Mallorcan real estate and property agents point out that despite the increased sales of 10% last year – demand remains very weak from both British and Spanish buyers.
The market for second homes in the Balearic Islands is starting to show early signs of leaving the state of hibernation where it has remained for the last few years. German demand is beginning to recover and push up an activity that is hampered by the weakness of the Spanish and British buyers, according to real estate companies and property agents.
The recovery is smooth. According to the president of the real estate agents on the islands, José Mir, and the commercial director of Kuhn & Partner, Kai Dost, registered sales last year accounted for an approximately 10% increase over 2009. But this increase should be relative, as highlighted by José Mir, because “we started with minimum figures.” The proof of this is that currently only 40% of vacation property found a buyer in 2009. That is, it grows, but in relation to the year it had ‘hit bottom’ year end sales.
What are the causes of that limited growth? German economy is emerging from the crisis with a clear advantage over their European partners, and that is allowing the Germans re-invest in real estate island, also helped by the decline in prices that has occurred. Over the past months in some cases this has reached as high as 30% decrease.
The former president of the property agents, José Oliver, adds to this assessment: the fall in prices is still key to explaining the slight rise that is being observed in the acquisition of previously owned homes.
Demand distribution
At the moment it is detecting a significant change in the profile of buyers. According to data provided by Kuhn & Partner, between 2006 and 2009 32% of its sales and 34% of their value were sold to British buyers’. Germans, accounted for 26% of the number of homes sold referred and 29% of the investment. For Spanish buyers it was 25% of the property market and 17% of the value of transactions.
But in 2010, the German purchasing increased to 44% of sales and 42% of the investment. That is, almost half the market is in the hands of Germans, although they have reduced the value of purchases. Although much more modest contributions, there has also been a a slight improvement in the case of the Scandinavians and the Swiss. In contrast, the British reached only 19% of transactions and 23% of its value, while in the case of Spanish the percentages were 13% and 11% respectively.
A few days ago, a report prepared by currencies.co.uk, a currency specialist service, stated that half of Britons with second homes in the eurozone are now considering selling their property.
Both Kai Dost as property agent Mariano Ogazón, which develops most of its activity in the area of Calvia, reject the existence of such massive supply.
In his view, he is not aware that there are many people in the UK that are interested in selling.
According to Kai Dost, the option being taken by many British people is to put your vacation home for rent, preventinga sale at a bad time to their interests because of cuts in prices and the extra revenue that also help to meet the expenses that the property general.
