Real estate market Mallorca

Current market situation 2025^*

2025 in particular will bring a breath of fresh air to the property market in Mallorca. New legal regulations, sustainability trends, technological innovations and increasing internationalisation are changing the rules of the game. If you want to invest here, you need sound information, a clear overview of the opportunities and risks - and ideally an expert with local knowledge at your side.

Economic background & influence on the real estate market

The Spanish economy is in a stable condition in 2025. After several years of economic uncertainty, key indicators such as gross domestic product, employment figures and industrial production have developed positively. Inflation is falling noticeably, giving both consumers and investors more planning security. At the same time, interest rates are falling moderately - a development that plays into the hands of property buyers in particular, as financing is becoming more attractive again.

Confidence in the property sector is at a high level, especially as property has proven to be stable in value and offer strong returns in times of crisis. Investors - both domestic and foreign - are increasingly focussing on tangible assets, with Mallorca taking centre stage. The Balearic island occupies a special position in the Mediterranean region: it combines a Mediterranean lifestyle with first-class infrastructure, political security and a high quality of life.

This combination of macroeconomic stability, favourable financing options and Mallorca's international prestige is leading to a growing willingness to invest. Investors and wealthy private buyers in particular see the island not only as a beautiful holiday destination, but also as a lucrative long-term investment opportunity.

^*The real estate market in Mallorca is constantly changing and characterised by dynamic developments - our property experts will be happy to provide you with the latest information.

Price development in the last 5 years

Since 2020, the property market in Mallorca has seen a steady increase in prices. Although there were short-term stagnations during the coronavirus pandemic, the recovery followed quickly and sustainably. The price increase up to 2025 is particularly striking: in Palma de Mallorca, the average price per square metre rose from around 3,800 euros in 2020 to around 5,100 euros in 2025. In the sought-after southwest of the island, for example in Andratx, prices even climbed from 5,200 euros to 7,000 euros per square metre. The north-east around Artà also showed dynamic growth, with prices rising from 2,900 euros to 4,000 euros. In the rural centre of the island, for example in Sineu, the average price in 2020 was still €2,500, while in 2025 it will already be around €3,600 per square metre. These figures reflect the growing interest and high demand for Mallorcan property.

Regional differences: Palma, south-west, north-east & rural areas

The regional differences in Mallorca's property market could hardly be more diverse - each area of the island appeals to its own group of buyers and offers individual advantages. Palma, the island's capital, impresses with its modern, urban flair and excellent infrastructure. Life here is lively, international and cosmopolitan - perfect for digital nomads, long-term holidaymakers and people who want to combine city life with a Mediterranean climate. Demand for flats and townhouses is consistently high, especially in neighbourhoods such as Santa Catalina and Portixol.

The south-west of Mallorca - with locations such as Port d'Andratx, Santa Ponsa and Bendinat - is regarded as an absolute premium location. This is where the luxury segment is concentrated with exclusive villas, modern designer homes and breathtaking sea views. International high-end buyers, especially from Germany, Switzerland and Scandinavia, appreciate this part of the island for its privacy, top restaurants and golf courses. In comparison, the north-east, for example around Capdepera or Artà, is still considered a real insider tip. This region shows strong growth potential, but remains much more affordable than the south-west. Here you will find charming village houses, rolling hills and proximity to unspoilt beaches - ideal for individualists and investors looking for peace and quiet.

The rural centre of the island, for example around Sineu or Santa Eugènia, attracts lovers of traditional fincas in particular. Spacious plots of land, fields of almond trees and authentic island life offer an attractive contrast to the tourist-orientated coast. Those looking for peace, nature and authenticity will find what they are looking for here - and often pay a moderate price compared to the hotspots.

Demand & buyer profiles

German buyers continue to dominate the market, followed by British, Swiss and, increasingly, Scandinavians. Buying interest from other EU countries has increased, particularly after Brexit, which has resulted in a broad, well-mixed buyer profile.

The main reasons

The motivations for buying a property in Mallorca are diverse:

• Holiday property: for your own holiday or to rent out.
• Capital investment: Stable value properties, often with good rental yields.
• Second home or emigration: Particularly popular with retirees and the self-employed.

Price structure & potential returns

The price structure on Mallorca is heavily dependent on location, property type and features. While simple apartaments in the east of the island can be found for as little as 3,000 euros per square metre, high-quality new builds in the southwest often start at 6,000 euros. Sea view locations and properties with modern fixtures and fittings, smart home technology and energy efficiency standards are particularly popular.

Luxury villas in prime locations such as Son Vida or Port d'Andratx reach prices of up to 15,000 euros per square metre - especially if they have direct access to the sea or spectacular panoramic views. In contrast, rustic fincas in the centre of the island are often cheaper, but offer interesting yield opportunities thanks to their large plots and rental potential.

Rental income and holiday rentals

A major attraction of the Mallorca property market is the opportunity to use property as a source of income. Holiday rentals in particular - legally only for registered properties - offer attractive returns, often between 4 and 7 per cent annually.

The highest rental income can be achieved in regions with high tourist demand, especially in Palma, Alcúdia, Sóller and Santa Ponsa. Those who invest in properties with a tourist licence benefit from constant demand, especially in the summer months. For long-term rentals, for example to expats or seasonal professionals, stable income is possible throughout the year - albeit with lower margins than for holiday guests. Nevertheless, Mallorca remains a reliable option for buy-and-hold investors.

Top regions for investors in 2025

Mallorca offers a variety of interesting investment locations - depending on your goal, budget and risk profile. Here are the top regions for investors in 2025:

• Palma de Mallorca: The capital remains a perennial favourite - urban life, good yield opportunities through long-term rentals and constant value appreciation make Palma a safe investment.
• Port d'Andratx & south-west: Luxury hotspot with strong growth potential and high demand from solvent buyers. Exclusivity meets prestige here - a guarantee for stable property values.
• Artà & north-east: The region is developing into an investor's pearl with plenty of room for growth. Prices are still moderate, the infrastructure is constantly improving and the scenic beauty attracts buyers looking for peace and quiet.
• Alcúdia & Pollença: Particularly interesting for holiday rentals - high occupancy in summer, good rental income and attractive purchase prices compared to Palma.
• Santa Eugènia & centre of the island: For long-term investors or expats looking for the authentic Mallorca. Lower entry capital, but solid rental yields and high quality of life.

Risks & challenges

Even though the Mallorcan property market offers many attractive opportunities, investors should not underestimate the potential risks. One important aspect is possible changes to the law. Stricter regulations on holiday rentals or restrictions on property purchases by foreigners are constantly being discussed.Anyone wishing to invest should therefore be sure to check the current legal framework and, ideally, have an expert lawyer at their side.

Tourist restrictions pose a further risk. In particularly popular areas that are heavily affected by the influx of visitors, some municipalities are taking measures to reduce the burden - for example by restricting the use of properties for tourism. This can have a direct impact on planned rental income. Furthermore, the property market on Mallorca is also subject to natural market cycles.
Price increases are not limitless, and excessive speculation can lead to setbacks in the long term. However, those who invest with a long-term horizon and analyse the market carefully reduce this risk considerably.

Last but not least, the quality of construction is a decisive factor.It is advisable to take a close look at older fincas in the countryside in particular:Defects in the building fabric, missing building licences or undeclared extensions can lead to expensive rectifications or even legal problems.A thorough technical and legal inspection before buying is therefore essential.

We accompany you professionally!

As an experienced local property company, we at KENSINGTON Artá are the ideal partner when it comes to buying a secure and successful property in Mallorca. With in-depth market knowledge, a strong network of lawyers, architects and financing experts as well as personal advice, we accompany our clients from the first viewing to well beyond the notary appointment. Especially in a region with as many facets as the north-east of Mallorca, it is crucial to have a partner at your side who knows the special features and offers customised solutions. Trust in our experience - we make your property plans in Mallorca a reality.

Contact us now