Price reductions across the Balearic island of Mallorca began to be openly marketed by agents in the run up to Christmas.  But by January, whole pages appeared, with red banners across property photos showing original and discounted asking prices.  

South west apartments
If you are shopping around for an apartment there are a few interesting deals to be made even though, unlike the costas of mainland Spain, there is no vast oversupply of developments. In the south west of the island, some developers left with new build units are prepared to take a deposit with two years or more to complete.  A potential buyer recently placed a local advertisement offering his yacht valued at €700,000 in part exchange for a luxury penthouse, with cash top up, and received three replies from private vendors.

In the luxury bracket, there’s a three bedroom apartment near Puerto Portals in a prestigious, front line community with 24 hour security, manicured gardens and spa facilities, which has dropped by €750,000 to €2.5m.   A second apartment in the same community has dropped from €1.9m to €1.425m.  

South west villas and fincas
In the villa and finca sector, there are reductions up to 30% island-wide, but although many look good on paper, there’s often a downside.  In the boom time, their prices were set unrealistically against “similar” properties but they may not be the best build quality and are not in prime positions.  A few appealing exceptions in the southwest would include a villa frontline to a golf course which has gone from €4.95m to €3.6m and a Karig style, sea view villa in Cala Moragues (near Andratx) reduced from €3.65m to €2.4m.  Of note is also a three bedroom house in a community next to Santa Ponsa golf course, reduced from €725,000 to €595,000.   

A stone-faced, detached home in the centre of the highly sought after village of Capdella (10 minutes from the coast) has reduced its asking price from €1.9m to €1.5m.  The four-bedroom property, with pool, sits on a private plot of 1,200 sq metres and is within walking distance of local tennis courts.  

This week, one developer has offered to take any property in part exchange, up to 30% of the sales price, for a newly constructed, stone finca with pool near Port Andratx, asking €4.59m, reduced from €5.95m. The six-bedroom property on 35,000 sq m with its own well, has wide ranging views over Sa Coma valley.

Palma city
In the Casco Antiguo, the old part of Palma city, a three-bedroom, refurbished apartment is reduced from €750,000 to €595,000 while a two-bedroom apartment that had a guide price of €395,000 is now asking €270,000.  In general, the apartment market has readjusted 10-20% down.  Just west of the city, a garden apartment in a quiet community of eight with its own garage and easy access to the Via Cintura motorway has dropped from €775,000 to €599,000.

South east

Although the apartment market has also dropped away on the south eastern  coast, it’s the one region which seems to have done better than most according to the Santanyi office of a large franchise chain.  They actually reported 20% increase on finca and villa sales for the last quarter of 2008 compared with the previous year.  In general, though, there are long lists of unsold, country houses between €1.1m and €2.5m in this sector, and the first signs of visible price readjustment have appeared, for example, a five-bedroom finca with 11m x 6m pool in C’as Concos previously asking €2.2m has reduced to €1.9m.  Top end properties are in fairly short supply but as they are not shifting either, may now be more open to offers.  

Inland, north and east
There are many opportunities in rural Mallorca.  Since improvements to the road network in the mid 90s, foreigners, in particular from the yachting industry, have been moving inland.  They now account for 20.5% of registered home owners in Llucmajor, 33% in Andratx and 35.5% in Calvia.   

In Montuiri (the very centre of the island), a four-bedroom, rustic finca with pool formerly asking €2.45m has reduced its price by €500,000 to €1.95m.  The land comprises 30,000 sq metres with its own well.

In the north and north east, prices have readjusted 10-25% down.  

Sterling exchange rate
Due to the dramatic slide of sterling against the Euro, buyers from UK had dropped by 50% by the end of 2008.  Buyers from Germany, Scandinavia, Switzerland, Russia and other parts of Spain, however, picked up.  As  prices are dropping to more realistic levels, some properties are already 15% cheaper than last spring when the exchange rate was more favourable, so the British are watching carefully, especially those with cash available: their negotiating power is phenomenal.

Jan Westwood is a buying agent with specialist knowledge of the market in Mallorca. (www.thepropertyfinders.com; +34 971 233 207)

* Villas for sale in Spain