I could never imagine a few months ago that I would be writing about the complete revolution we have witnessed in Mallorca’s real estate sector caused by COVID-19. After the initial shock of the State of Alarm, we soon realised that our clients (in the main overseas second-home owners) not only wanted to continue with their long-term plans, but that there was also a renewed appetite for information on real estate on the island.
Selling to clients who couldn’t physically get here meant we had to move fast to embrace virtual technology and excel at new ways of selling and marketing. We therefore invested in Matterport cameras to offer virtual viewings. This technology came with its own challenges and our team of photographers worked in conjunction with the provider to solve software problems. So now we are working at breakneck speed to feature virtual tours for many of our properties in conjunction with other tools including drone videos and mobile viewings. This keeps our team of more than 100 real estate advisors in Mallorca busy, despite the fact that not a single client can reach Mallorca! We are also developing scripted videos with a professional presenter for social media to provide fresh content that focuses on key aspects of a property in a distinctive personal style.
Throughout we continued to sell property successfully in spite of the additional complications of virtual notary appointments and the requirement for clients to give power of attorney to their lawyers. Interestingly not one buyer backed out of a deal in progress, nor tried to re-negotiate. We also signed option contracts for multi-million euro properties, observing in awe that clients are in no doubt about their investment. Sure they were frustrated because of the travel restrictions but they want to continue with their long-term plans. Even though access is restricted in the short term, it is also the reason why the island is so safe and why Mallorca’s health system controlled the situation at all times. This has become a compelling selling point.
When our Engel & Völkers property shops re-opened we had to introduce a completely new protocol for our teams and our clients (who were physically here) of health and hygiene and an appointment-only system. I envisage that this “new normal” is here to stay for the foreseeable future and that there will be a need to reassess the traditional office; to study the way in which we use space to ensure that we can provide the highest level of personal safety and hygiene.
Mallorca’s real estate has always been regarded as a long-term investment that buyers can enjoy and recently I have seen the attraction of the island’s lifestyle to a new group of younger overseas buyers that want to settle here with their families in a better environment with education in a choice of international schools. In the past few weeks we have already seen a spike in interest from this type of buyer particularly as parents have been forced to work from the home. This “new normal” way of working is now globally accepted reinforcing the fact that you can conduct business from literally anywhere in the world with a good internet connection.
It’s too soon to predict what will happen to prices by the end of the year but realistically I don’t believe that there will be any major discounting. Currently prices are holding and vendors of prime property simply will not make excessive price reductions, they prefer to wait for a better time to sell. This is exactly what happened in the 2008 financial crisis when the success of overseas real estate (that accounts for 43% of all sales transactions) was one of the main factors in the revival of the Balearic economy.
Since 2012, overseas clients have invested almost 11 billion euros in Mallorca’s real estate *(source: Ministerio de Fomento) this is indicative that Mallorca has entered another league and is on the international investors’ radar as the safe real estate haven in the Mediterranean.