What next for Ibiza’s booming property market?
We don’t know. And that’s the only honest answer. Anybody who pretends they can predict what will happen to the sale and rental prices for Ibiza villas, houses and apartments is being more than economical with the truth.
With our years of experience in Ibiza’s property market what we can tell you is:
- What we’re hearing now from both buyers and sellers
- What’s happened in the past
- And how you might be able to take advantage of Ibiza’s fast-changing property market in the future.
We’ve already had enquiries from potential purchasers of luxury villas and yachts looking for relative bargains in a market that’s boomed for decades. We’ve also fielded tentative calls from owners looking to balance their portfolios in light of the dramatically developing economic and social landscape.
Our advice to buyers and sellers is the same: It’s never too early to register an interest. In the current climate, many deals will move quickly and discreetly. It’s not quite ‘blink and you’ll miss it’, but, you could regret losing a sale or the opportunity to snap up a once in a lifetime deal on a spectacular piece of Ibiza real estate.
Of course, visiting the island at the moment is a challenge. That’s why we’re talking to owners about virtual viewings. These will offer the opportunity for buyers to see properties in detail and ask specific questions about them. Of course, it’s not the same as being here with us, but it is quick and convenient.
While we can’t predict what will happen in the future, we do know Ibiza’s property prices have proved remarkably resilient through numerous economic shocks.
Most recently, the island’s market, especially at the luxury end, bounced back from the 2008 crash better and faster than anywhere else in Spain. Villa rental prices fared similarly well. In fact, most of our clients barely noticed a recessionary dip at all.
All this is clear from official figures and simple Google searches. But, these only tell part of the story. Government statistics cover the whole region of the Balearic Islands: Ibiza, Mallorca, Menorca and Formentera. Inevitably this means the results are skewed towards the largest, Mallorca, which has a population of over 850,000, around half of whom live in the capital, Spain’s 12th largest city, Palma. In comparison, the whole of Ibiza has just 150,000 residents.
There are other signs of how different Ibiza is. We have a higher proportion of luxury hotels. Fifteen years ago only one, the Hacienda Na Ximena, claimed five-star status. Now there are around 30. Over the same period the island has also changed from being a virtual culinary desert to being a foodie heaven. And, every quarter Ibiza Airport has far more private jet movements than its far larger neighbour in Palma.
As a further illustration, Ibiza Unlocked recently heard reports of an Ibiza villa changing hands for €76 million, the highest price ever paid for a property in Spain. In comparison, the most expensive current listing in the rest of the country is for a home in Marbella with a mere €55 million asking price. The spectacular modern Ibiza mansion with the equally spectacular price is in Vista Alegre, close to where Prince Harry and Meghan Markle came to escape from the media and celebrate her 38th birthday in August 2019.
We’re not saying the rest of the Balearic Islands have done badly economically. They’ve fared better than anywhere else in Spain. It’s just Ibiza has done so much better.
Across all types of housing, Spain’s National Statistics Institute (INE) reported that the Balearics had a 4.5% increase in prices in the third quarter of 2019, the largest increase in Spain. The Gesvalt Building Consultancy told a similar story, saying the cost of property across the islands had finished 2019 at a price of 2,368 euros per square metre, again, more than any other Spanish region. Rental prices according to the country’s main web portal, pisos.com, were similarly high.
At Ibiza Unlocked we also track other sources of information such as the price per square metre that banks base their increasingly hard to get mortgage offers on. Unsurprisingly, these are usually well below the real market rate. More accurate, but with a substantial time lag, are the official ‘catastral’ figures which show the declared price paid for land and property. All these figures point to substantial growth.
The problem is those listings are free. So, anybody can put their home up for sale, dreaming of a number, then doubling it. There’s nothing to lose. And everybody knows somebody who’s been at a dinner party and heard from a friend of a friend that a house like theirs has sold to a mysterious buyer for some astronomical price. Listing a home is like having a free ticket in the lottery. It might as well be you.
In truth, the majority of Ibiza’s most desirable properties are bought and sold without ever being listed, like the €76 million Vista Alegra home we mentioned earlier. Owners rely on discreet personal networks and word of mouth. That’s where the island’s best estate agents come in. They are what the Spanish call enchufado, ‘well-connected’. They know the owners who quietly want to sell and the potential genuine buyers who would suit the property. This sort of matchmaking is a rare skill.
This discreet nature of the luxury market makes it almost impossible to answer the question every buyer and owner wants to know: How much is a property worth? The standard reply is: It’s worth what somebody will pay for it. That’s really the only answer. But, it’s not very helpful.
What we at Ibiza Unlocked can tell you, more usefully as a buyer, is what types of property are available within your price range. Unlike some of the larger agencies we don’t just fill in a standard form at our first meeting and stick rigidly to it, showing you similar properties over and over again. Whether it’s a home or a person, nobody falls in love by checklist.
Meanwhile, if you want to sell your home, we won’t give an unrealistically high appraisal simply to get a property on our books. It’s a common island trick to show buyers an over-priced property first so the next one looks a good deal in comparison. We won’t do that. Instead, we work with buyers and sellers to negotiate a fair price for both sides.
What does that mean? We used to say there were no property bargains in Ibiza, but now, who knows? In the current turbulence anything is possible.
It’s clear 2020 will be the catalyst for a massive shake-up of Ibiza’s tourist industry. The island, we believe, will become more exclusive as the final nails are driven into a large part of what remains of the ‘pile ‘em high, sell ‘em cheap’ mass market.
Our little piece of paradise will never be quite the same again. In many ways it could be better with less people to clog our roads, beaches and towns. At least for now. The island always bounces back.
Change has always been part of Ibiza’s lifeblood. The fundamentals, however, remain the same – the weather, the beauty and the island’s proximity to much of Western Europe’s population.
Readers of this article don’t need to be told what makes Ibiza one of the most desirable places in the world to live. There will always be far more people who want a house in Ibiza then there are properties. It’s a small island with strict planning laws. So demand will always outstrip supply.
