THE real estate sector led the economic growth of the islands last year, with a 6.5 per cent increase of its Gross Added Value, five points more than the national average, according to an analysis made by the Economic Research Centre of Sa Nostra and the Balearic University. The report says that the sector shows a 28.9 per cent increase over the past five years, much higher than the 10.2 per cent increase in other non-farming sectors in the islands. Real estate activity has increased its contribution to the regional product by 1.2 points to 7.7 per cent of the Gross Added Value of services in the Balearics, beating transport (5.7 per cent). It was only beaten by the most traditional branches of the Balearic economy such as commerce (23.5 per cent), hotels (16.4 per cent), restaurants (19.6 per cent) and other tourist services (11.7 per cent). According to the Research Centre, the expansion in the real estate sector has been accompanied by a huge growth in the creation of new companies (up by 63 per cent between 1999 and 2004). This is attributed to the arrival of capital from outside the Balearics.
The report indicates real estate channelled 80 per cent of foreign investment in the Balearics, most of it coming from Germany.
The Research Centre said that 90 per cent of the new firms had a maximum of two workers.
The real estate boom shows every sign of continuing this year.
Earlier this week it was reported that supermodel Claudia Schiffer had sold her extensive Camp de Mar (Andratx) property to a Russian millionaire businessman for 11 million euros.

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