NEWS

The lack of properties leads to a rise of 10% in the prices

29Nov

Derecho Inmobiliario y cuestiones Fiscales

The real estate sector in Baleares admits the crisis in the access to homes for the residents. Luis Martín and José María Mir, president of the association of promotors of the islands and president of the college of real estate agents in the Baleares, respectively, have placed on the table the details of 2016. Accordingly, they predict a rise in the price of properties of 10% in 2016 to 12% next year due to the shortage of new homes. This shortage is more evident in the islands of Ibiza and Mallorca, and is presenting a serious problem for the residents. In fact, at present the new construction does not cover even half of the demand. In the Baleares are being built about 1.000 dwellings per year (of which half are villas for foreigners or the high standing Spanish population). To the contrary, the real necessity of the island is about 2.000 or 2.500 homes per year, 1.400 of which should be in Palma.

More than 500 millon euros of investment is restrained due to the legal insecurity

What elements promote the lack of new homes and increase the prices? Amongst these elements is to be found:

  • The tourist boom and the success of holiday rentals.
  • The foreign demand
  • The planning regulation and high price of the land.

With respect to this last point, the present planning regulation make it unfeasible the construction of new properties at reasonable prices for residents as it is very complicated to construct dwellings of 50 square meters at a price of about 150.000€. The present regulation in towns such as Palma forces the building of dwellings of 120 square meters and high prices (2.000 to 3.000 euros per square meter), whilst the present demand is round about 45 square meters at much lower prices. The result being that a great part of the properties on the market have a price much to high for the majority of the residents. This explains that the demand is dedicated to 2nd hand and rental (which, at the same time, is also increasing the prices). All this has resulted in a strong inflation that prevents the purchase or rental to youngsters or workers in high season. The promotors state that some of the measures taken by the Administrations have been taken without seeking political and social consent, leading to the following legal insecurity. This insecurity, they assure, has stopped more than 500 million euros investment. It is the case of the latest modification of 13 articles of the General Plan of Palma or of the delay of the drawing up of the laws of dwellings or land. Together with these measures, it stands out the necessity of the Govern to regulate holiday rental -read more about the Law for Holiday Rental-.

They foresee that the situation will remain for 3 years

According to the details forecasted, it would appear that the situation will remain the same for at least 3 years due, particularly, to the tourist success. At the same time, the National Institute of Stadistics (INE) forecasts that the Balearic population will continue to increase about 2.400 people per year during the next 10 years. Luis Martín indicated that the difficulty in the near future to obtain a property could lead to a hard social answer. Additionally, on also influencing the second hand and rental market, it could generate a problem for the seasonal workers of the tourist sector that come to the islands. The promotors believe in a limited use of territory, with the possibility of constructing smaller flats. They prefer higher restrictions on first line and the possibility to reaching various heights in central streets, as long as these have sufficient parking spaces and wide pavements. Please remember you can contact our lawyers office in Baleares by telephone 971228036 or vist any of our offices.

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