REAL ESTATE INTELLIGENCE
What’s the price for a square meter in Mallorca?
Let’s go directly to the most debated theme in the local real estate residential market (as everywhere..).
In this article we focalize on this (so no hotels, commercials, industrials, etc). Well, we always can get an answer to that but it’s one of the most grossly estimated number, really unuseful for every more or less serious investor.
It’s an average, grossly influenced by the type of data and analysis that we’re doing. In particular, professional and investors looking at real estate portals need to confront with a lot of problems about listed offers: yet sold properties not cancelled, same properties double, triple or more time listed by different agencies (exclusivity is a chimaera), hugely skewed listings towards luxury products and more.
We can’t obviously forget that listed price ARE NOT transacted price (consider a 5 to 10% discount also if this not at all a rule).
Just to summarize, if we try to extract info from portals you suffer by GIGO (garbage in, garbage out).
Another big problem is that the current offer is full of premium renovated or luxury villas and finca, with sky-high listed price: it’s pretty obvious that the average price is strongly influenced by this type of products. Doing research on Idealista (biggest portals in Spain) we have about 26860k properties on the market with an average price of 3515 euro/sqm, principally located around the coast (southwest, some north and along whole east the biggest concentration) and wide Palma area.
New promotions are currently 84 with wide dispersion in range dimension. About rental offers, we have about 3400 properties with a 12.5 euro/sqm price. A simple division gives us a 4.25% yearly gross (widely gross!) return at current prices. Is it the correct number?
Another database: Governo de Espana, Ministero de Fomento. Tasacion vivenda libre al final des 2019.
We have two macro-areas (Calvia, so Southwest region) and Palma, with properties until 5 years of age and older properties. Here we have these two sets of prices: Calvia new (3542 €/m2) Calvia old (3040) , Palma new (2500), Palma old (2100). The amount of old valued properties is a scale of 8x. Here seems that the premium for new properties is between 15/20%. Analysing average price for Baleares we see that the price is 2370 €/m2. So actually there’s a price gap between “real” offer prices and government data of about 48%, not bad at all!!! (we’re well conscious about the different scope of valued and transacted price but it’s just to underline the level of difference and dispersion).
Just moving to independent data providers and market study, let’s go to PrecioViendas infographic (also if dated early 2019, so maybe 4-5% less than actual data. Price 2750 €/m2 for the average-priced house at 283.000 euro, something in the middle of the previous gap.
Talking about real estate agency-sponsored market study the last edition published by Engel&Volkers is reflecting their portfolio and target, so totally directed towards touristic/luxury properties. We close the listing talking about independent research (also if sponsored by Porta Mallorquina, a large real estate agency franchise), published by STI centre for real estate studied where the calculated average price for sqm in the island was 5429 euro in 2019. This is probably until now the more well-structured analysis about Mallorca markets, with more in-depth analysis in terms of geographic, features (sea-views, new building, etc.) but lacking a large set of insight that could be useful to navigate this complex markets in Baleares.
So, why this large representation?
Because we want to be a platform where a large set of data are used to extract information, KPI, price dynamics and build a tool to filter and select market opportunities and be an advisor with a solid background.
We want to know the difference in price terms between a double and a triple bedroom in a particular quarter of Palma or in Peguera, what’s the current situation and the historic trends? We want to know the demographic evolution and the impact on prices? where’s the area with the biggest influx of people with good income? where we come to optimize the rentability and how?
Data, big data, ratios, KPI, trend and more are our bread and butter.