5% we can find Aragon, Basque Country and Madrid and the most economically dynamic regions in Spain should be Comunidad Valenciana (2,6%), Andalucía (2,7%) and Murcia  standing out with 3%.

The slowdown in tourism will affect mainly the regions of Catalonia, Canary and Balearic Islands, this being the main cause of the general weak growth in the services sector.

In the industry sector a slowdown is also noticeable in exports of plastic and oil-based products.

The construction sector was the one that suffered the most from the crisis and also the one that took longer to recover from it. Although it was one of the sectors whose growth stood out in 2018, it will also moderate its growth in 2019, especially in the Balearic islands, where there seems to be a more intense deceleration in employment growth in this sector.

The general annual unemployment rate of the Balearic islands will close 2018 at 11.9% and should remain at the same level in 2019.

External factors for this loss of speed in the economic growth, seem to include international trade restrictions as well as the recovery in oil prices. Furthermore, the uncertainty caused by Brexit and the foreseeable rise in interest rates, and the effect this can have on household consumption and business investment.

As for internal factors, the increase of taxes on the autonomous community budget, which is in itself bad news, but even more so if the revenue from it is destined for current spending instead of boosting the Balearic economy allocating resources to productive investment.

In any case, it is important to highlight the reactivation of the real estate market of the Balearic Islands and the significant investment in household improvements during 2018, which was 8% more than the national average. This investment was done mainly for renovations and maintenance works to guarantee properties’ good conditions. Property owners in the Balearic Islands seem to be more and more committed to improving the comfort and/or the aesthetics of their homes or as an investment to obtain more benefits when selling or renting their property. In fact, the price of housing in the Balearic Islands increased by 7% in the third quarter of 2018 compared to the same period last year.


Following the financial and economic crisis in Spain caused by the residential real estate bubble (which saw property prices in the country rise 200% from 1996 to 2007) the real estate market slowed down, and logically, as a result of the decrease in demand for buying houses, there was an increase in the demand for renting houses..

Overtime, this situation lead to a concerning rise in rental prices to a point that long term rental prices got too close to touristic rental prices.

According to real estate reports from 2018, throughout Spain, house selling prices will have increased 11% and the number of house sales 23% by the end of the year. In the Balearic Islands and more so in Mallorca, 2018 was definitely well-marked by the increase in both indicators and the tendency for 2019 is that this positive trend will continue in supply, as well as in demand and prices, probably reaching a peak during 2019 and starting to slowly decrease towards 2020.

Although banks have been cautious granting new mortgages, also to avoid a new real estate bubble, the truth is that financing costs are not too high at the moment, job market is stable and with a boost in consumer confidence, buying a house is extremely appealing as an investment, so it all indicates that the real estate market will continue to grow until 2020 or until the moment when financial effort reaches its limit. This is due to the fact that the cost of buying a house has increased around 6% during last year whilst salaries not even 1%.

There are no signs that a new crisis will surprise Spain, the country’s economic growth is not based on this real estate favourable period, but on exports and capital goods investment. Therefore, experts in this sector guarantee that now is a good moment to invest again in real estate, especially in new residential areas.

Regarding foreign investment, the Balearic islands have been gradually extending the multitude of international buyers, who take advantage of strong tourism numbers and significant infrastructure improvements over the past few years. The island’s tourism growth caused the need for legislative and infrastructure improvements that came to reinforce the already well established residential property market. 

Nowadays, the luxury property market is really strong in the islands and it keeps drawing the interest of wealthy investors from Germany, Switzerland, Austria, Scandinavia, Britain, etc., so in this sector the expectations for 2019 are also of continuous growth.

Specifically about British investors, Brexit did initially cast a shadow on the continuous growth of the real estate market (both house sales and touristic rentals) in the Balearic Islands, as it is undeniable that British nationals are important real estate investors in the islands and the largest represented foreign nation in Balearic tourism statistics. However during the last 2 years since the Brexit vote, British numbers in the islands have not decreased and in fact some say that house sales to British people might actually increase before Brexit is definitely in place – reason to say that British buyers are undeterred by Brexit.



The average price per square meter of a standard 2nd hand property in Spain is around 1,600€. More than double that figure, at almost 4,000€/m2 are luxury properties. Even if this value has been decreasing over the last few years, the luxury housing market is still in full form.

The most common type of luxury properties offeredare: houses (29.54%), followed by villas (27.84%) and theapartments (17.42%).Usually they will have 4 or more bedrooms and same number of bathrooms, kitchen, living room; the majority of those costing above 1 million euros also feature swimming pool, garage and air conditioning/ central heating.

If the Balearic Islands are already in the top5 of regions with the greatest offer of luxury properties for sale (together with Málaga, Madrid, Barcelona and Alicante), the islands actually stand out in terms of proportion of this type of property compared to number of standard properties on offer.

Furthermore, amongst the five most expensive properties for sale in Spain, two of them are in Mallorca: a Renaissancestyle mansion in Alcudia (30 million euros; nine bedrooms, swimming pools, heliport and garage for more than 12 cars) and a medieval farmhouse in Puigpunyent (26.5 million euros; total property area of 820,000m2, 4,000 m2 for the ten bedroomed house that is surrounded by more than 9,000 olive trees)

On the Spanish luxury property market, there is more than enough domestic demand, but as property prices rise above 2 million euros, it is theforeign client taking over. Latin American buyers, for whom Spain is a preferreddestination in Europe, are taking the lead on big cities whereas clients from other European countries dominate the coastal areas, especially in the search of a second home.

Also gaining importance are Asian clients that see their real estate investment also as an opportunity to legally enter Spain and the European Union by acquiring a “golden visa”.

These golden visas were introducedin the midst of 2013’seconomic crisisto attract foreign investmentbut the program faltered in its beginnings due to the harshness of the requirements imposed. Nowadays these visasare only given to non-EU citizens who fulfil at least one of these requirements:

  •             Have at least half a million euros to invest onreal estate;
  •             Have more than one million euros in their bank accounts;
  •             Have more than two millioneurosin government bonds;
  •             Are considered “highly qualified” professionals.

The investment in real estate, totalling more than 2,550 million euros, is probably the best known of these conditions,having allowed foreign citizensto obtain so far over 3,400visas or residence permits in Spain. Topping the list are Chinese citizens, followed by Russians and Ukrainians and not surprisingly, the biggest investments of this kind were done in the Balearic Islands.

Lately, the European Parliament has beenexpressing concernsregarding the golden visa programsthat exist in various member countries, as the potential economic benefits do not compensate for therisks of money laundering and tax evasion. They also defend that there isa significant impact on the real estate sector when these programmes are highly dependent on it – first comeshigh demand and with it an increase in the price of properties. Finally, they say that the idea of directlyor indirectly selling EU citizenship, “undermines the very concept of European citizenship”.


Last October 16th, the Spanish Supreme Court established that it should to be the banks

the lender – and not the clients – the borrower – the ones liable for paying the stamp duty (“AJD”) on mortgage loans. It was considered that these entities were the ones most interested in registering the operation in the Property Registry and therefore should be the ones supporting the cost.

As opposed to the instruction given just a couple of weeks ago, and in spite of the statement from its president that the decision was firm and not subject to review, the Supreme Court has now ruled (whilst with internal diverging opinions: 15 votes against 13) that paying for the stamp duty should actually remain as the client’s responsibility. In other words, in the end, there are no changes to the previous situation.

This final decision has raised questions about the independence of the judiciary system with some alleging pressures from the banks, as the initial ruling cost them stock market losses of 5 billion euros in one single day. This should come as no surprise, as not only would the criterium of who is liable for paying the stamp duty changed, there was also the possibility that thousands of customers with mortgages would be allowed to claim back from the banks the stamp duty already paid. In theory, all those who liquidated this tax between 2014 and now would have the right to claim it back – before this date, it would already be considered as prescribed. Defending that this state of affairs has been caused by a lack of clarity in the legislation, the Supreme Court has transferred the authority to the Government and Parliament to amend the mortgage legislation as necessary to clarify who should be the taxpayer. As a consequence, the Spanish Prime Minister announced that, although respecting the Supreme Court’s decision, the government, supported by other political parties would indeed review the mortgage legislation. Even if borrowers could not claim back expenses already paid for, banks would be the ones liable for paying the stamp duty of new mortgages going forward.

Looking at it from the outside and only at the economic effects of the stamp duty, they do not fall exclusively on the payer. Even if not necessarily in equal proportions, they will affect all parts involved in the exchange.
On one hand, if it is up to the borrower (Client) to pay the tax, this represents an additional cost when deciding whether to invest in buying a property. From all the mortgage expenses that a client faces, the stamp duty represents about 75% of the total. The more a borrower has to pay, the less interest there is in buying, reducing the demand for housing and therefore, the demand for mortgages.

On the other hand, if it is up to the lender (Bank) to pay the tax, the mortgage conditions will change – the mortgage costs will probably increase to cover the tax value. This is obviously not good for the borrowers and consequently will end up not being good for the lenders either because it will again decrease the demand for housing/ mortgages.

In a way, we can then say that the Supreme Court’s judgement in this case was actually unnecessary as nothing changed in the end and it seems that it is not so important to decide who pays for this tax, but that both parties, the bank and the client, end up satisfied with the expenses allocation and the contractual conditions in general. This way, housing and mortgage demand is maintained, which is beneficial for all.


The Spanish government has reached an agreement with one of the main opposition parties to properly regulatethe real estate market in order to end the abusive increases ofrental prices in certain areasof the country.

With the support of “Podemos” political party, the government is planningchanges to rental agreements related tothe minimum lease terms, lease extensions, guarantees/ deposits andthe rent review. For instance: when tenants are individuals, compulsory lease term goes up from 3 to 5 years and automatic rent renewal, that used to be 1 year, increases to 3 years. If the tenant is a legal entity, compulsory lease term will be 7 years and automatic renewal also 3 years.

It was established that the maximuminitial deposit or guarantee should be 2 months worth of rent and that the owner’s right of retrieving the property before the end of the legal rental period needs to be specified in the contract.

The 2019 government’s budget agreement includes various decisions that are relevant for the regulation of the real estate sector:

  • Enabling municipal councils to elaborate a benchmark rental price index (which will besubject to periodic review).
  • Allowing municipal councils to temporarily and exceptionally declare an urban area “stressed” in case the rental pricesare abusive and preventaccess to these dwellings.
  • The development of a 4 year plan to increase the number of rental dwellings at affordable pricesto a total of 20,000.
  • Giving powerto homeowner associations to forbid or limit touristic rentals.
  • Proposes the development of an action plan from the SAREB  – government-owned companythatis responsible for managing assets proceeding from the restructuring of the banking system – that promotes the use of properties managed by the SAREB as social housing with affordable rental prices, by agreements with the Autonomous Communities and Municipal.

These decisions are meant to produce an increase to 2019’s budget, in terms of Housing, of 630 million euros (38% more than in 2018) and with the intention to keep adding up during the following years: 700 million in 2020 and 1,000 millions in 2021.

In Ripoll & Mateu Solicitors Mallorca, we offer our clients a comprehensive service in everything required for the sale of a property.





There are various aspects one should consider before investing in Real Estate. Although it seems to be more profitable to invest in Real Estate than in financial products offered by banks and other financial institutions – buying with the intention of renting out, shows to be as profitable as 7,5%  for shops; 6,8% for business premises; 4,6% for garages and 3,6% for residential properties – the tax circumstances need to be taken into account for each case and market so that nothing takes you by surprise when it comes to income tax or other taxes related to  property purchases.

One of the most important decisions is wether to buy a new property or second hand, knowing that second hand properties have a disadvantage as you will have a 5-10% cost increase due to a Spanish tax on capital/property transfers (ITP – Impuesto de Transmisiones Patrimoniales). Different ITP % is applicable in different Autonomous Communities which makes it also very important to decide where to invest. In this aspect, you must also take into account other local taxes that might be applicable in different municipalities (for example, tax on increase in urban land value, paid by the seller).

On another hand, you will have to consider other taxes that will aggravate the total cost of your investment:

VAT (IVA – Impuesto sobre el Valor Añadido): On second hand properties, there might be a waiver of VAT exemptionif the seller and the buyer are a company or an individual officially registered as a landlord, and both parts agree to submit to this tax. In most cases, there is a reverse charge mechanism and the buyer does not actually pay VAT.

Notary and property registrationexpenses: will add up 2-3% to the total buying price of both residential or comercial properties.

Income Tax (IRPF)/ Corporate Tax (Impuesto de Sociedades): revenue made from real estate assets by form of rentals is taxed on individuals according to their financial tier and on companies around 25-28%. Once you stop investing in an asset, real estate gains will also be taxed at around 24% for individuals, andover 25% Corporate Tax for companies.

Property tax: it is a direct, general and individualtax, established and regulated by the State, although its total yield, as well as certain regulatory powers, areassigned to eachAutonomous Community.

Tax on capital/property transfers (ITP – Impuesto de Transmisiones Patrimoniales): as mentioned before, differs between each Autonomous Communities and taxes property and rights byinheritance or donation. To try to avoid it, there is the alternative of creatinga family business, whichis exempt fromproperty tax and a has a 95% bonus in property transfers tax, as long as all legal requirementsare respected.

Our 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.





Tourism is obviously a great growth opportunity, but the boom in property rental for touristic purposes has turned into one of the main concerns of homeowners associations and local governments.

The lack of control over short term rentals of touristic dwellings allowed the increase of long term rental prices and it forced many local residents out of their homes.

The increasing need to regulate this situation led the Spanish government to take action. However, tourism matters are responsibility of each Autonomous Community and urban planning of each Municipality, so the only way the government can regulate touristic housing is by reviewing the law. In this case, clarifying the definition of ‘seasonal rental’ in the Urban Rentals Law and giving more power to homeowners associations through the Horizontal Property Law.

Although law reforms are full responsibility of Spanish government entities, it has been announced that changes will only be made with the consensus of all parties involved: Autonomous Communities, municipalities, homeowners associations, relevant online platforms, hotel owners and unions.

For this purpose, the Ministry of Tourism has recently addressed the 17 Spanish Autonomous Communities and the Spanish Federation of Municipalities and Provinces with a proposal to review the Horizontal Property Law, that currently states that it is necessary to have consensus among all owners to make important decisions or change the homeowners association bylaws.

If the change in the law is accepted and implemented – and it seems that there is a general agreement among the autonomous governments – homeowners associations will have more decision power as it would bring the number down to a majority of three fifths of the owners (that represent three fifths of the total property area owned, which is the actual criterium used by this law) needed to, for example, forbid the touristic rental of dwellings in their building/ community. At the moment, as long as the existing community bylaws are respected, the homeowners associations cannot prevent each owner to rent their property, because their own vote will hold back the consensus. The Spanish government has also proposed to change the Urban Rentals Law, limiting seasonal rentals to periods of minimum 7 consecutive days, not exceeding a total of 45 days per year. However, there is still no consensus among all those involved on this issue.

Also to help the autonomous communities control touristic rentals, and to offer legal security to both property owners and the people renting, it was suggested the creation of a national registry of all housing for touristic use. This registry would make it compulsory to identify the people renting and also make sure homeowners comply with their tax obligations.

If you need more information about the Tourism Law and holiday rental, do not hesitate to contact us. 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.


The Balearic Islands have recently benefited from the escape of capital due to high prices and the moratorium for new hotels in Madrid and Barcelona.

According to the data analysed, the real estate investment market in Spain will close 2018 financial year with figures similar to those obtained in 2017, 13,500 million, or slightly lower, and it will continue in expansion until 2020. In the same way, it is shown that Spain remains one of the most attractive countries for real estate investment and is the fifth European destination that captures the greatest volume of investment, on the list lead by the United Kingdom, Germany, France and the Netherlands. In this sense, investment funds are still the main players in the market, especially those of foreign origin.

The commercial sector in real estate is still the one with the highest volume of professional investment, reaching a total of 2,000 million euros.

Residential professional investment has evolved positively in the first half of the year and housing is still the preferred asset for both large funds and small investors, as 25% of operations have been made as investments.

The Balearic and Canary Islands are the preferred regions of the listed real estate investment company (socimi) that Bankinter will take to the stock market at the end of this year, as they have acquired 10 hotels in both archipelagos, what adds up more than 3,400 rooms. From a total of 23 hotels, 10 are on the islands: 5 in the Balearic Islands (4 in Mallorca and 1 in Menorca) and another 5 in the Canary Islands.

The idea is that these hotels allow to give back an annual dividend close to 5% to all the shareholders of the “socimi”, which will be quoted on the “MAB – Mercado Alternativo Bursátil” (Alternative Stock Market).

The main shareholders of Atom are Bankinter’s private banking clients, with a minimum investment of 200,000 euros and a maximum of 15% of their financial assets, but the bank itself, the manager of the “socimi”, GMA, and some institutional investors also take part in the capital.

This situation has contributed to the increase of private investment in construction. The increase in demand and promotion of housing, the latest impulse in the modernisation of hotels; and the industrial and commercial companies’ activity reactivation, have made the money that has been allocated from the private sector to building or refurbishing projects has increased an incredible 60.6% during the first four months of this year in relation to the same period of 2017.

Our 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.



During the first semester of the current year, the luxury property buy and sell increased 27% in Spain, as the average price increased 19%.

The most expensive houses in Spain are located near the sea, not surprisingly, three of the top 5 most expensive properties are in Mallorca.

An annual report on wealth has been published recently, reflecting  that the number of personal Spanish wealths shot off to 76% since 2008, concurring with the beginning of the financial crisis. At the moment, Spain stands as the 7th country in Europe with the highest number of people with this economical profile.

Mallorca is going through a situation where its attractiveness seems to have multiplied, something that reflects on the record number of tourist arrivals as well as  on the boost of its real estate market, especially visible in the case of high-end products. Because of this, one of its main investments grows: the luxury real estate market.

According to the same report, real estate together with the stock market are the main destinations of these wealthy people’s money, that can lash out between 1.5 and 12 million euros. The Spanish and international buyer’s need of a second home in a unique environment, such as Andratx and Calvià, in Mallorca, made the Balearic market a protagonist in the luxury sector.

The luxury real estate market in the island is in full expansion. The supply of Premium properties is not very high, while the demand is sustained. Especially, the one that comes from the German market. With this appeal for the Spanish and foreign buyer, the luxury real estate segment is experiencing a great moment given the combination of: high demand, sales growth and rising prices.

Not only are we talking about selling, finding a long term rental property in the Balearic islands, at an accessible price, is at the moment more complicated than at the same time last year. The National Association of Real Estate Agents assures that the average price of rental in the islands has risen 12.4% during the last year and is around 10.6 euros per square meter, per month; higher than the peak of 9.6 euros reached in 2007, already surpassed since late 2017. The price increase that began in Palma’s downtown has already moved on to other neighbourhoods. An example is Son Rapinya, where three-bedroom flats are offered for around 1,300 euros per month.

For your investments in Mallorca and the Balearic Islands, 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.

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.


There is no doubt that investing in Mallorca’s real estate is a totally successful decision. Palma is the Spanish city where the investment in real estate is more productive, showing a price increase of 16% in the last quarter of 2017, compared to the same period in 2016.

A recent survey comparing prices of housing in Madrid, Barcelona, Málaga, Valencia and Palma, shows that Palma and Málaga overcome Madrid y Barcelona in terms of real estate profitability

The coastal segment of real estate is the most dynamic one because of the increasing interest of people with savings on buying properties to rent afterwards. The areas that are growing the most are still the ones with safer values.

The sale price in some areas like Palma and Calvià have reached historical highs. In the second quarter of this year the average price per square meter was 2,809 euros in Palma, and nearly 3,500 in Calviá. In both areas the prices have been increasing since late 2014, up to 50%. In the islands altogether, the prices have not yet reached its highest (that occurred in late 2008) although they are very close to it.

In relation to the final price of a property we have to take into account the high interest that foreigners have in investing in Mallorca . This demand has caused that the recovery of new constructions is mostly luxury homes. To this we have to add the increasing demand from residents, that once found a job again, are interested in buying a house. Real estate promoters and agents are aware that there is a much higher demand than existing supply, and therefore the high prices.

In the same way, the number of people thinking of buying a second house in the short term has increased eight points in 2018, comparing to 2017. 18% of the Spanish people are in the process of searching for this type of property, compared to 10% last year. 43% of these potential owners think about buying a property close to the sea and 17% in the town centre of a coastal municipality.

Mallorca in general and Palma specifically are living a new real estate boom and the transactions keep increasing, especially with foreign clients that see the island as a good place to invest in again.

At Ripoll & Mateu we work to bring total satisfaction to our customers effectively by offering legal services and personalised assistance.

For foreign investment, we offer legal assistance regarding funds from other countries for investment in real estate and business.

We offer detailed advice in the field of internationalisation by providing services such as:

  • International Trade Consulting, recruitment, setting up companies, subsidiaries and branches.
  • Advice on tax issues: tax incentives for the internationalisation of companies, income earned abroad, international operations, etc.