Current status of foreign investment in the Balearic Islands
Data recently published by the Ministry of Commerce confirms what was already an open secret, the great growth of foreign investment in the Balearic Islands. The purchase of tourist accommodation of any type by German and British investors has meant that in the first half of the year practically all foreign investment over 2015 was reached. Purchase and sale operations of hotels have joined in that period over 139.5 million euros. Of the 260.7 million this year, 142.6 came from Germany. It is worth highlighting that the real estate sector is the one that accounts for more than 80% of all foreign investment, mainly in Mallorca until June. The construction of villas and luxury homes has been rising and the forecast in the second half, despite political instability at state level is that the trend continues to grow, a fact confirmed by the constant increase of visas at the College of Architects Balearic short, medium and long term. Undoubtedly, British citizens are those who lead the investment in the Balearic Islands. This is the group of foreigners who acquires more homes in the country, 21.3% of international buyers opted for a property in Spain were from the United Kingdom. This number is more than double that of the following nationality, the French, with 8.7% of sales, followed by the Swiss. The interest of foreign buyers is reflected in housing prices. Where international investors fix their goalsincreases the value per square meter. According to the latest data from the Evaluation Society, the Balearic Islands registered during the first half of this year, the biggest increase in prices, with a rise of 2.8%.
The growing interest in purchasing properties in the Balearic Islands coincides with the rise of tourist rents and yields data as facilitated by the report of the National Statistics Institute which claims that during the first eight months of the year have been purchased on the islands 9,305 residences, which means a growth rate of 36.1% over the same period last year. The report highlights two phenomena that are currently registered in the Balearic property market. One is the acquisition as investment of a significant number of homes for its subsequent incorporation into the rental market or as a second home. The second, the promotion of new homes is under minimum, which is forcing the islanders and foreign to resort to second-hand market: of the 9,305 purchased between January and August, 7,238 were used and only 2,067 of new construction.
With these data, the forecast for close of the year is that housing transactions increase by 10%, similar to the growth of a year earlier, and that the price will cost more around 2.5%. Moreover, forecasts indicate that investment in housing will grow above 3% in 2017 and that for the second consecutive year, the residential construction segment will contribute positively to economic growth.