Residential real estate on the Spanish mainland continues to take a beating, but reports indicate the tide may be turning for island properties. Data from Tinsa shows that prices in the Canary Islands and the Balearics have not fallen as steeply as homes elsewhere in Spain and demand for holiday homes is still strong, particularly in places like Mallorca and Ibiza. Experts warn, however, that Tinsa’s numbers may not reflect across-the-board statistics due to its way of calculating averages, and that price falls among low-end homes may skew the data. For more on this continue reading the following article from Property Wire.
While the property market in most of Spain remains in the doldrums there are signs that it is picking up in the Canary Islands and the Balearics.
The latest figures from Spanish valuation company Tinsa say that prices increased by 3.3% in April over the previous year whereas there was an average fall of 10.5% in the rest of the country.
Spain has had a rather tumultuous few years with Tinsa calculating overall house price falls at 37.2% from peak values in December 2007 when the property bubble burst. The mainland Mediterranean coastline is home to the highest falls at 45.1% and the capital and major cities with populations greater than 50,000 next at 40.4%.
The Balearic and Canary Islands prop up the table with falls of 24.5% from the peak, with a positive turnaround now on the cards as experts point out that not every part of the country has experienced the same steep falls.
Balearics Sotheby’s International Realty has been saying that a recovery is most likely first in the islands compared with the Spanish mainland. ‘These figures are consistent with the market predictions we posted in January this year when we stated that we had started 2013 with a real sense of positivity,’ said the firm’s managing director in the Balearics, Daniel Chavarria Waschke.
‘We made reference to the fact that Ibiza had its recovery in 2012, way ahead of the mainland, and was already booming out again. Meanwhile we said that demand for holiday homes in Mallorca had remained high throughout the crisis largely due to the mix of nationalities involved, with more than 80% of buyers non-Spanish,’ he explained.
‘We believed that at the top end, the worst was over for Mallorca and recovery would accelerate in 2013. Our crystal ball appears to be spot on with April’s 3.3% house price increase reflecting that recovery. Long may it continue,’ he added.
He also pointed out that Mallorca and Ibiza enjoy very different qualities to the mainland, but it is also important to consider that Tinsa values all properties for sale, and that includes small apartments with no views or homes in less exclusive areas of the Islands.
‘Our business focuses entirely on the luxury end of the market and I suspect if we were to carry out the same exercise, the ‘peak to bottom’ price falls would come out a lot lower than Tinsa’s across the board 24.5%,’ he said.
There are also hopes that a real estate market recovery may well be accelerated by Prime Minister Mariano Rajoy’s statement of intent to offer indefinite residency to foreigners purchasing a home priced in excess of €500,000, significantly higher than the €160,000 first suggested back in November 2012.
A more detailed draft of the proposal is expected by the summer but there has already been strong interest from China and Russia, nations keen to access one of Spain’s millions of empty homes in return for a lucrative residency visa.
This €500,000 could really boost the luxury end of the market. Sotheby’s International Realty focuses exclusively on villas priced above €2 million and apartments above €500,000 in Mallorca, whilst in Ibiza it is villas above €1.5 million and apartments above €1 million.
This article was republished with permission from Property Wire.