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Foreigners bought more than 15,000 Balearic properties in the past 5 years

In the past five years, foreign nationals have acquired a total of 15,659 homes in the Balearic Islands, most of them bought by German and British nationals. The figures provided by the Central Statistical Information of Notaries, show that the natural environment of the islands and the excellent flight connections to Europe are some reasons why the islands are attractive destinations for foreign investment in real estate, especially luxury residences.

In 2013, a total of 3.744 transactions selling properties were completed, this is an increase of 3.1% over the previous year. Of these, 35.6% were bought by German citizens (1,334 properties), followed by British, with 694 acquisitions. Purchase figures in the Mallorca real estate market are also being driven higher thanks to the Swedes, who have increased purchases of Mallorca properties by 36% over last year (230 acquisitions). Moreover, Swedes are precisely those who are buying the Mallorca’s most expensive properties. They paid an average of 3,513 Euros per square meter.

By contrast, Belgians (40 acquisitions) and Russians (82 acquisitions) are nationalities that have reduced their presence in the market. However, it is worth noting that Russians tend to purchase in the top luxury property market in Mallorca, with an average price of 2,757 Euros per square meter.

The drop in Mallorca’s real estate prices has strongly affected the market.

In order to analyze foreign investment in Balearic property the drop in housing prices as a result of the Spanish economic crisis should also be taken into account. Thus, the price of housing has decreased significantly from the 3,236 Euros that were paid in 2008 per square meter to 2,208 Euros last year. Only between 2007 and 2008 the average price per square meter fell by 19.7%.

This trend has been consistent since then. Only in 2013 the price per square meter fell 3%. This means, therefore, a great opportunity for foreign investment. Antonio Fuster, CEO of Balearic Properties confirms this trend, which is highlighted by the increasing UK market thanks to the recovery of the pound against the Euro.

Antonio says the luxury real estate market on Mallorca already emerged ages ago from the crisis and that "if the year 2013 was already a good one, this year will be better and the market will continue to grow," he says.

One of the “symptoms” of this recovery is that 95% of sales were made without any form of funding. Meaning: without asking anyone for money. In 2007, 35% of purchases were financed, now it is only five percent.

The motivation behind foreign property investment on Mallorca has many reasons.

The reasons that lead people of various countries buy a property in Mallorca are diverse, but Antonio tells us: "They want to improve their lifestyle; buy a house as a future investment, or because they already have family or friends with properties on Mallorca. The Germans in particular have a dream: when I stop working I want to have a house in Mallorca."

In Mallorca the most real estate transactions paid with foreign capital are registered, buyers being both residents and non - residents. This makes it clear that many of the tourists, who visit, buy a property in Mallorca in order to spend relaxing holidays or as a retirement home.

By Iris Gruenewald
Founder

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