Property trading in Mallorca: key factors for 2023
2022 was quite an active one for the real estate business in Spain. According to a study by Solvia, one of biggest real estate agencies in the country, around 640.000 operations were completed during the year. That means an increase of 13% compared to 2021. Very positive indicators that reinforce the “boom moment” felt after the pandemic of 2020. This growth trend is expected to slow down in 2023 and the study foresees that the number of deals will be cut to some 580.000. So, what are the key factors to potentially have an impact on the real estate business in Mallorca?
- Restrictions to non-resident buyers
This is still far from becoming a reality. In any case, the Balearic Government is currently considering passing a new law that would require non-Spanish buyers to have been registered as a resident for a minimum number of years.
- Euribor will continue to go up
For the first time in more than a decade, the reference for the borrowing rate amongst European banks went back to positive numbers in 2022. Banks and European financial institutions expect that it will continue to go up, but at a slower pace and according to some of these organisms it will eventually stabilize.
- Tougher requirements on mortgages
The higher costs of the mortgage payments experienced last year and the prospect that this is a trend that will continue in 2023, even if the spike occurs at a lower speed, will translate into higher risks too for banks. Therefore, they will very likely harden the requirements for their mortgages. That means more legally binding commitments, guarantees, higher interests…
- European funds and energy consumption
The financing coming from the EU through the Next Generation funds will potentially mean new business opportunities. This is because of remodelling and works on properties, which will also likely create a new segment withing the real state sector and motivate many professionals to specialize and work mostly with foreign buyers or investors. Digitalization and adapting capabilities to the clients’ new needs, as always, will also be key to reaching successful deals through this financing.
- Fewer new constructions
The rampant inflation that has been affecting the global economy last year has also made construction materials more expensive. In the case of the Balearic Islands, the number of new construction permits been decreasing since the pandemic. In 2022 this decline was even bigger than during the Covid 19 crisis in 2020 and 2021. To the contrary, remodelling licenses have gone up slightly.