Ibiza back on map for foreign property buyers
Regional election results sees foreign buyer restrictions put on the backburner.
3 minutes to read
The Partido Popular’s electoral victory in May 2023 means a cap on overseas buyers purchasing second homes now looks unlikely across the Balearic Islands.
The Partido Popular intends to make it easier to renovate older properties in need of urgent maintenance even though they may not comply with current planning, making these properties more attractive to investors.
The market above €4 million is seeing more activity and displaying more resilience than below €2 million, given buyers are less reliant on finance.
Dutch and German buyers have reduced their market share, but US, French and UK purchasers are still active as the newly-branded IGY Ibiza Marina in Ibiza Town began welcoming super-yachts last summer, hosting vessels of up to 120-metres.
Foreign buyer cap removed
May 2023 saw an electoral victory for the Partido Popular (People’s Party or PP) across the Balearics Islands.
The PP’s win means a proposed cap on the foreign ownership of second homes has been all but scrapped.
This is the death knell for the initiative after Spain’s central government had already rejected the outgoing government’s proposals on the grounds it was contrary to EU Law on the free movement of capital, including real estate.
The plan, mooted by the outgoing Socialist Party, would have applied to all four of the Balearic Islands: Ibiza, Mallorca, Menorca and Formentera.
Renovation projects
Covid-induced high construction costs and a lack of labour are making prime property purchasers think twice about embarking on large scale improvement projects, this has seen the premium for turnkey homes strengthen further on the island.
The incoming government’s plan to encourage renovations and improve older housing stock is a positive for the market, offering investors the potential of a stronger return.
Investment in Ibiza
Investment on the island is stepping up a gear. The newly branded IGY Ibiza Marina began welcoming superyachts last summer, hosting vessels of up to 120-metres.
Luxury hotels such as Six Senses have reportedly achieved full occupancy, suggesting a degree of resilience at the top end of the tourist market despite the economic headwinds.
There are new direct flights to the island from Liverpool, Vigo and the Canary Islands, as well as direct flights to New York from neighbouring Palma de Mallorca.
Foreign buyers
According to Spain’s National Statistics Office, foreign buyers, both residents and non-residents, accounted for 34.3% of purchases in the Balearics in Q1 2023, compared to an average of 19.5% throughout Spain.
Buying costs (transfer tax and stamp duty) sit at 10% for new homes and 7-13% depending on price bracket for existing properties.
Dutch and German buyers, whose economies have been hit hard by the higher cost of living, spike in building costs, and higher mortgage rates, have reduced their market share, while French, US and UK purchasers remain active.
Jack Harris, of Knight Frank’s International Department, comments, “Most prime buyers target Ibiza’s southern coast in locations such as Es Cubells, Porroig, Cala Yondal, Cap Martinet and close to Ibiza Town. There’s also strong and enduring interest in and around Santa Gertrudis, in the island’s rural centre, which is home to Ibiza’s top international school, Morna International College.
Jack adds, “In the north, the pull of the newly-opened Six Senses has shone a spotlight on an area of the island prime buyers may have previously overlooked, and the newly-finished fast road direct into Ibiza Town has boosted interest further.”
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Photo by Jixel on Unsplash