Mallorca property boom raises fears for locals ahead of property sales

A third of all fincas and apartments that changed ownership in Mallorca in 2022 were purchased by buyers from abroad, local authorities have thus reported. The data also shows that more than half of all property buyers in 2021 had a foreign passport, with buyers from German-speaking countries leading the statistics.

If real estate agents on the island are to be believed, demand for property in Mallorca may well continue well into 2023. However, amid the real estate boom, there is growing pressure on the regional government, led by the Social Democratic Party, to restrict sales to foreigners and non-residents. Authorities are considering similar measures as in Canada, where foreigners are banned from buying real estate for two years. Even renting apartments is becoming unaffordable for many.

The plan to restrict sales to foreigners comes at a time when residents of the Balearic Islands, including Ibiza, Formentera and Menorca in addition to Mallorca, can no longer find affordable housing for their own use. For many locals, rent is also proving unaffordable. Locals, frustrated with property prices and rents, are demanding that the island belong to them, not foreigners.

In 2022, property prices on the island increased by 8% and rental values rose by 14.5%, according to real estate portal Idealista. "The Balearic Islands should not be turned into a theme park where locals no longer have a place to live," said Mallorca's Economy Minister Iago Negueruela, speaking at a meeting of the regional parliament on the issue of rising real estate prices in the Balearic Islands. He also said that it is necessary to openly discuss the regulation of the real estate market in light of the "increasing tensions among the population."

However, restrictions on purchases made by European citizens would contravene EU law, which guarantees freedom of movement for all citizens in the 27-member bloc. The ruling Social Democratic Party is supported in the island's parliament by the left-wing Mes party.

For months, news of sensational real estate deals has been causing outrage among the local population and contributing to the outrage that much of Mallorca is gradually passing into foreign hands. This comes after many celebrities from Germany, Austria or Switzerland have already made the island their second home in the past. However, over the past few months, wealthy people from many other parts of the world also seem to have discovered the island as a lucrative business proposition, "outbidding each other for pearls," as local newspaper Diario de Mallorca put it.

The latest record-breaking real estate deal was the sale of the Sa Fortalesa castle-palace, located on the magical peninsula north of the city of Pollensa. The estate, including its own harbor, was acquired by Norwegian billionaire Erik Tollefsen for62 million euros (66 million dollars), according to Kapital, a leading business newspaper in Norway. Tollefsen,61, owns the investment company Fredensborg, which controls one of Europe's largest real estate enterprises, Heimstaden, owning155,000 residential properties, mainly in Germany and Scandinavia.

Not far from Tollefsen's dream, another foreigner has spent a large sum to buy prestigious real estate in Mallorca. Mexican billionaire Fernando Chico Pardo paid 165 million euros for the five-star Hotel Formentor, one of Mallorca's most famous seaside hotels, steeped in local history, with a sprawling park and hunting grounds. However, Pardo has caused huge outrage by starting to demolish the nearly 100-year-old building to build a new, more luxurious hotel in violation of preservation rules. Recent acquisitions by British billionaire brothers David and Simon Reuben have also caused outrage on the island. They have long been among the largest landowners in Mallorca, but have recently expanded their holdings with two huge estates in north Polensa and southwest Andratxa. The Ruben brothers now own just 13 square kilometers of land in Mallorca, including a 10-kilometer stretch of the island's magnificent coastline.

This article was originally published in German.