After the evolution in the real estate market in 2016, everything indicates that 2017 was the year of consolidation of the sector. Hence, many analysts predict that it is a good time to invest in housing.
Profitability growth is expected, in part thanks to the increase in the sale and rental price. Investment in housing was 899 million in the Balearic Islands in 2017, with an increase of 32.91%. According to a recent real estate study, the return on housing as an investment has reached 6.3% from 5.5% the previous year. In addition, it relates the sale price and the rental price of the house, from which its gross profitability is obtained. In the same way, they point to an increase in the rental price at a rate higher than the sale price of the home.
This situation has made investing in housing one of the investors’ favorite options. In fact, buying a flat and renting it is 4.2 times more profitable than investing in government bonds.
In terms of tourism investment, 335.8 million in total, 5.9% higher than 2016, has been unequal among the islands. In Ibiza and Formentera it has decreased by 27.2%; in Menorca it has increased by 64% and in Mallorca it has grown by 11.8% to 251.7 million.
In terms of construction, investment increased by 17.6% in 2017, to 1,729 million euros, an increase that the sector values but reveals that it can’t be called a “boom” since it is still lower than that of 15 years ago, when 1,820 million were reached in 2002. There is a fairly significant investment in single-family homes, but they do not represent the investment desired by the sector. The builders are concerned about the lack of a strategic plan for public investments, as well as the lack of incentives for private investment and the proliferation of moratoria. In the same way, they consider insufficient investment in officially protected housing, and there is a significant lack of incentives in the tourism sector to continue investments.
The real estate market, through the SOCIMI, which are listed companies, returns with renewed strength. It is a type of investment in which you can get 6% -7% per year, counting the dividend and the revaluation of assets. Many investors can’t buy a house and rent it, that’s why SOCIMIs are an alternative way, very suitable for the investor that wants to diversify. It is estimated that they accounted for 40% of all real estate investment in 2017. During 2018 they will face a stage of consolidation and enhancement of the assets acquired in recent years, focusing mainly on their management.
In Ripoll & Mateu we work to get total satisfaction of our customers effectively by offering legal services and personalized assistance in civil matters, obligations and contracts of all kinds, especially those who follow and especially highlighting the urban-administrative matters.
Foreign investment area offers legal assistance with regard to funds from other countries for investments in real estate and commercial Islands. Our team has extensive international experience, we also have cooperation agreements with international firms and are members of the AIPP (Association of International Property Professionals).