Living Moments - N°2 Edition 2014

www.private-residences.net 7TaTYR 8ZXPY_^ 163 Positive trends can be seen in Spain: It can be assumed that the sales figures in Mallorca for high-end real estate have continuously grown for the first time in 2014/2015. Since the previous year, 2013, the Mallorcan real estate market has stabilised considerably with a positive trend compared to the past years of the international financial and economic crisis in the EU. However, the market must still be looked at in all its facets and in a differentiated way. In order to be able to analyse the Mallorcan market more closely, it is necessary to make a clear differentia- tion of the market in respect of its various locations and regions, as well as the exact kind of real estate offered on the market. The problem with the publication of sales figures and reports about market developments, which are often drafted in too broad terms by the media, or partially based on company figures of a smaller individual real estate broker, is that they mis- represent the current market reality considerably and lead in part to inaccurate market analysis or wrong conclusions by prospective Mallorcan buyers. Therefore, it is definitely necessary to divide the Mallorcan real estate market into two different segments; on the one hand is the market for primary residences which is primarily taken up by the local Spaniards and which to some extent still has to struggle with drops in prices since the beginning of the crisis. On the other hand we see the real estate market for holiday and luxury properties, which is mostly dominated by EU citizens, mainly German, English, Austrian, Swiss, Dutch and Swedish people, or wealthy entrepreneurs, industrialists or people of inde- pendent means who have owned real estate on the island for many years and have sat out the consequences of the effects of the crisis due to a solid solvency and asset and liabilities structure. This higher quality and luxury segment has seen only a slight price drop since the beginning of the crisis, particularly in the still much-coveted loca- tions in the southwest of the island, and it has shown a tendency of increasing demand and prices since this year. The overall number of properties offered in Mallorca is currently 12,600 residential properties of various kinds of real estate. Only about 3,100 properties are luxury or high-end holiday residences island-wide, situated in the aforementioned prime locations on the island. The experiences of the last few years show that the number of residential properties tends to stay the same. However, due to the considerable increase in demand since 2013, the availability of luxury and holiday residences on offer will de- crease compared to the previous years. A crucial backdrop of this trend is the lack of new building projects, particularly in the southwest of the island, despite continuously growing demand. Mallorca has learnt from the past and has therefore, protected itself even more at the right time, from excess supply and hence the dangerous emergence of a bubble. The expected end of the Euro crisis through the ensuing austerity of the indebted EU countries and the economic policy based on in- creasing awareness and responsibility within the European Union should also have substantially re-established confidence in high-end properties on the Balearic Islands. As politics, economy, consumer behaviour and investments are often closely inter-connected, and considerable positive trends can be seen in this respect in Spain, it can be assumed that the market situation in Mallorca and the sales figures for high-end real estate will lead to a continuously improving tendency for the first time in 2014/2015. Apparently, it had been realised that there is no true alternative in the Mediterranean to the most popular of the Balearic Islands. The statistics showing that every third and fourth property sold to foreigners in Spain in 2013 was sold on Mallorca are also significant. This illus- trates even more the attractiveness of the Balearic Island as a real estate and investment location. In 2013, the positive development on the largest Balearic Island had already begun with several high priced real estate transactions. Various properties were sold at a price level of more than 4 million euros, particularly in the top locations in the southwest of the island. This trend shows that the buyer’s market again believes in the high, stable value of real estate investments in Mallorca considering it as a positive long-term perspective. In the past years of 2011 and 2012, the sales figures developed quite similarly at a very stagnating level. The impact of the Euro crisis and politics had still been too strong on the investment behaviour of the buyer’smarket.The fluctuationswhich occurred at the end of these years correspond to terminat- ing tax advantages/disadvantages which many buyers and sellers had considered in their in- vestment or purchase decision. According to first