About MenorcaSol

Investing in Mallorca’s Real Estate market

By MenorcaSol 3 September, 2018

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.

Summer news on Tourism legislation

By MenorcaSol 1 August, 2018

The Tourism Intervention Plan that has been recently approved by the Consell de Mallorca, with the objective of being a planning instrument that regulates the main economic activity of Mallorca, brings news regarding ratios to distribute the holiday rental places.

The main premises are the following:

New licenses are limited to 000 during the next few years
The supply limit of 430.000 beds fixed by the Tourism legislation remains the same
The Consell de Mallorca will distribute the new accommodations with intensity criteria

The large touristic areas of Balearic Islands that overcome 120 accommodation places per hectare (10,000 square meters), will not be allowed to take in new ones – hotels or holiday rental places. The average of tourists per hectare in urban land for new touristic places is fixed at 25. In touristic areas it ranges between 30 and 120 tourists per hectare.

The Tourism Intervention Plan sets a maximum capacity of touristic accommodation in Mallorca of 430.000 places, that are divided in 315.000 for hotels and 115.000 holiday rentals. In the areas considered as second home, licenses will be allowed if 12 places per hectare are not exceeded. All this respecting the average of 25 tourists per hectare of urban land in Mallorca.

In the case of touristic areas considered of medium occupation, the limit is fixed at 45 places per hectare, and for low occupation areas, the number goes down to 30 places per each 10,000 meters. Cala Millor, Cala Bona, Son Moro, s´Illot and Calas de Mallorca are added to the list of saturated touristic areas. In these areas, new holiday rental licenses will only be authorised during two months every year, one in low season and the other July or August. Furthermore, the saturated areas shall be governed by Comprehensive Improvement Plans, with the aim of being reconverted.

Another issue that has been discussed lately is the well known agro-tourism, a way for farmers and ranchers to welcome up to six tourists in their homes and complement their activity. This is one of the most controversial issues of the Land Law that is currently on public display.

If you are an owner and need more information on holiday rentals in the Balearic Islands do not hesitate to contact us. 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 multilingual and multidisciplinary team.

Our 30 years of experience in legal practice in Mallorca, as well as our constant process of renovation, internationalisation and specialisation has led Ripoll & Mateu to become a clear example of service quality and hard work.

Characteristics of the Real Estate Market in the Balearic Islands

By MenorcaSol 26 July, 2018

The average price of luxury properties in this region was around 6,700 euros per square meter in the first semester of the year, what implies an increase of 3% compared to same period last year, according to the last real estate reports published.

The tendency has continued upwards, since the 6,500 euros of the first semester of 2017 and the 6,075 euros of the first semester of 2016.

Most of these properties have very specific characteristics. The luxury real estate sector focus on properties with a price range from 500,000 to three million euros and with an area of between 150 square meters and 500 square meters.

The average selling time of a luxury property during the first semester of the year has been 5 months at a national level, 10% less than the average in 2017, and only 2 months in the most touristic areas, the same selling time as in the second semester of 2017. By nationality, the French have been the fastest buyers of luxury properties, with an average of 2 months, followed by the British and German (3 months), Belgian (4 months), Scandinavian and Russian (5 months), Spanish and Italian (6 months) and Chinese (8 months).

Regarding the Balearic Islands, the increase in prices has exceeded a year-on-year increase of 5% bordering in some cases levels of 10,000 euros per square meter. The good climate of the Mediterranean is the perfect claim for those seeking a second residence, buying or renting. Tourism demand is usually quite high, which encourages investors that seek the profitability of sun and beach tourism.

Foreign investors play a fundamental role in the Balearic real estate market. In the first quarter of this year, one out of every three properties sold on the islands was bought by foreigners and, together with the Canary Islands, the Balearic Islands are the preferred destination for foreigners to invest in housing in Spain, according to data from the Registrars Association.

The exposure of the Balearic real estate market to foreign demand remains high and growing. Although it is considered that in this situation there are still no clear symptoms of a bubble, it is not strange to think that the current price rises seem unsustainable and should begin to moderate during 2019.

To this solid demand contribute a favorable economic cycle – the expansion cycle will continue – the lower level of unemployment and the positive evolution of employment, as well as better access to financing. Not forgetting the boost of investment in housing in a scenario of interest rates close to 0% in savings and even the negative profitability currently provided by fixed rentals in the short and medium term – the gross return for house rentals stands at 4.1% according to data from the Bank of Spain.

Housing Law in the Balearic Islands

By MenorcaSol 28 June, 2018

On June 26th 2018 the BOIB (Balearic government’s official report) published the first Housing Law in the Balearic Islands, effective from June 27th 2018, and that, according to the Balearic Government, will make it easier for citizens to have access to housing.

The most important aspects of this law are the following:

– The law recognises the citizen’s right to housing and establishes mechanisms to facilitate it, like the increase of the public housing offer for social rentals, and establishing the government’s obligation to facilitate the access of citizens in vulnerable situations (accredited by appropriate entities) to this type of properties or other types if these are not available.

– It will be compulsory for major owners to grant access of their properties that have been empty/ closed for over two years to social renting if there are people in need of housing.

– Major property owners have three months to report all of their properties that have been empty for two years. Not doing this implies a serious penalty: from 3.000 to 30.000 euros.

– A universal and free housing support service goes into operation for all citizens. Its function will be to guide and assist citizens that are in a situation where there is a risk of losing their housing.

– The right of all citizens to basic supplies is guaranteed. Supply cuts can’t be made if the municipal social services recognise the difficult situation of the family.

– In order to encourage public renting, new properties built by public administration will be for renting and can also promote housing with formulas other than ownership (for example: housing cooperatives). The Law details the conditions of use of a social housing dwelling, which must be a regular place of residence. Social housing dwellings can’t be rented, except in some justified cases.

– The law also foresees the promotion of new formulas to make affordable housing available to the public. Thus, it conceives the cession of land (as a temporary cession of surface) to citizens’ cooperatives for the construction of housing. The people who, through the cooperative, have access to these dwellings won’t own them, but they will be able to use them for life.

If you need more information about the new Housing Law, do not hesitate to contact us. Our multilingual and multidisciplinary team will be pleased to assist you.

Last updates on holiday rentals

By MenorcaSol 20 June, 2018

The “Consell de Mallorca” authority has recently given definite approval to holiday rentals zoning. This is going to put an end to the existing suspension of new licenses to carry out the activity. In fact, a new zoning proposal has already been prepared taking in consideration all reports and allegations.

At the moment, the Balearic Environmental Commission has one month to prepare their report, so from the second half of July new licenses could be requested.

However, it is important to take into account that the new authorisations are granted by the Tourism Agency, and that not only must the dwelling be within a qualified area according to the zoning approved by the Consell, it will also have to meet the requirements of article 50 of the Government’s Tourism Law.

These are:

Having a valid certificate of habitability.
In the case of multifamily residential buildings, the community of owners’ rules must not prohibit the activity.
Presenting the correspondent energy certification.
The dwelling must have individual water, electricity and / or gas meters.
It cannot be a social housing dwelling.
For properties situated in saturated areas it must be proved that it is the regular place of residence of the owner.

News:

For new touristic properties, a spot should be bought from the Tourism Agency Pool in the same way that hotels do. The Tourism Agency must determine the price per spot.
The “Consell Insular” should also write down a Tourism Intervention Plan (Plan de Intervención Ámbitos Turísticos – PIAT) that will determine the number of spots that can be granted in each zone.
The new licenses will be valid for 5 years.

In regards to Palma, the town council took longer to approve the initial zoning, and as a consequence, the final zoning will have some delay as well. On August 1st, when the Government’s suspension finishes, licenses can be requested for single family dwellings, in accordance with the stipulations of the previous law.

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

Palma, the “luxury capital” of Europe

By MenorcaSol 24 May, 2018

During last year, the city of Palma has experienced an exponential growth of the luxury tourism becoming Europe’s top city in “cosmopolitan tourism”.

This situation was backed up by the opening of new boutique hotels as well as the excellent gastronomic and complementary offers. This can be also extended to the real estate market in the island, especially the luxury sector, that is going through a very good moment these last few years, with a relevant increase both in number of sales and square meter selling price. These circumstances are especially visible in areas such as the centre of Palma and the southwest of Majorca.

When it comes to nationalities, Germans are still leading the investors list on the luxury real estate market, followed by the English and in third place, the Scandinavians, that show a special preference for Palma. Regarding this information, we have to highlight that 93% of the new residents of Palma in 2017 are foreigners. And again Germans stand out in the numbers, choosing to live in Palma and enjoy its quality of life.

All this that has been stated before contributed to a volume of real estate sales in the island last year similar to the numbers registered in 2007, just before the crisis started, when total transactions reached 4,800 millions of euros and last year ended with 4,500 millions.

In fact, real estate experts started to point out the shortness of luxury housing in the island. Especially in the municipalities of Andratx and Calvià, and some neighbourhoods in Palma, such as Santa Catalina or Terreno, where the Scandinavians have invested immensely during the last few years. The demand for this type of product and its shortness in the island is causing that there is now interest in some other areas that some years ago were not exactly attractive for investors but that are now being revalued, like Platja de Palma or Cala Major.

The German client is still the one claiming most of these properties in Mallorca, and it is responsible for 57% of purchases, followed by the British with 16% not allowing the Brexit to hold them back. The Spanish, with the country’s economical recovery, are next with 7%, followed by the 5% of the Swiss and 4% of the Swedes.
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.
Ripoll&Mateu can fully assist you in the buying process.

The price of housing in Majorca