The Coronavirus has impacted every corner of the globe and has in some way touched everyone’s life. A lot of us due to the uncertainty of the next few months are keeping a closer eye on our personal finances and maybe not indulging as much as we usually do. As the coronavirus has impacted international stock markets and companies a lot of investments have flowed into the international property market. The Spanish and Balearic property market has a history of enticing international property developers and inventors due to the stability it has shown in times of turbulence. The property prices in Mallorca have not fallen. What makes Mallorca attractive to investors is its isolated position away from the rest of central Europe. It has been well distanced from any exponential outbreak of the virus. Even during the 2008 Financial crisis Mallorca and the other Balearic Islands provided a safe harbour for investment.
To rent a property in Soller?
The answer to this question is very much dependent on one’s personal situation and some external factors. Both buying and renting have their advantages and will be discussed below.
One of the biggest advantages of renting a home in Sollér for example is that you are not tied to the one location. If you want you can spend a summer renting an apartment by the Port of Sollér with breath-taking views of the ocean, have the cool breeze coming of the ocean, and then for autumn move and rent a small Finca surrounded by olive trees and citrus trees. Renting very much allows you to get a sense for the area before fully committing. It is advised to if possible, rent a house in the area you are looking to buy for a few weeks to make sure that the area works for you. Renting gives you more flexibility as there is no long-term commitments to abide by. If you do not have the means to purchase a home outright, then renting is a happy medium which will allow you to experience the Mallorcan lifestyle without having to take out a mortgage or a loan.
If you are happy to walk into an apartment and not change a thing then renting will work for you. If you are someone who likes to do DIY on the weekend, remodel a bathroom then it maybe isn’t. When renting unless the apartment is completely to your taste when you first view it, it is difficult to create an apartment that 100 percent suits your taste. It is difficult to change things or to remodel as you will need to request the permission of the owner. There will be rules in the lease that will need to be followed, and ultimately you will never see a return on whatever money you have decided to invest into your rental property. Due to the reduced tourist numbers this year the holiday rental market looks a little different. In a normal summer there aren’t many long-term rentals available in Sollérs as many rentals are geared towards short term holiday rentals for tourists. The holiday rentals charge a premium price per night, and as such it can be tricky finding an affordable long-term rental.
Or to buy a property in Soller?
It is a dream of many Europeans especially British and German to buy their dream house and retire on Mallorca. There are as always, a few caveats to remember. The price you see on the property website will not be the final costs, as there will be a series of other small expenses which will come up such as land registration. There are other expenses which will arise during the course of the year such as electricity, water and property tax but these can be offset as these are usually similar to what the homeowner would pay in their own country.
There are numerous advantages to buying a property in Mallorca. As previously mentioned, Mallorca has proven to be a safe harbour for one’s money. Some of the factors that determine this and support the consistent cost of housing is that due to the nature of Mallorca being an island there is a short supply of building lands, and a need for about 16,000 additional units in order to cope with the demand. The population of the Balearic Islands has risen by 40% in the last 20 years increasing the demand for property. Property developers have not faced any problems as the Balearic Association of Developers has increased the building licences awarded by 610 from 2015 to 2019. International Buyers on the Balearic Islands move approximately 40% of the market volume with the majority preferring to buy in cash.
The high international demand, coupled with a growing population of locals and a scarcity in supply of housing will ensure a continued stable real estate market in Mallorca as has been displayed for the past 20 years. There are some people speculating that there will be a drop in property prices in the rest of Europe. It is highly unlikely that something similar will happen in Sollér. There are too many factors contributing to its strong and stable property market. If anything, the uncertainty in the rest of Europe has only strengthen the property market on the Balearic Islands as international investors have moved their money there during this latest crisis.
Buying a property in Sollér offers a lot. The prices are still affordable, and the banks have historically provided low interest rate Mortgages due to the stability of the housing market. The average prices of housing have historically in Sollér and the rest of Mallorca grown consistently since 2013 and as such you will earning money on your investment year on year. Another factor that contributes to the consistency of the housing market is investors who choose buy to let. Buying to let is a viable and lucrative option for investors. Due to the high demand for rental in Sollér and Mallorca in general a lot of people purchase properties that can then be rented out during the holiday seasons. Mallorca and Sollér offer incredible rental returns during the holiday seasons. There is also great demand for long term rentals where locals, people who work on the island and etc. are looking for properties to rent.
One of the biggest advantages of buying is peace of mind. There is no need to make sure you have a set amount of money ready to handover to a Landlord. Sure, you still have to pay a mortgage if you weren’t fortunate enough to pay in cash, but the mortgage amount will be considerably less than any rental amount and that cash is going towards actually purchasing something of your own and not lining the pockets of a landlord. Another advantage is that you don’t have to ask the Landlords permission to do something to your house. You can put up as many shelves and paintings as you want. You can plant trees, shrubs, flowers or whatever else you want in your garden. If you intend to use the house or apartment as a holiday escape you don’t need to worry about it being booked for the week you want to go like your favourite Finca or villa, it will be there ready, waiting for you.
Buying property through an estate agent or not?
A lot of people are tempted to not go with an estage agent. They want to tread their own path, use their few words of spanish with local lawyers and navigate through the sale in order to save some money. Many people choose this path purely for financial reasons the main one being, being able to save on the commission. But it is only the seller who will have to pay the comission It is not recommended to carry through any deal in a foreign country where the language isnt your native language. They are much more exposed to risk and the danger of getting scammed in a deal. The role of the estate agents is to look after the best interests of his client so they will not expose you to any uneccessary risks.
Real Estate agents and agencies will know immediately if a situation is not as it should be. They will do their upmost to protect you, your assests and your interests. It is highly recommmended to use an estate agents for any deal. If you are new to purchasing property it is highly likely that you will be out of your element when it comes to reviewing and understanding the multiple documents involved in a real estate deal, and you should have a thorough understanding of what you’re getting into. An Estate Agent will be far more familiar with all this paperwork than you are. Some mistakes or omissions in these documents can cost you as much as that commission you were trying to avoid paying and in some cases far more.
Buyers usually have a pretty firm idea in mind of what they want in a property, from number of bedrooms to an attached garage to any number of other must-have and must-not-have factors. You’ll probably feel pretty comfortable looking at homes with that list tucked firmly in the back of your mind.
But your agent will be alert for issues that might not cross your mind, such as furnace issues, leaks, roofing problems, and mold and insect issues. An agent will recognize the telltale signs of these problems and know how best to approach them. Again, this experience and knowledge can end up saving you thousands down the road.