January 2020 ©-Houses in Ibiza
Dear Friends & Customers,
So we close another year!
It is the time of the year to reflect on the longer term trends and where we have come from, and where we are going in terms of the real estate market in Ibiza.
In spite of all the noise, property prices, after sharp price increases from 2013-2017, have been largely consolidating levels over the past 2 years.
Indeed, listed offered supply has escalated by over 200% but seems to be peaking and transactions have collapsed by 30% since 2017, but prices have remained pretty resilient.
Building and planning permissions are still very stringent, the process is cumbersome, a little confusing and overall fairly strict.
Good quality, fully legalised properties are in limited supply and demand is strong and growing at the right price levels.
The increase in demographics and the consolidation of Ibiza as a luxury premium destination have created demand for realistic price to value property and especially in the premium sector.
The wealthy have been choosing Ibiza for permanent or semi permanent residency and as a high quality lifestyle option.
Regulations and limited short term rental licenses are putting a lid on the more speculative, buy to short term let component of the market. But slightly longer term rentals yields are compelling and demand is strong, meaning the less volatile buyer can still extract a decent income for the months the home is not being used by the owners.
My feeling is that over the next 3 to 6 quarters, we will start to see some pressure on house prices in Ibiza.
Transactions are drying up, new supply pipeline is slowly coming on stream but is relatively limited, and demand is robust and appears to be growing.
Bids will start to be revised upwards over the coming quarters.
For sure the infrastructure issues need to be addressed and sustainability reviewed, but the steady inflow of people looking for the quality lifestyle option the island offers will continue and tourism will remain strong.
Prices cycles here in Ibiza tend to leap in bursts of a couple of years and then consolidate for a while.
We may well be at the very start of the next cycle.