EXPERTS are forecasting a shift in the Balearic real estate market this year with the commercial and industrial sector expected to enjoy rapid growth while foreign investors look for slightly less-luxurious but more accesible holiday homes. Property consultants CB Richard Ellis released their outlook for 2006 in Palma yesterday and claiming that Majorca is going to remain one of the most sought-after destinations for holiday homes. Francisco Sánchez, director of CB Richard Ellis in the Balearics, said that Spanish nationals are starting to invest heavily in the Majorcan residential tourism, holiday home market and are starting to take over from German second home buyers who still, however, dominate the market. Economic instability is still holding back German foreign investment while one of the big winners of last year was Minorca which enjoyed a rise in property sales to British and Catalan buyers. Sánchez claimed yesterday that there are currently 700'000 Europeans thinking about buying a second home in the southern Mediterranean.
While Majorca, because of its safety, similar cultures, the euro and excellent flight connections, remains one of the most wanted locations, Croatia, Turkey and Morocco are also proving very popular. The British media has recently been focusing very heavily on the British property and tourism boom in Morocco.
But, in line with changing holiday habits across Europe, European second home hunters are looking for less luxurious and more accesible properties which they are visiting more often but for shorter periods. Europeans no longer want a luxury home near a golf course or in the front line on the coast costing around 700'000 euros, Sanchez said. They are looking for a more modest property costing around 400'000 which, for example, is close to the airport. He explained that, apart from people using second homes more for long weekend as opposed to lengthy stays, the cost of property and garden maintenance has also made property buyers think twice about investing in a large property. Sanchez said that, for the future, the hotel sector could play an important role in expanding the region's residential tourism sector.
With the debate on-going about how best to reconvert obsolete or old hotels, CB Richard Ellis maintain that condo-hotels, hotels converted into serviced-holiday apartment complexes could be an interesting solution. It would offer hoteliers a profitable solution to the reconversion problem while also offering a product for Europeans looking for a holiday home in the 200'000 to 300'000 euro market. We see this as a viable alternative to reviving old and abandoned hotels while also helping to decentralise the holiday industry, Sanchez said.
For the immediate future, an exodus of young people is forecast out of Palma, where few can afford to purchase a property, to municipalities like Inca, Campos and Felanitx while there is going to be a great deal of activity on the outskirts of Palma. The lack of building space in Palma is set to spark a sharp increase in the price of office space and industrial sites this year with prices expected to reach around 2'600 euros a square metre. In conclusion, 2006 is going to be an even more aggressive year for the residential real estate market.
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