This percentage in the Balearics is expected to increase in the coming years because of rising house prices. CBRE indicate that international funds are setting their sights on Mallorca in order to invest in new developments on a build-to-let basis. Profitability of this type of investment in the Balearics is put at around 4%, higher than in Barcelona and Madrid with 3%.
With regard to the housing market, the study shows that prices in the Balearics increased by 9.6% between the fourth quarter of 2020 and October-December 2021.
The increase in construction costs will continue to push up house prices, CBRE suggesting that this will be more so with modest-priced homes than those at the the upper end of the market. For the latter, the consultancy says, there will be "greater elasticity" in absorbing the higher cost of materials. However, the increase in costs will delay new developments, especially those for VPO "protected" affordable homes.
Another finding is that almost 39% of the homes sold in the Balearics in 2021 were purchased by foreigners. Tonia Vera, CBRE director in Palma, says that a shortage of land in the Balearics over the short to medium term will mean that the price of housing remains high and that there is a lack of supply.
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Some homes are perhaps rented out because British people can no longer use them freely. Just 90 days in a 180 day period ...and not even that long if people have been to other Schengen countries. Meanwhile Spanish people who own homes in the UK can still use them as a visitor for 6 months per visit. Incredible really. For visitors, ending Freedom of Movement of People seems to have backfired spectacularly on British people as a result of the foolish choices of their government and failure to negotiate anything better with Spain. It's even harder to believe this situation exists when indications (from Valencia and Baleares in particular) are that Spain wants a bilateral deal with the UK on Visa Waivers (or even FOM), yet UK Foreign Office does nothing about it citing "government policy" not to sign written agreements on visa waivers. Beggars belief.