Palma de Mallorca - Paradise City

Billed as ‘the new Barcelona’, Palma de Mallorca is quickly asserting itself as a cultural capital, full of all the grace, charm and heritage that comes with an alluring history, but tagged with the trendy, upbeat feel of a city on the rise.

In many ways, Mallorca’s capital is the ultimate European city for overseas property owners: safe, highly visited, easily accessible, chic and with a historic old quarter thrown in. It’s no real surprise then that a staggering 80,000 Brits are estimated to own property on the most popular Balearic Island, a quarter of those choosing to live there permanently. Naturally, the balmy Mediterranean climate leads the appeal, but another significant factor is the accessibility.

At just over two hours’ flying time from the UK, the blue sky of the Balearics is a mere hop from the grey clouds of Britain. There are now around 17 different airlines operating this route from 24 different airports throughout the UK, and naturally such a surfeit of supply has the kept the air fares relatively low.

The city lies just ten minutes from the airport, its boundaries stretching from s’Arenal in the east to Cala Mayor and San Agustin 15 kilometres west. Like many cities developed around a shorefront, Palma has grown in semi-circles, with each section offering a different appeal. Santa Catalina, west of the city walls, used to be run-down and scruffy, but has been recently revamped thanks in part to its plethora of trendy bars and restaurants surrounding Catalina market.

The same resurrection has taken place in La Lonja, the oldest and most tourist-visited part of the city. Like Santa Catalina, chic eateries and ‘see-and-be-seen’ watering holes have increased the demand for properties in the area.

Calatrava is an area popular for renovations. Housing a warren of tight streets and alleyways, this historical area circling the cathedral contains most of Palma’s museums and mansions.

Although restoration possibilities are snapped up often before the sold sign has been printed, there are also attractive apartments and townhouses among the renovation projects.

At the eastern edge of the city, Portixol has been transformed from a rusty old fisherman’s quarter into one of the most desired locations for the young and trendy. The fishermen’s cottages lining the quayside now command a small fortune. Another once-neglected suburban area, Terreno, is also benefiting from new found popularity.

Properties with views of Palma Bay, particularly front-line residences, are in particularly high demand, with penthouses ticketed with price tags reaching into the millions. Luxury villas sited in the upmarket and exclusive area of Son Vida are commanding some of the biggest prices. Known as the ‘Beverly Hills of Mallorca’, this neighbourhood is flanked by three of the best golf courses on the island and has eye-popping views of the whole city and sweeping bay.

Just beyond the city’s boundaries, traditionally marked by the so-called Via Cintura, residential areas have sprung up for those with the desire for city convenience but perhaps not the necessary cash or yearning for such ‘full-on’ city life.

Places like Son Rapinya and La Vileta tend to cater for business commuters with young families.

Magdalena Scheffer, a realtor and financing consultant with Centro Inmobiliario advises that you choose the area dependent on your purpose: “If you settle in Palma for good, you should choose for an area where you feel comfortable. If you buy-to-let, you obviously will go for a property inside Via Cintura, no matter if it is a second-hand or a newly built apartment on the place of a demolished old building.”

The buy-to-let market is particularly strong, and not just for holiday lets. Agent First Mallorca has recently opened a dedicated rental office and three more rental departments in their offices; “The demand for long term rentals is extremely strong,” says managing director Robert Maunder.

Scheffer explains why: “The government subsidy that came into force this year, of €210 [£165] per month granted to tenants aged between 22 and 30 years old, plus the fiscal advantages conceded to landlords and tenants are both clear causes of this increase.

“The sort of buyers we had the last few years were mainly young couples purchasing their first home.

In 2008, that same type of clients comes asking for long-term rentals. They just can’t afford to pay the high instalments of the mortgage. And they don’t want to buy a cheaper property in a place they don’t like, so the best option is renting for a while.”

According to many agents there has also been a switch in the nationality of buyers. “The Germans and British were the predominant force driving second-home sales,” says Maunder, “Now new buyers are emerging from Eastern Bloc countries such as Russia, Poland and the Czech Republic.”

With prices generally levelling, or even dropping in some situations, it’s most certainly a good time for anyone with the cash to be buying property in Palma. Expect to pay anywhere from €100,000 to €300,000 (£79,000 to £237,000) for a one-bedroom apartment on the Paseo Maritimo, €130,000 to €350,000 (£103,000 to £276,000) for a two-bedroom apartment in a refurbished building within the old town, and over €750,000 (£592,000) for detached villas within the Via Cintura.

Christian Pfleger of Europalma also recommends looking at new builds in the Plaza Cuartera as an upcoming area offering good value for money.

Property bargains are not often associated with Palma, but because of the current climate they are there for the taking: “Many of those that bought their property by financing 120 per cent of the purchase price three years ago can’t cope with the mortgage instalments today,” says Magdalena. “They will gladly agree to sell for the price of the debt.”

It’s a brave man, or woman, who would predict when property market conditions will return to normal in Palma, but Europalma’s Christian Pfleger is optimistic: “As soon as people realise that prices have not been affected on the island as have been dramatically predicted, confidence will return to average investors and prices should leap dramatically, perhaps as early as this autumn.”