Low end property market in Mallorca struggles
Monday, 04 August 2008
The combination of global recession, strong Euro and a tightening of lending criteria for non-resident buyers has led to a slow down in the lower end of the second home market in Mallorca, according to agents Engel & Völkers.
Price reductions, particularly in areas popular with UK buyers, are generally 10% of the asking price. This is also true of flats in Palma for under €500,000 which have largely been financed with mortgages. Areas where there are concentrations of apartments are also suffering.
The south west is proving the most resilient, with average sale values of just under a million euros. Farm houses and estates in the mountains have also bucked the trend by selling within weeks of coming onto the market.
Euro-zone countries are proving more willing to buy on the island while the unfavourable sterling exchange rate has led to a drop in British buyers. To date, German buyers account for 50% of the market and British buyersnow account for around 20%. However, those British buyers who are coming tend to be the biggest spenders.
Daniel Chavarria Waschke of Engel & Völkers says: 'One of the great strengths of the islands is their international appeal which means that when one market decreases, another takes its place.
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'Although the market has slowed down at the lower end our sales figures indicate that the market remains stable. Furthermore, most price adjustments of around 10-15% have been made mainly at lower end but this is more an indication of vendors’ over inflated expectations.'
On the market: Old Bullring, Pollensa €2.2m
One of the most unusual properties on the island has come up for sale in Pollensa. Tucked away in the quiet backstreets of the old town is a house which boasts its own mini bull ring. Understood to have been built following a fashion for garden bull rings that was bought back from South America in the early 20th century, the semi circle seating gallery now overlooks a formal garden. The house, which has been in the hands of its German owners for twenty years, has four spacious bedrooms and a second interior patio with a swimming pool. 'It would benefit from a bit of money being spent on it but it's a fabulous opportunity to own an oasis in the middle of a lively town like Pollensa,' says Mark Ccott of Engel & Völkers. The house is on the market for €2.2m (+34 971 53 20 50; www.mallorca-north.com)
* Properties for sale in Mallorca
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