Prices of new properties in Mallorca to rise

BUCKING national trends, prices of new properties in Mallorca are set to rise. Palma will not be able to satisfy demand for new housing in 2010, Gabriel Oliver, President of the Balearics Property Developers Association warned.

Residencial Cala Magrana, is a new residential complex developed by Taylor Wimpey just 600 m from Cala Anguila beach The Cala Magrana III residential complex is situated close to the sea and very close to golf courses and the marina of Porto Cristo. It consists of 2 bedroom apartments in a Mallorcan design surrounding a communal garden with a swimming pool.

Oliver said banks reticence to fund new construction projects since the recession, has created an “atypical” situation where supply is being outstripped by demand. Around 3,000 flats are sold in Mallorca annually, and at the end of 2011 there will only be a stock of 2,000 new properties on the island, Europa Press reports

Even if banks loosened their purse strings for new construction projects, there would be a two to three year period before these would be available to be sold to the public. Each month an average 252 new properties are sold on the island, with more than 2,000 sold so far this year.
Nevertheless, these figures remain much lower than the 7,000 – 8,000 new properties being sold in 2006, before the onset of the economic crisis. “All the building projects for new apartments have finished,” he said.

By 2012, he said “there will be no stock, especially in the big cities like Palma” where there is a bigger demand due to the constant population growth.

He blames the Bank of Spain for the “unfair” situation in the Balearics as he feels the massive over-supply of housing stocks on the mainland has forced tighter constraints on all regions penalising investments in the construction industry. Meanwhile, he revealed 70 to 80 per cent of resale properties  on the islands belong to banks.