Overseas Property Investors Taking a Fresh Look at Palma

Overseas property investors interested in Mallorca are spurning the usual coastal villages and taking a fresh look at Palma.

The Mallorcan capital city, Palma, has recently had a €350m upgrade to its three-mile long strand, and also has marinas, Michelin-starred restaurants, boutiques, art galleries and ancient architecture.

Now the new cosmopolitan feel to Palma has attracted many high-net-worth individuals snapping up pretty orange palazzos as second homes, or even making it their primary residence.

The number of foreign residents in Palma has doubled since 2002, to over 60,000 and there are 15 international schools in Mallorca, three of which have opened in the past year alone.

Another advantage of the Mallorcan capital is that unlike resorts on the rest of the island, Palma is a base that doesn’t shut down in the winter, when the average daytime temperature only falls to 15C.

As demand for real estate in Palma increases, the supply is dwindling, meaning that average prices in the city have risen by ten per cent over the past year.

The investment in infrastructure is not stopping with the strip upgrade either. The Paseo Maritimo promenade is receiving a €20m facelift and a further €50m has been earmarked for the Club del Mar yacht harbour. The airport – Spain’s third busiest, which last year served 29m passengers – is also being extended and improved to the tune of €300m. It offers flights to 70 locations and has seen private jet traffic almost double since 2010.

But the upgrades to Palma will not take away any of its charm. The architecture ranges from the golden sandstone palaces of the old town, clustered in narrow lanes around the magnificent gothic cathedral, to the Gaudi-inspired modernism of the early 20th century, and from apartments on wide avenues to picturesque former fishermen’s cottages on the seafront.

Overseas property investors interested in Palma do need to be aware of restrictions for holiday lets. From 2017 until last summer, there was a freeze on the granting of licences to let to tourists. The ban was lifted in August, but only for properties on their own plot of land (detached houses, townhouses and semis occupying a plot each). This criterion could well change in the future but must be kept in mind.

Buying in Palma doesn’t come cheap however, with around 70 per cent of properties being in the luxury market, and costing on average around €6,500-€10,000 per square metre.

If you are after more space then outlying areas such as Cas Catala, five miles west of Palma, or even the countryside setting of Genova, a 15-minute car ride from Palma could suit. However, 3-bed and 4-bed properties are still likely to set you back €1.5m – €2m respectively.

Another option is the former fishing village of Molinar, towards the eastern end of the bay. Cottages both restored and newly built line the seafront, where bars and restaurants come alive in the evenings and at weekends. Expect to pay up to €3m for a penthouse right on the seafront but go one row back and a 3-bed townhouse could be found for half that.

If buying in Palma and surrounding areas at least the shadow of Brexit should not be a problem, as anyone purchasing a property for €500,000 or above may apply for a visa, which if obtained, it will confer residency rights.

It seems that Palma is firmly back on the map for overseas property investors.

The Mallorcan capital city, Palma, has recently had a €350m upgrade to its three-mile long strand, and also has marinas, Michelin-starred restaurants, boutiques, art galleries and ancient architecture.

Now the new cosmopolitan feel to Palma has attracted many high-net-worth individuals snapping up pretty orange palazzos as second homes, or even making Palma their primary residence.

The number of foreign residents in Palma has doubled since 2002, to over 60,000 and there are 15 international schools in Mallorca, three of which have opened in the past year alone.

Another advantage of Palma is that unlike resorts on the rest of the island, Palma is a base that doesn’t shut down in the winter, when the average daytime temperature only falls to 15C.

As demand for real estate in Palma increases, the supply is dwindling, meaning that average prices in the city have risen by ten per cent over the past year.

The investment in Palma infrastructure is not stopping with the strip upgrade either. The Paseo Maritimo promenade is receiving a €20m facelift and a further €50m has been earmarked for the Club del Mar yacht harbour. The airport – Spain’s third busiest, which last year served 29m passengers – is also being extended and improved to the tune of €300m. It offers flights to 70 locations and has seen private jet traffic almost double since 2010.

But the upgrades to Palma will not take away any of its charm. The architecture ranges from the golden sandstone palaces of the old town, clustered in narrow lanes around the magnificent gothic cathedral, to the Gaudi-inspired modernism of the early 20th century, and from apartments on wide avenues to picturesque former fishermen’s cottages on the seafront.

Overseas property investors interested in Palma do need to be aware of restrictions for holiday lets. From 2017 until last summer, there was a freeze on the granting of licences to let to tourists. The ban was lifted in August, but only for properties on their own plot of land (detached houses, townhouses and semis occupying a plot each). This criterion could well change in the future but must be kept in mind.

Buying in Palma doesn’t come cheap however, with around 70 per cent properties being in the luxury market, and costing on average around €6,500-€10,000 per square metre.

If you are after more space then outlying areas such as Cas Catala, five miles west of the capital, or even the countryside setting of Genova, a 15-minute car ride from Palma could suit. However, 3-bed and 4-bed properties are still likely to set you back €1.5m – €2m respectively.

Another option is the former fishing village of Molinar, towards the eastern end of the bay. Cottages both restored and newly built line the seafront, where bars and restaurants come alive in the evenings and at weekends. Expect to pay up to €3m for a penthouse right on the seafront but go one row back and a 3-bed townhouse could be found for half that.

If buying in Palma and surrounding areas at least the shadow of Brexit should not be a problem, as anyone purchasing a property for €500,000 or above may apply for a visa, which if obtained, it will confer residency rights.

It seems that Palma is firmly back on the map for overseas property investors.