This week, the Balearic Government has opened the door to holding “an in-depth debate” on an issue that first pro-Mallorcan Més and then the PI parties put on the table and which would imply profound modifications to European community regulations.
Despite this, the real estate sector warns that the message is reaching international markets and causing deep concern for the immediate future of the Balearics.
“It has gone down like a nuclear bomb,” says Hans Lenz, president of the Balearic Association of National and International Real Estate Agents (ABINI) and director of Engel & Völkers in Mallorca.
“In the international press you simply read that the Balearics are going to ban the sale of property to foreigners and that is scaring everyone away. Many are already assuring us that they are going to finish what they have in place and leave”.
Foreign property sales to foreigners in the Balearics now account for around 50 % of the total market. The Germans, followed by the British and the Swedish, have been the first to set the alarm bells ringing, but they are not the only ones.
Marc Pritchard, sales director of Taylor Wimpey, assures that British companies are already planning to move if they continue to perceive what they consider to be a hostile context for their activity, with their sights set preferably on well-known markets such as Portugal. Italy and Greece, where land is also more affordable, are also among the most obvious escape routes, although other Spanish regions such as Andalusia and the Valencia region are also being considered.
Lenz, who explains that with the current geopolitical situation and inflation, Germany has noticeably slowed down its urban development activity, maintains that the negative message can have devastating and immediate effects: “Once it is transmitted, you can be left with zero”.
He also denies that for the moment there has been a rebound effect, contrary to what was intended with the proposed limitation; in other words, that it has not led to an increase in transactions.
Lenz - who recognises that the sale to foreigners is one of the reasons for the increase in the price of housing, although he stresses that it is not the only one - is in favour of exploring other ways of reconfiguring the market, such as changing the type of housing “prohibition is not a way of solving a problem and, furthermore, it breaks models of coexistence that have existed for a long time and all for launching electioneering messages that do not provide any real solution”.
12 comments
To be able to write a comment, you have to be registered and logged in
OouooI have mentioned Moroccans before. The local authorities need to take a long look at towns in the English midlands and north to see what is in store for them. Stand outside schools in Sa Pobla or Felanitx when the pupils come out and you will see first hand the numbers already here. The key word is Integration and it is not happening. All the cheap areas of these towns are becoming ghettos, complete with mosques and as long as religion stands in the way integration will never happen.
Mr Melia of the ultra minority Pi party knows that there is an election around the corner and is trying to drum up support from his fring base by blaming "rich Germans and Brits" on housing issues he says is caused by a population growth of 300,000 in Mallorca in the last decade. What he conveniently ignores, when speaking to his base is that the largest foreign community which now exceeds all Germans, British, Swedish and Danish combined is the Moroccan population on Mallorca. I am not sure how many coastal properties they are buying ?
Christopher, Salaries of 30K, if only, I think you will find the majority on far far less than that, maybe half, so nearly all properties over 200k are out of their reach.
An awful lot of hurdles to overcome a policy proposed by a rather extreme minority. Not the least of which is that it directly violates some very basic concepts of EU membership. Not to mention the severe economic consequences, and finally, the effective destruction of the "quality over quantity" programme. British turkeys may have voted for Christmas, but they're a special breed of turkey.
Since this news broke I have spent some time talking with a few interested parties for their perspectives and to see what they are doing to address this issue. I have spoken with the MD of Engel & Volkers, the chairman of the real estate association and a property lawyer……all people who will be directly affected if this legislation were put into effect. The general message seems to be “don’t worry everything will be fine ……the legislation won’t be implemented.” I am surprised to find there is no co-ordinated effort going on between the main associations who will be most affected by it - I would have expected that the real estate associations, the college of architects, the big developers and the property lawyers plus (if it exists) a representation of the foreign community on Mallorca, would have been urgently organising a crisis meeting to co-ordinate their actions and to pool resources to properly analyse the core issue of affordable housing, develop alternate proposals, to engage professionals to advise on lobbying the political parties and the government and some form of media strategy to get some coherent arguments into the local Spanish media. It seems none of this is happening. This really feels a lot like Brexit in the UK where the “remainers” kept telling themselves it will never happen, all the stakeholders interested in remaining in the EU both political and business failed to work together in any coherent or meaningful way. Meanwhile the pro Brexit campaigners were united, focussed on a few perceived populist benefits (reduced migration and extra money for the NHS) that they knew would resonate with the general public and surprise, surprise people voted for Brexit, many taking the attitude that Brexit was likely no worse, than maintaining the status quo that they were dissatisfied with so why not give Brexit a go. This news about banning foreign property investment is already all over the internet in English and German, there must already be many potential investors out there who are already pausing their investment plans in Mallorca. With the general slowdown in the European economy this is the worst possible time to be discouraging such investors, the longer the key local stakeholders sit on their hands doing nothing the greater will be the short term damage and the more likely it becomes that this controversial proposal will gain real traction within the local electorate. Surely it’s time for these people to do something coherent???
This is not an attept to ban foreginers from buying EUR1M+ villas, it’s a political stunt to come up with ‚mystical them’ to be blamed for 20 years of failed housing policies. End game: nothing changes, populists who started this debate will get some votes as the „defenders of the regular, working-class folks” and keep on doing nothing to secure affordable housing. Making noise is easy, building affordable housing, policies and infrastructure to support it and seeing the results after 10+ years is hard 🤷♂️
In addition, Christopher, put a severe restriction on new building of properties with say €1m+ values. Unaffordable to locals but tying up building resources and land. This may result in property prices rising for foreign buyers but that doesn’t matter to locals. However, resources will be available up build affordable homes.
So, let me get this straight... The property market is suffering a "nuclear bomb" because a handful of some obscure wing of some political organisation is >threatening< to stop foreigners from buying property in Mallorca? Count your blessings. Another country not only threatened, but ultimately actually >voted< for anti-foreigner policy, and are now suffering substantially.
Just another point, what will happen to all the the greedy estate agents when the property market goes bust and charging 5% commission will be a thing of the past. Maybe all the expensive Mercedes’ and Porsche cars they drive might disappear off the road which will ease congestion
Great review Christopher, maybe you should be working in the government and bang some heads together. What’s going to happen when some wealthy German wants to buy their dream villa at 5 million and will be paying 500k in tax but can’t because it’s got to be sold to a local, don’t seem feasible. We have a home in Santa Ponsa and at the minute every other business on the road is a estate agent, there will be lots of empty commercial units