“Legal uncertainty is making us lose our competitive edge”
Premium magazine met with some of the island’s leading real estate agents to find out about the current market situation. Alejandra Vanoli, Managing Director of Sotheby’s Mallorca International Realty, John Van Eenennaam, Director of John Taylor Luxury Real Estate and Jesús María Calvo, Managing Director of BalearHouse, analyse the sector’s current situation and the evolution of the luxury real estate market in recent years. They are asking the planning authorities for a speeder response when it comes to requesting licences and a regulation of the sector.
Vanessa Sánchez | Cristian Montoro
– Will you be able to take stock of the existing real estate situation in Mallorca?
-John Van Eenennaam (John Taylor): After a few boom years, it could be said that the market is now becoming more stable. We continue to grow but in a smaller percentage, owing largely to external factors.
– Jesús María Calvo (Balearhouse): It has certainly levelled out, but we find ourselves facing a real and serious problem. With the new estate agencies that are opening up, the market is now saturated. There are new faces appearing on the scene without the quality and rigour required of agencies such as ours that have over twenty years of experience. The sector urgently needs to be regulated.
– Alejandra Vanoli (Sotheby’s Realty): This intrusion is seriously affecting us. In the end, we are sharing the same pie is the same and in Mallorca it is extremely difficult to have exclusivity on selling a property. The fact is we are talking high-end prices in the real estate market and people think it is very easy to earn big money. That’s simply not the case. It requires a lot of sacrifice and hard work.
– Is there enough market to go round?
– J. Van Eenennaam: There’s no more territory in Mallorca than we already have, but this isn’t the most serious problem, which is that the government planning policies aren’t on our side, in fact they are becoming increasingly more restrictive. There are very few possibilities for new builds, giving the market very little room for growth. The market now is in renovations, in the stock of old houses that were built over three decades ago. This is also the cause for price increases, because there is no more space to build new urbanisations on the island.
– A. Vanoli: We need a firm commitment from the official bodies with the sector, but we don’t get one, on the contrary all we get is rejection. I understand that Mallorca and Ibiza are going through a complicated situation and that the market is saturated and it needs to be controlled. But they making a mistake with all the restrictive measures they are taking. Not forgetting the high income the real estate sector is generating for the public coffers. It’s brutal. We are talking about millions of Euros in tax revenue.
– Where is the business?
– J. M. Calvo: Before we had lots of seafront plots but now the only option we have as real estate agents to the end customer is to buy up the older houses, knock them down and make them new again.
– Who is currently buying in Mallorca?
– J. Van Eenennaam: Almost all foreign buyers. 90% of John Taylor’s clients are German, Swiss, Austrian, Nordic and English.
– J. M. Calvo: Balearhouse is a lot more balanced, around 50% of our clients are national and 50% foreign, above all Swiss and German.
– A. Vanoli: Our clientele is mostly foreign. German, Swiss and Austrian. The British buyers have fallen back considerably, and above all the Swedish. The krona has depreciated and they don’t have the same spending power as before. To make matters worse we have a tax regime that simply isn’t on our side. In this context Portugal is competing against us.
– What do buyers look for on the island?
– A. Vanoli: Location, quality and design. And then a price adjusted to what they are going to buy.
– J. Van Eenennaam: The view is the top feature. A terrace is fundamental and a sea-view is the buyer’s dream.
– They say that the Spanish tax authorities don’t benefit in any way from foreign investment. And they view Portugal as a direct competitor.
– A. Vanoli: Because they offer tax exemptions to investors if they live for more than 10 years in the country. They need to introduce a tax regime in Spain to incentivise buyers. The authorities should take an interest in our sector, simply from the tax income point of view.
– J. Van Eenennaam: The key issue for me is facilitating the process involved in planning permission. It’s just not acceptable if you are trying to reform your house and increase its value at the same time that you have to wait from 6-12 months to start the work. Naturally we understand that planning and development need to be controlled in order to protect rural land, but the system needs to be quicker.
– How does Brexit affect the Mallorcan property market?
– J. Van Eenennaam: The worst thing about it is the uncertainty, as we don’t know what to expect. Right now there is just a void with the whole world speculating. There are three possible realities right now in the housing market: the clients who have so much money they don’t really care what happens; we have the clients who, because of Brexit, are planning to retire and take all their wealth out of the European Community and back to England; and the third case, the clients who decide to spread their wealth into different areas; these are the ones who continue to invest in Mallorca. But the uncertainty of it all is holding up the buying and selling process.
– J. M. Calvo: The legal insecurity is the worst. It affects us a great deal. It makes us less competitive.
– In spite of everything, is Mallorca still attractive to buyers?
– J. Van Eenennaam: I don’t think other Mediterranean areas are poaching our customers.
– A. Vanolli: We are unbeatable in terms of infrastructures, healthcare and security. Mallorca as a destination has a unique opportunity to continue its leadership of quality, luxury tourism.