A third of all villas and apartments that changed hands on the island in 2022 were acquired by foreign buyers, according to the authorities. In 2021, more than half of all property buyers had a foreign passport. Wealthy Europeans, especially from German-speaking countries, lead the statistics. According to estimates by the brokerage industry, this rush to Mallorca real estate is likely to continue in 2023.
The run by foreign buyers on Mallorcan property has assumed such proportions that the pressure on the island government of social democrats and two small left-wing parties is increasing to set limits on property purchases by foreigners and non-residents. Something like what just happened in Canada – foreigners won’t be allowed to buy real estate there for the next two years.
The background is that it is becoming increasingly difficult for the residents of Mallorca and the other Balearic Islands (Ibiza, Formentera, Menorca) to acquire affordable housing for their own use. Rental apartments are also only available at prices that many locals can no longer afford.
According to the statistics office, real estate purchase prices on the island rose by eight percent in 2022. According to the industry portal Idealista, rental prices even climbed by 14.5 percent.
“The Balearic Islands must not become a theme park in which the residents no longer have space,” said Iago Negueruela, the social democratic economy minister of the holiday islands, in the Balearic regional parliament. Negueruela explained that the regulation of the real estate market is an issue that must be discussed openly in view of the growing tensions in the population. However, restrictions on European citizens could contradict EU law, which guarantees freedom of movement for all European citizens.
“The mass purchase of second homes in tourist locations makes it impossible for locals to afford a primary home,” said Balearic MP Josep Castells of the left-wing Més party. “It’s often no longer possible for locals to keep up with foreigners when it comes to property prices,” Castells told the German-language Mallorca Zeitung.
Spectacular real estate deals on the island have been causing unrest for months and giving the impression that large parts of Mallorca are passing into foreign hands. Many celebrities from Germany, Austria or Switzerland have been at home on Mallorca for a long time.
Now the rich from the rest of the world are also discovering the dream island. “The foreigners are outbidding each other in the competition for the real estate gems,” writes the Spanish island newspaper Diario de Mallorca.
The latest sensation was the sale of the castle-like palace Sa Fortalesa. It is located on an enchanted peninsula in the northern resort community of Pollença.
The headland, including the palace and its own port, was bought by the Norwegian multi-billionaire Ivar Erik Tollefsen, as confirmed by Pollença’s town hall. According to the Norwegian business newspaper Kapital, the purchase price is said to have amounted to 62 million euros. The 61-year-old Norwegian is the owner of the investment group Fredensborg, which in turn controls the international real estate giant Heimstaden.
Heimstaden is one of the largest European owners of apartments. According to its own statements, Heimstaden currently owns 155,000 apartments across Europe, 26,500 of them in Germany and 53,000 in Scandinavia.
A few kilometers from Tollefsen’s dream palace, another foreign investor made a big purchase: Mexican billionaire Fernando Chico Pardo bought the traditional Majorcan Hotel Formentor, which is surrounded by spacious parks and hunting grounds, for 165 million euros through his investment fund Emin Capital.
Outrage was caused by the fact that the investor did not stick to his plan to preserve and renovate the most famous and almost 100-year-old hostel on the island. Instead, the demolition excavators moved in to make room for a new luxury hotel.
The recent acquisition by the British billionaire brothers Reuben was not well received on the island either: David and Simon Reuben have long been among the major landowners on Mallorca. According to several island media, they have just increased their holdings with two huge estates in northern Pollença and southwestern Andratx.
In the meantime, the brothers on Mallorca are said to own more than 1,300 hectares of land – this corresponds to 13 square kilometers or twice the area of Gibraltar. It was also said that more than ten kilometers of coast belonged to the property, which passed into the private ownership of the billionaires.
Author: Ralph Schulze (Madrid)
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The original of this post “Mallorca’s Fear of Selling Out” comes from Deutsche Welle.
