A war of words has broken out between developers on the Island of Mallorca and the College of Technical Architects (Aparejadores) over what is happening to property prices in Mallorca, and the outlook for the future. 

Unsurprisingly the developers, many of whom have large stocks of unsold properties (although not as large as those on the Mainland), argue that prices won't drop further fearing, no doubt, that buyers will sit on their hands waiting for further falls before committing to any purchase. Official figures from the Instituto Nacional de Estadistica (INE) suggest prices across Spain fell by 9.2% between April 2009 and the same month last year. Tinsa, one of Spain's largest valuers, published a similar figure of 10.1%, although referred to a figure of 17.1% for the Mediterranean coastal areas and 10.4% for the Balearic Islands.

Although these figures do not take into account falls prior to April 2008, official figures of price movements since the top of the market passed are not more than circa 15% and therefore along way short of what is happening in other countries (UK, USA, Ireland etc) where similar property price bubbles have been experienced. As we have mentioned on a number of occasions it seems much more likely that the statistics in Spain are inaccurate rather than that Spain is suffering less, and price reductions are subsequently lower.

Anecdotal evidence, where sales are being achieved are of price reductions much nearer 30 - 40% with the largest falls in areas with greatest over supply problems and poorer quality properties. While Mallorca has very significant defensive qualities - more limited over supply of unsold new build properties; a history of "lifestyle" purchasers rather than speculative investors; a top quality international brand; and a large stock of top quality luxury properties, we have long maintained that property values in Mallorca have fallen although in many cases this has not been reflected in asking prices, many of which have remained stubbornly high.

It is thus refreshing to hear that our fellow professionals, the Aparejadores, believe that where sites are being purchased for future development these are being done so at values which will allow subsequent sales to be done at up to 30% below the "boom time" levels. They quote land prices of between 42,000€ and 48,000€ per dwelling, on small unit schemes, compared to 102,000€ and 108,000€ at the height of the boom and the start of the credit crisis.

Clearly this will have a direct impact on second hand property values and those of the unsold stock of new build properties.  Even if asking prices don't drop the reality is that actual sales prices, particularly where mortgage finance is required and where the bank valuers are coming in with much lower figures, need to fall if buyers are to commit. The key for buyers is to thoroughly review the market, if necessary seeking independent valuation advice, and to negotiate hard. This is a buyers market (and yes there are some good buying opportunities) so don't be the one that over pays because someone says Mallorca property prices "don't really fall"! (each individual case needs to be assessed on it's own merits and some properties will see lower price reductions than others but no property, however special, can be total immune to what is happening, so as the saying goes "buyer beware" !! 

Resources:

The Mallorca Mortgage Business

Novi Property Mallorca

Properties International Mallorca

Mallorca Chartered Surveyors

Property Finders in Mallorca

Mallorca Property News

The international financial back drop for the Spanish and Mallorca property markets remained largely unchanged over the last month although the expected long term trends for exchange and interest rates appear to have been established despite ongoing uncertainty across the globe.

Interest rates in the US and UK seem to be close to their bottom (not least because they are close to zero!) and expectations are that they will remain at these levels for some considerable time with any increases not anticipated until 2011. The emphasis in the US and UK will stay with quantitative easing measures to improve cash flow in the credit markets.

In the Euro Zone on the other hand interest rates remain relatively high at 1.25% and while the ECB talks of  announcing measures to ease private sector credit, the reality is that these are much harder to introduce in a "multi state" Europe and where no procedures exist to indemnify the Central Bank against losses resulting from asset purchases. At least in part this should mean that the ECB will have to continue to reduce interest rates, despite their reticence to do so, in contrast to central banks elsewhere.

The RBS only anticipate one further quarter point drop although at Novi Property we feel that the structural weaknesses in the Euro Zone, coupled with the more restrictive position of the ECB regarding quantitative easing methods, could mean one further quarter point cut may be needed. On the exchange rate front, and particularly the relationship between Sterling and the Euro, the trend of a more stable Sterling, and a move to longer term weakening of the Euro, has continued. Much of the weakness of the UK economy, and on going downside risks, seem to have been factored in to the current Sterling rate, while that does not seem to be the case in Europe where the expectations are that the single currency will continue it's decline against the dollar and start to suffer against Sterling (the Euro lost 2% agaist Sterling last month). 

As we have maintained for sometime this backdrop for prospective purchasers of Mallorca property is reasonably favourable although the big question for  Sterling denominated buyers is how to time any acquisition to take advantage of the anticipated strengthening of Sterling / weakening of the Euro. While buyers may wish to look at delayed completions and multi currency mortgage finance, UK national vendors of Mallorca and Spanish property face a very different problem - how to achieve a sale as quickly as possible and in a very weak market, if they are looking to repatriate sales proceeds back to the UK and take advantage of  Sterling's current weakness against the Euro.

Where a buyer is Sterling denominated and vendor a UK national seeking to repatriate funds it is vital that the dynamic of the negotiations includes a currency / exchange rate element, if a fair and equitable deal is to be found that can satisfy both parties and facilitate a deal. By way of example:

A property valued at 500,000€ would "cost" a Sterling denominated buyer 454,000 pounds at today's exchange rate of 1.10 Euros / Pounds. Assuming the purchase were delayed  9-12 months this "cost" may well have fallen to 400,000 pounds if the exchange rate has moved to 1.25 Euros / Pounds, as is forecast, ie 54,000 pounds / 12% less. Of course the opposite has happened to the hypothetical UK national vendor of the same property. Rather than receiving the 454,000 pounds he / she will only have 400,000 if the sale is delayed. It could thus be argued that if both parties want a deal then some middle ground should be found where perhaps the buyer agrees to pay now but pay a little less and the vendor accepts less in exchange for an early completion. 

Equally in such a weak "buyers" market it could also be argued that with "buyers" so few on the ground a vendor might do better accepting a lower offer now, rather than holding out for something higher in the future, not only because of the uncertainty of whether another buyer will be found but also because if and when they do come forwards the exchange rate will have moved against the vendor. In our example the vendor might well be advised to accept an "offer" today of 440,000€ which when exchange and repatriated at an exchange rate of 1.1 Euros / Sterling will give him / her 400,000 pounds, rather than hold out for 500,000€ in the future which will not only, in all probability, be worth no more than the 400,000 pounds they would get now, but also has the very significant element of uncertainty given that the buyer may well not be there at all in the future ("bird in the hand"!!)

The "win / win" option is for the vendor to sell now at the prevailing high Euro / Sterling exchange rate but the buyer to delay having to exchange his / her Sterling to Euros which can be done, at least in part, via a multi currency mortgage (ie the mortgage is taken out in Sterling but later converted to Euros when the exchange rate is more favourable. Obviously there is still a need to pay a deposit in Euros, likely to be 40% in the current market with prevailing Loan to Value Ratios, so the buyer will still want a discount but only on 40% of the purchase price not 100%.

In our case the purchaser may want to reduce the Sterling equivalent of the 40% deposit on the 500,000€ purchase price from 200,000€ (ie 181,000 pounds at today's exchange rate of 1.1 to 160,000 pounds based on an exchange rate of 1.25 that they may have got delaying the purchase for 9 -12 months). The overall purchase price would thus be agreed at 21,000€  less (ie 479,000€) rather than 60,000€ less (ie 440,000€) in the example above. The buyer is left in the same position as before while the vendor is 39,000€ better off. (Please contact David Novi BA MPhil MRICS if a multi currency mortgage might be of interest) Continuing the "mortgage" theme, although these are not easy times for obtaining credit, if you do have a stable income profile, some excellent deals are now available for prospective purchasers with banks seeking to "entice" new good quality clients to help balance their lending portfolios against the ever increasing number of existing bad debts on these books, resultant in part due to their own imprudent lending practices. Again contact us for further details.

Resources:

RBS Interest & Exchange Rate Forcast 

The Mallorca Mortgage Business

Novi Property Mallorca

Properties International Mallorca

Mallorca Chartered Surveyors

Property Finders in Mallorca

Mallorca Property News

Property in Pollensa, Puerto Pollensa and the close by bay of Cala San Vicente, has long been popular amongst foreign buyers and in particular the British. Offering a mixture of stunning mountain and costal scenery, particularly associated with the Tramontana Mountains behind Pollensa, and the Voramar “Pine Walk” in Puerto Pollensa, and a quiet sophisticated and family friendly environment, for years the Pollensa property market knew only one thing, growth! With that growth came extensive new development, particularly in the Port’s Gotmar, Llenaire and Boquer areas with their mid to high range apartment complexes and in the countryside around the old town where rural fincas were purchased and renovated or high quality new build Pollensa country houses constructed. Prices increased rapidly and Pollensa became a Mallorca property market hotspot.

Now with the world and Spanish economies retreating rapidly, and the Spanish and Mallorca property markets in what appears to be freefall, what is happening to the niche Pollensa property market and what are the prospects for 2009 – 2010?

Let’s start with the positive! The countryside, mountain backdrop and sweeping sea frontage retain all the charm and quality that underpinned the boom. New development has generally been of good quality and relatively controlled, so that what the Pollensa real estate market has to offer remains very attractive, and the development “overhang” (i.e. supply of unsold new build properties) is also what one would regard as “controlled”. In effect the characteristics that made Pollensa one of Mallorca’s top “property lifestyle” areas remain unchanged or even enhanced.

Although on the surface of things these might be regarded as bland statements of little economic significance the reality is that these qualities and characteristics are exactly what makes Pollensa so attractive to foreign property buyers (and indeed more local Mallorquin and Spanish mainland purchasers). When economic stability returns (but be patient!) so will the buyers looking for the same lifestyle characteristics as before.

On the downside Pollensa is very much a British area and thus has been exposed to not only the general downturn in the economy but also the recent weakness of Sterling against the European Currency which has seen the former fall by around 30% over the last year. In effect the cost of buying a Pollensa property has gone up that same amount for Sterling denominated purchasers! While there remains considerable uncertainty in the foreign exchange markets and the prospects for Sterling and it’s relationship with the Euro, credible opinion, including that of the RBS Bank, is that we will see a slow recovery in Sterling and that by mid 2010 much of the ground will have been recovered and Sterling could stand at around 1.30 against the Euro (compared with around 1.05 today). Note: Contact us about how to use mortgage and debt finance to manage the Sterling -  Euro interface and take advantage of any future appreciation of the pound.

But even if conditions become more attractive for UK buyers, due to an appreciating pound, will the wider economic backdrop keep the buyers at bay for the foreseeable future? There is no doubt that the good times are still a long way off and we do not foresee real growth returning to the market until 2012. UK buyers will undoubtedly remain an important sector of the market and will return in more numbers around the same time, coinciding with returning confidence, job security and economic growth back at home. We also believe that while the British and German interest in the Mallorca property market will remain predominant it is likely that the trend of increasing diversification in the origins of foreign buyers, that became apparent in recent years, will continue both generally and in the area of Pollensa.

We also believe that, just as during periods of uncertainty investors look for quality in their underlying investments, it is likely that growth will return to those sub sectors of the Mallorca property market where supply is controlled and the quality of offer high. In this regard it is likely that the Pollensa market generally, and in particular the market for top quality rural fincas / country homes around Pollensa old town, and mid to top end apartments, in good locations around the Port of Pollensa, will start to move earlier than others but probably not for a year or two yet, 

But while we can argue that the medium term future looks reasonable, with a return to stability and growth, underpinned by the undeniable quality of the Pollensa environment and real estate offer, what is happening now and are there buying opportunities that warrant consideration during the downturn? Firstly and interestingly while much anecdotal evidence from the Mallorca property market generally is that the one sector that is retaining some resilience is that for top end villas and fincas, in Pollensa sales have dried up for these properties with the consequence that asking prices are falling, in some cases considerably, although not uniformerly. Market research is essential to identify those properties that are starting to offer real value, but they are starting to emerge, if one takes a long term investment view. 

That said with recovery of the market generally not expected for some 2 or perhaps 3 years will the wise investor sit on the sidelines for a little longer before taking the plunge? The answer is probably yes and no! Firstly it is important to say that “calling” the bottom of any market and being clever, or should we say lucky, enough to buy at the lowest point and just before growth returns, is almost impossible even for the savviest investor. The key is to buy when the majority of the price falls have occurred thus reducing the downside risk to the investor and taking a long term view so that even if there are further marginal falls these can be easily recouped during the initial stages of a market recovery. The other key is to look not only at prices in the market as a whole but also those of individual properties. The two are not always in step and investors can miss buying opportunities fearing further falls in the general market, when the price of a particular property has been reduced already and / or can be negotiated sharply lower today.  

In Pollensa while the asking prices of many properties are likely to still fall, as we have said some have already been adjusted downwards and in most cases “offers” are considered. In other words while the actual asking prices have in many cases only been reduced marginally, serious vendors are now prepared to talk about much more considerable reductions with a prospective buyer. This is a big change in the market and one that should open up opportunities for purchasers who wish to look now, carefully and patiently, but are serious about buying and able to demonstrate an ability to purchase (i.e. have funding in place) and thus negotiate discounts. 

While general market prices are likely to fall for some considerable time to come, if a good reduction can be negotiated now, on an individual property, it is likely that a purchaser will be able to “bring forward” some or all of these “future price falls” and thus considerably reduce the downside risks of their investment. A long term view of the purchase will of course be important but for lifestyle purchasers, or those looking at relocation, it seems that, with patience and careful market research, acquisitions can be considered now rather than postponed post 2012 when the market generally looks likely to start to grow again in Mallorca, and importantly the property can be enjoyed now!

In conclusion we believe that the Mallorca property market, and that for Pollensa, still has some way to fall and that recovery will not take place until 2012 generally, although high quality areas like Pollensa may recover marginally before. One of the keys however is to look at the prices and values of individual properties relative to the general market, thus identifying properties that have been reduced or can be reduced by negotiation now. Opportunities at this level are now emerging and, with good market knowledge and research, could allow purchasers to consider acquisitions now and thus start to enjoy all that makes Mallorca and Pollensa such an attractive place for property owners!          

 Property for sale in Pollensa and Property for sale in Alcudia

The decline in value of Mallorca property steepened again in December 2008 reaching a year on year figure of -9% compared with -8.4% in November, -5.4 in October and -4.4% in September, according to the latest monthly report from Tinsa, one of Spain's leading property valuers.

This is the 7th successive month that prices have declined in the Balearics according to Tinsa. Interestingly the same report identifies much heavier "losses" on the mainland Mediterranean coast, a fall of 14.3% in December, a decline that has been on going since February ie 11 months.

Novi Property Mallorca Comment:

What can we read into these figures and how do they compare with what appears to be happening on the ground?

Firstly it is important to note that the traditional valuation approach in Spain is to use, as evidence, the values of comparable properties that are being offered "on the market" not actual sales transactions. While this is a simple product of the lack of reliable information on real sale prices* it is a real issue that needs to be considered by Buyers and their representatives (*Note. most are distorted by the tax evasion practice of registered sale prices excluding a cash element paid "under the table" by purchasers to the vendor, something that has the real problem of disguising what is really happening in the market).

Owners and estate agents rarely act in line with the real market, holding out for higher prices long after a market has turned (especially when it turns down). The likelihood is that if "asking prices" are falling, real values fell sometime before. In the case of Mallorca we believe the market turned, at the very latest, in late summer of 2007 (some top end properties may have been a little more resilient) and any subsequent increases in asking prices were the consequence of owners and estate agents failing to come to grips with the simple fact that Spanish and Mallorca property prices can actually fall! Until then if a property did not sell owners and Agents simply increased it's price every few months, or at least at the end of the year, to reflect "the increase in values of property" during the preceding period - ie they were indexed linked like a State employees salary!!!

Extending this argument, it is thus likely that owners and estate agents are still not reflecting the realities of the market, ie have not fully adjusted down their price expectations, and thus "real nominal price falls" are much higher. "If you would want me to pull a figure out of the air", says Novi Property Mallorca's David Novi "I would double it and say values, generally in the Mallorca market, have already fallen between 15% and 20%, and since the market turned in mid - late 2007"

In relation to the levels of price falls in the different areas of Spain, and in particular comparing the decline of 14% on the Spanish Mainland coast with the 9% in the Balearic Islands (ie is it reasonable to concur that values are falling more on the Mainland than in Mallorca), it is likely that here the statistics don't lie and rather reflect the market fundamentals of the two regions. The mainland market was, as we have highlighted on many occasions, dominated by a much greater levels of speculative low - mid level price residential development driven by an equally speculative demand from investors. In Mallorca, while the construction boom was not exactly "controlled", it was on a much more reduced scale and the demand side was driven by real underlying fundamentals - population and household number growth and second home purchasers motivated by lifestyle reasons rather than financial.

These fundamentals are likely to help the Mallorca market withstand the current crisis better than other areas with "top to bottom" falls of around 30%, in the market generally, rather than an anticipated 40 - 50% in some of the worst affected areas of the mainland.

For buyers the key question is when to come into the market. David Novi believes 2009 could be a good time even if prices generally are still weakening.

"Clients often ask for my advice on where they can find the best deals, hoping we will produce a list of properties with bargain level prices, many of which are distressed sales from repossessions etc. In reality while there are one or two examples of such properties, the real opportunities are hidden behind the still artificially high asking prices of many (but not all) properties on the market. What we see is that the real bargains are only discovered once offers are made and detailed negotiations undertaken. Suddenly a property that looked at best "reasonably priced" has become good value, as we have been able to negotiate a major price reduction for the purchaser. The bottom line is don't expect to see asking prices reflect underlying value, at least from a general point of view but there are always exceptions!

Perhaps we are biased (!!), but as Chartered Surveyors and valuers, and above all agents for Buyers rather than Estate Agents acting as brokers between owners and purchasers, we believe we are able to offer clients not only the market and professional expertise, but also the independence and impartiality to help buyers identify and buy at the best possible price.

"In a rising market you could always make a mistake and over pay without getting your fingers burnt" concludes David, "the market keeps rising and any error is soon eroded and the buyer is left sitting on a profit (all be it a paper one!). When a market is falling, and even more relevantly in one where the buying costs are quite high (ie 10%), an overpayment of say 10 - 15% will leave the buyer with a "deficit of 20 - 25% (ie after adding in the costs of purchase) that will need to be recovered via future market growth, if a subsequent sale isn't going to result in a loss. Since future growth levels, at least in the medium term, are likely to be much more modest - say 3-5% per annum and even those won't probably start until 2012, it is easy to see how long someone would have to wait before the "error" is corrected. While pure investment motivations are rarely the driving force behind our clients purchases, they do want to limit the downside risks, something we believe we can assist them with through our market and valuation expertise"

Mallorca Property Prices - Mallorca Property Market Update

Just when we thought it was all doom and gloom a re-mortgage product has come to the market offering Mallorca residents and non residents the opportunity to substantially reduce monthly repayments without the usual costs associated with transferring a loan from one lender to another.

This really is a no catch deal (normally difficult to find!) and offers residents a mortgage rate of euribor + 0.35% and non residents euribor + 0.5 - 0.7% (dependent on the income profile of the client, loan amount and LTV). These rates apply throughout the term of the loan and are not limited "introductory offer" rates as is often the case.

On top of that the bank will cover all Notary, Gestoria and Land Registry costs and incredibly will accept an official valuation the owner may have from the original purchase or mortgage of up to 5 years old (ie if you have an official valuation of your property that is under 5 years old the bank will not require to you to pay for a new one, a saving of circa 400€)

The only costs not covered are any cancellation fees on your existing mortgage although these can always be added to the new loan amount to help you pay (eg on a 300,000€ loan with 0.5% cancellation fee of 1,500€ a new loan of 301,500€ will be granted. Generally there is a small 0.25% arrangement fee which is easily covered, within 2 or 3 months, with the savings in monthly repayments. 

Options include a fixed rate for the life of the loan, a fixed rate for the first 5 years or a fully variable rate that is reviewed annually.

In terms of paperwork key is proof that your current mortgage is fully up to date and that the last 6 monthly payments have been paid on time. Other documentation required is your last tax return, last 3 wage slips, bank statements showing the income etc.

If you would like further information and no obligation quote to see how much you could save please contact David Novi BA MPhil MRICS at The Mallorca Mortgage Business (www.mortgagesinmallorca.com) and info@mortgagesinmallorca.com  Best Mallorca Mortgage Deals

Never has there been such a disparity between property prices and values in Mallorca and, associated with this, such disparity in the asking prices of individual yet similar properties.

While we prepare our latest update on the Mallorca property market, and our forecast of where values will be going in the months ahead, we felt it important to highlight this general disparity in prices and values and the importance of market research and independent valuation advice.

Unfortunately good quality statistical evidence of the Spanish property market is difficult to obtain, but it is clear to see the anomaly between various official statistics that suggest that values have fallen by only 3% during the year to the third quarter of 2008, when compared with figures from the US and UK, two other nations that suffered from recognised "property price bubbles", that show annual falls of 20%. To put it another way it is very difficult to see how the official statistics can reflect the reality of what is happening in the Spanish economy (the Madrid stock exchange has fallen to levels last seen in 1983!) and that values are falling rapidly even if asking prices are not!

David Novi comments, "my view is that in Mallorca properties for sale seem to fall into 3 quite distinct groupings - the first where asking prices have remained unchanged, and have even in some cases increased, and where owners seem reluctant to reduce their expectations even where serious buyers show interest. These properties are to all intents and purposes unsaleable.

A second tier of properties where asking prices also remain largely unchanged but where owners are at least prepared to recognise the economic realities of today's market and where significant discounts can be negotiated by buyers able to demonstrate their willingness and ability to purchase; and a third tier where asking prices and values are more in line, with owners (in most cases either developers or hard pressed private individuals) reducing prices to attract buyers".

The effect of this 3 tier market is firstly disguise the reality of falling values; secondly create a disparity between different property asking prices (realistic and unrealistic); and lastly to decouple in many instances the fundamental relationship between prices (asking) and values.

The only solution for buyers is to undertake a three stage analysis - the first is market research; the second independent valuation; and the third an assessment of "worth" ie what any particular property is worth to the buyer. In order for a transaction to take place we need to see a convergence between the asking price / expectations of the owner; underlying value (generally assessed by an independent Valuer / Chartered Surveyor etc); and the "worth" that the buyer has put on the property (worth will include various aspects, many subjective, including importantly the perceived risk of the purchase in the eyes of the buyer). 

In the current market that is not at all easy but neither is it impossible! For more information about the Mallorca property market and how to identify buying opportunities please contact David Novi BA MPhil MRICS at info@novipropertymallorca.com or for a bespoke property finding service at www.propertyfindersinmallorca.com
Mallorca Property Valuers - Property Valuations in Mallorca

Justo cuando pensamos que todo son malas noticias económicas y que nuestro bolsillo no gana para sustos, aparece un producto que puede ayudarnos muchísimo a llegar a fin de mes con más comodidad.

Me estoy refiriendo a algo nuevo en el mercado bancario, al fin hay un banco que se preocupa por nosotros, sus clientes. Por fin podemos subrogar nuestra hipoteca a una entidad seria, solvente y lo más importante sin ningún gasto para nosotros, (notaria,gestoria y registro a cargo del banco) y con total comodidad. Es una oferta para residentes y no residentes: los primeros podrán disfrutar de un tipo de interés de Euribor+0.35 durante toda la vida del préstamo, sin redondeos y sin un tipo de interés mínimo (que algunos bancos nos cuelan en la letra pequeña) y los no residentes un euribor+0.5-0.7 (dependiendo del perfil del cliente).

El importe máximo que nos concederán, en estos momentos de crisis económica, es del 70% del valor de tasación de la vivienda para residentes y del 50% para los no residentes, pero la buena noticia es que aceptan tasaciones de hasta 5 años atrás y además si se necesita algo más de capital, están dispuestos a estudiarlo.

Para que se nos conceda la hipoteca es necesario justificar ingresos suficientes y presentar el recibo del pago de los últimos 6 meses de la vigente hipoteca, para que puedan comprobar que se han pagado puntualmente.

Si quieres beneficiarte de estas condiciones, contacta con nosotros:

David Novi BA MPhil MRICS at The Mallorca Mortgage Business (www.mortgagesinmallorca.com) and info@mortgagesinmallorca.com , móvil: 661560284, teléfono oficina: 971879494 (de lunes a viernes de 9 a 15h).Mallorca Mortgage Brokers

Andratx has always been regarded as one of Mallorca's "property hotspots" and a favourite destination for the rich and famous. During the boom years the Port of Andratx became a hive of construction activity as every conceivable peice of the rocky coastline was snapped up to build ever higher priced villas and apartments. While in most cases the build quality was high, corruption scandals emerged and black clouds were cast over the market even before the economic downturn threw everything into reverse. So what is the legacy for the Andratx property market and what are the prospects during the downturn and for when growth returns?

First and foremost despite the almost totally uncontrolled development activity since the turn of the century and, at the very least, "suspect quality" of the general environment created by this boom, Andratx and particularly the Puerto Andratx coast has maintained its allure for property buyers seeking top quality villas with spectacular sea views. The downside is that vast areas have failing infrastructure (roads, water and foul drainage in particular), and the general environment has suffered much to the consternation of local and international environmental groups including Green Peace.

The result is that virtually all new development has now been banned until the infrastructure has been introduced and fully adopted by the Town Hall. Furthermore a new and updated Development Plan is being introduced in conjunction with the Consell de Mallorca (Mallorca Council). The positive "spin" to this story of failing management of construction activity is that this now appears to be in the past and a programme of improvements is underway that should see the main problems addressed within 3 or 4 years.

Of course we need to add to these woes the "insult"of the economic downturn and the impact this is having on the owners of Andratx real estate assets, in terms of values and prices. For many Andratx remains a solid long term bet as an "investment location" within Mallorca and only recently was identified by the Financial Times (in an article of the top 10 worldwide real estate locations - Mallorca came 5th) as one of the best areas along with Old Town Palma, Deia and Soller and the exclusive urbanisation of Formentor in North Mallorca. The feeling is that the key attraction of the area - high quality properties with sea views and good quality amenities in the Port and Old Town, will ensure that the shine will return to the market as and when the wider market and economy recovers and the infrastructure improvements are completed.

For the moment however values are under pressure and the area contains some classic examples of grossly overpriced properties and divergence between asking prices and underlying value. With owners clearly aware that all buyers will seek to negotiate discounts there appears a philosophy that the best way to "manage" this threat is by either leaving asking prices unchanged, so there can be a wide range of movement when it comes to negotiations with purchasers or, extraordinarily, setting asking prices artificially high so that it appears that buyers are achieving good discounts, and a "bargain", when huge discounts are eventually agreed. 

That said some major sales have been achieved since the start of the new year demonstrating that if real value can be demonstrated buyers will part with their money in an area viewed as a "safe long term bet". The key is in the assessment of value and the characteristics of the individual property - quality and location are paramount. So along with "location, location, location" comes "market research, market research, market research"!

Like in all areas buying opportunities are emerging but these need to be carefully examined and often only reveal themselves at the time when serious negotiations get underway and an "agreed price" emerges.

At Novi Propert Mallorca and specifically our dedicated property finding arm, Mallorca Real Estate Search, we pride ourselves in not only accessing the best properties but, so importantly in this market, helping clients assess value and "worth" (ie what any individual investment is worth to the buyer, taking into account their requirements, risk profile and investment time horizon) and thus establishing an appropriate purchase price.

For further information please contact David Novi BA MPhil MRICS and see Mallorca Real Estate Search for a dedicated and maket informed approach to buying property in MallorcaProperty Finders in Mallorca

Mallorca has increasingly become one of Europe's top residential locations boasting an increasing number of rich and famous residents and visitors. With increasing levels of investment in one of the many high quality sea front villas, exclusive rural fincas or port-side penthouses, this segment of the market enjoyed continued growth well after the rest of the market had slowed as cash rich buyers sought a home not only for their families but also their money!

But what is the situation now, the prospects and what properties are available?

Firstly and from a general perspective cash rich buyers are likely to dominate this segment of the market for the near future as is the case in other locations, such as London and Paris, particularly where good rental income can be expected providing buyers with not only an ongoing yield but, if purchased at the right price, good long term capital growth prospects. The key is "quality" and "location" ie top quality specification with an excellent location - sea front or in unique locations such as Deia and Valldemossa or Old Town Palma. Supply is very limited and thus, it is our opinion, that long term growth prospects are very good.

Throughout the Island we can find truely spectacular properties such as the Cielo de Bonaire hill top mansion enjoying some of the best views in the Balearics; the La Fortalaza private peninsula with historic buildings luxuriously restored, over 85,000m2 of grounds and hundreds of metres of private coastline;  Son Coll near Arta in North East Mallorca a luxury finca with over 285,000m2 of land, private Spa and international quality tennis court befitting the current owner of the property; a magnificent rural retreat near Alaro, dating from the 17th century and meticulously restored; Las Brisas in Puerto Andratx one of the top 2 or 3 addresses on the Island, along with Formentor and Son Vida boasting 15 exclusive villas;  Sa Torre in nearby Sol de Mallorca, a Mediaeval fortified tower with direct sea access; or Portals Views one of Mallorca's top penthouses enjoying top quality interior design and views to match!

That Mallorca has top quality properties, in truly stunning environments, is not in doubt nor is the fact that the Mallorca "brand" remains very strong and attractive to international buyers, but that is not to say however that these properties are immune from the world economic backdrop and that appropriate "pricing" is not also an integral part of the due diligence process. In the past top prices were demanded and paid while now they are demanded but less often paid.

While valuing such "unique" properties is difficult in any market, thorough market research and professional advice is more important than ever with the "odd few million euros" quite often dropping off asking prices when negotiations get under way and the seriousness of a purchaser seen! Obviously each individual case needs to be understood in it's own right so "getting behind" the sale, who the owner is, why they are selling etc is critical to seeing where prices can be pushed and how a deal can be structured. This is certainly a case where buyers should be looking at their professional team, who is advising them and ensuring they are independent of the owners and sitting firmly in the "buyers corner" before any serious search gets underway. Legal and property advisors - Solicitors and Chartered Surveyors for example, should be appointed at the outset that can look at the ownership position; the land registry rights; finance and payment options; the valuation of any property being considered and it's structural condition, all critical if an optimum price is to be paid. With so many millions at play a few thousand invested in a good set of advisors certainly pays dividends.

For further advice in exclusive property investment options in Mallorca and the Ballearic Islands, market conditions and valuation advice please contact David Novi BA MPhil MRICS at info@mallorcacharteredsurveyors.com or see the Mallorca Chartered Surveyors web site
Mallorca Chartered Surveyors Property Finding Services

Novi Property Mallorca - Property For Sale in MallorcaDue to the economic climate we are accessing for clients an increasing number of distressed Mallorca property opportunities. These forced sale opportunities offer investors the possibility of excellent long term returns or for lifestyle purchasers the chance to buy luxury Mallorca real estate at very low prices.

While we maintain that the Mallorca property market and the wider national and international economic backdrop remain "complicated" we feel that some buying opportunities are emerging particularly where current owner have over leveraged, have cash flow difficulties and are coming under pressure from the banks.

Please contact us to discuss your requirements and to receive details of some excellent investment property in Mallorca including - a spectacular 5* boutique hotel enjoying some of the best views in Mallorca; a luxury designer villa in Pollensa, a house with sea views in Costa de los Pinos, a luxury finca in South West Mallorca close to Andratx and a wonderful front line house near Porto Cristo