Property sales are forecast to slowdown this year because of the Covid-19 crisis, according to the Real Estate Consultant, CBRE.
In the CBRE report, 'Keys to the Residential Market in Spain 2020', Palma Regional Director, Tonia Vera, stresses that the pandemic will also have a big impact on the home rental market.
“In the post coronavirus situation, an adjustment will be observed mainly in second hand sales and a minor impact in new construction and in the field of residential rentals, the prospects indicate that a certain amount of tourist rentals will be transferred to conventional rentals as a consequence of the current situation, which could attenuate the tension in rental income experienced in recent years and this will lead to the stabilisation of prices,” he said, adding that between 2013 and 2019 "the high tourist demand in Palma increased average annual rental income by around 57%".
House prices in the Balearic Islands were more expensive than in the whole of Spain last year, with values increasing by 5% to just over 2,360 euros per m2 on average compared to 3% nationwide, according to the CBRE report.
Between 2014 and 2019 property prices in the Balearic Islands rose by 25% compared to 12.5% nationwide due to a combination of strong demand and limited supply.
“The year-on-year growth in prices last year was 11% to 2,138 euros per m2 in Palma but the Balearic capital does not have the highest prices in the Islands. In both Ibiza Town and Santa Eulària del Riu property costs more than 3,500 euros per m2,” says Vera.
CBRE claims that demand for property dropped by 10% in 2019 in the Balearic Islands.