Engel & Völkers Mallorca posted a total sales transaction volume of €662 million in 2023, which was up by 38% on the 10-year average representing the third-best year in Engel & Völkers' 34-year history in Mallorca.  Last year, the average price of property brokered by Engel & Völkers Mallorca increased by 14% over 2022.

“In 2023 we saw a return to normality in the island's real estate market after the extraordinary activity of the previous two years, this “soft landing” has given way to a more sustainable market. Our data also demonstrates a sustained growth in prices underpinned by strong demand and limited supply”, comments Florian Hofer, Managing Director, Engel & Völkers Balearics.

Mallorca represents approximately 78% of the entire real estate market in the Balearic region.  According to the Spanish Ministry of Housing, total sales transactions in Mallorca in the first three quarters of 2023 were €3.3 billion, 38% above the ten-year average of €2.4 billion and the third-highest level on record.

Price Development of Mallorca's Premium Real Estate Segment

Looking over the past eight years gives an even clearer picture of price development, aside from the years of pandemic and the resulting boom, the Spanish Housing Ministry data for the first nine months of each year from 2015-2023, indicate that the average property price in Mallorca has increased by 50% or more in most areas and by 8% or more in 2023 which underlines the steady demand.

Engel & Völkers data over a similar period demonstrates the development of Mallorca's premium real estate segment; since 2013 the company's sales transaction volume increased by 227%, the number of sales transactions by 88% and the average price of property sold by Engel & Völkers Mallorca increased by 74%.

In 2023 the average price of property sold by Engel & Völkers on the island was €1.88 million which represented a 14% increase over 2022 when the average reached €1.64 million.

Rural property market

In 2023 rural property sales in the Balearic region accounted for 26% of the total market (source: National Statistics Institute) making it the third-best year for rural property sales over the past decade and 6.7% above the 10-year average of 3.272 transactions.

In Mallorca, Engel & Völkers registered a similar increase for property in the countryside and villages focused on traditional houses with modern-day comfort and amenities. Post-pandemic there has been a shift in thinking as more and more clients want self-sufficient properties with eco-technology to save water and energy. They also want to grow their own produce including wine, olive oil, fruit, vegetables, etc… An underlying respect for the cultural and natural heritage of the island drives these purchases which strongly focus on the authentic architecture and Mediterranean lifestyle of the island.

Average listing prices vary greatly in this market depending on location.  For example, according to Engel & Völkers Mallorca Central area, a rural house (finca) in a top location such as Santa Maria can fetch an average of €4 million. Further away from Palma, in villages such as Algaida, Llubi, Selva, and Montuiri, average prices will range from €2-3 million.

International buyers underpin Mallorca's prime real estate

Latest figures from the Spanish Registrars registered that 60% of all real estate transactions, with a value of 500,000€ and above, were made by overseas investors.   These international buyers are dominated by German investors (44%) followed by the UK (10.5%), France (5%), Italy (4%), Sweden (4%), Netherlands (3%), and Switzerland (2%).

Engel & Völkers Mallorca 2023 data indicates a similar nationality breakdown of German, British, Spanish, Swiss, Swedish, Czech, and Dutch buyers. There is also increasing interest from overseas buyers from the Americas and Eastern Europe, a trend that is growing as we move into 2024. In recent years, the company's buyer demographic has become younger as people are considering not just buying a holiday home, but to relocate permanently to the island with their families.

Wealth Tax Reduced in the Balearics

In January 2024 the Balearic Government introduced important improvements to the Inheritance and Donation Tax which is now exempt for immediate family members and has raised the limit of Wealth Tax from €700,000 to €3 million per person. Furthermore, this is accumulative, so a couple could be exempt from paying wealth tax on an amount of up to €6 million regardless of whether they are residents or non-residents.   From now on, only net assets in excess of €3 million will be taxed on an incremental scale. This change in fiscal policy makes the Balearics even more attractive to homeowners and is anticipated to have a positive impact on the region's economy by attracting more permanent residents to the Balearic Islands.

Outlook: Sustainable growth and price increases in the premium segment

Mallorca continues to lead economic growth and employment creation in Spain assisted by the strong recovery of its tourism sector which boosted job creation and consumer spending. According to Caixa Bank research, the Balearic GDP grew by 3.8% in 2023, which was above the Spanish average of 2.5%. 

The island's easy access and modern infrastructure are supported by Palma International Airport with direct flights throughout Europe and the US.  This factor, combined with its thriving tourism industry, is attracting major investment from key international brands such as Four Seasons and Mandarin Oriental. These factors make Mallorca a highly desirable destination in the Mediterranean with year-round appeal for second-home investors.

Concludes Hofer: “Many people re-discovered the island post-pandemic, so demand continues and there's confidence in Mallorca's real market which has a proven track record of providing solid long-term returns on investment. It remains a leading second-home destination in the Mediterranean and is increasingly being considered as a primary residence for families”.

From March 1st download the Mallorca Market Report 2023/2024 here: marketreport.ev-mallorca.com

About Engel & Völkers Mallorca:  Engel & Völkers was first established in Mallorca in 1990 as the company's first real estate business outside of Germany.  Today it has 19 property shops around the island and 1 commercial shop working with a team of over 200 people, the majority of whom are multilingual. Engel & Völkers Mallorca supports its local community by participating in/sponsoring a range of social and environmental projects, and sports events. In terms of sales transactions, Engel & Völkers is regarded as the leading international real estate brand in Mallorca and features approximately 2,500 properties on its website: https://ev-mallorca.com/en

About Engel & Völkers: Engel & Völkers is one of the world's leading service companies specialised in the brokerage of premium residential property, commercial real estate, yachts and aircrafts. For over 45 years now, the wishes and needs of private and institutional clients have had top priority, giving rise to the ongoing development of a range of services relating to all aspects of real estate. Sales and leaseholds, as well as consultancy for various investment opportunities in the real estate segment are among the core competencies of more than 16,500 people operating under the Engel & Völkers brand. The company is currently operating in over 35 countries on five continents. Intensive training schemes in its in-house real estate Academy and the high level of quality assurance governing its systematically structured service provision are key factors that account for the company's success. Engel & Völkers develops digital tools and IT products on an ongoing basis, in order to keep its service as efficient as possible. In doing so, the company is setting new standards in digital solutions for property brokerage. www.engelvoelkers.com