Dear Customers & Friends,
We hope you are all keeping well safe and looking after each on during these difficult and strange times.
It is still not very clear what the final outcome may be but for certain Ibiza and its economy will take a hit. We depend almost entirely on tourism.
The latest news is that we may have a season after all, albeit delayed, this has breathed fresh air & and cautious optimism into our ecosystem and the island is now busy preparing for visitors in July & onward.
I will to try and assess the possible repercussions on the real estate market in Ibiza and the variables that influence demand, prices and offered inventory.
Prices may well see some pressure, and buyers will probably be marking prices down. Tourism may take a while to recover to 2019 levels and a possible drawn out recession could result in further falls in home sales.
The island model to date may well see some readjustment and if done properly could result in Ibiza being a nicer place to visit and even nicer to live.
The Ibiza property market is traditionally resilient and in the last financial crisis did not see significant falls in house prices, as we saw on the Spanish peninsula.
The Ibiza villa rental market may see some pressure on prices over the delayed season but is likely to recover as demand for private space is likely to increase.
Depending on the depth of the oncoming slowdown we would expect to see real prices ease up to some 10%. Perhaps a little more in the under €1mm segment of the market but the higher price points are less prone to sell at any price and many are not as leveraged net net.
My call is that transactions will dry, the market will coil in and wait for the storm to pass. For sure it will not be buoyant but I do not foresee a sharp fall in real prices especially in the upper segment.
Difficult times to make any strong calls but, if past cycles are any indication, when the economy turned upside down,real prices for quality on the island of Ibiza did not collapse.
Any glaring price opportunities are quickly mopped up by cash rich locals or foreign buyers well related to the island.
We have to this follow closely, as the goalposts can shift quickly.
There is no hurry but keep your eyes and ears open if you are looking to buy.