Menorca’s Real Estate Market Sees Rapid Growth

One of Spain’s Balearic Islands, Menorca is known for its natural beauty and has a reputation for being family-friendly and low key. It is the least visited and developed island in the archipelago, but lately it’s been receiving more attention. Tourism is up, the second-home market is seeing a revival and new boutique hotels and upscale villa developments are popping up across the island. Menorca , unlike its sister islands Ibiza and Majorca, doesn’t have super nightclubs and raucous party towns, and its coastline is not marred by sprawling resorts. There are many unspoiled and uninhabited spots on the island and secluded beaches along its long coastline, while inland there are tranquil whitewashed villages, farmland and pine forests.
The tranquillity keeps regulars coming back and makes it an obvious choice for celebrities looking for some rest and privacy.
Visitors to the island this summer reportedly included Kate Winslet and U.K. rapper Stormzy who hired a villa for himself and his fans and friends for his 25th birthday celebrations.
Tourism is growing, and at a sustainable rate, said Carlos Maceda, of Sotheby’s International Realty office in Menorca, which opened this summer. The feeling on the island is that things are going well, he said. “Businesses are working through the winter months.Meanwhile, rundown historic buildings in the old towns of Ciutadella and the island capital Mahon are being converted into new boutique hotels in increasing numbers.”
He added that Mahon’s new additions include Casa Ladico, Sindic Hotel, Ses Bruixes, Sant Roc and Ciutadella’s include Can Faustino and Hotel Tres Sants. Last year it was reported that were 37 applications for boutique hotel licences, 19 of which had already been approved, according to the Menorca newspaper.
Increased Second-Home Buyer Interest
People are putting down roots, too. More prime second-home buyers are investing in the island’s top areas, with country homes with land and sea views and villas by the sea attracting the most interest, according to the Menorca 2017/18 Market Report by Engel & Volkers. These properties have become more expensive because of increased demand and a lack of new construction due to local government restrictions on building.
“People are buying here because they love the island, not just because they believe prices will rise,” Mr. Maceda said. “Affordability is a factor—a house here would be half the cost of an equivalent property on Ibiza and it has a diverse range of locations in which buy. Second-home buyers are not just looking for coastal homes, more people are looking inland and buying up rustic farmhouses or fincas.”

There has been a recovery in prices following the crash in 2014 and an increase in property purchases, Mr. Maceda said. “We have monitored the Menorcan market for some time and observed the increase in value of properties and land, boosted by rapid growth in demand, said Alejandra Vanoli, managing director of Balearics Sotheby’s International Realty. “We realized this island had huge potential as the island in the Balearics with the biggest growth opportunity.”
Average prices in Menorca have risen 5% from the first quarter in 2017 to the same period this year, according to Mr. Maceda. The high-end part of the market has remained steady throughout and some properties, such as those in the center of Mahon and properties on the first and second lines of the seafront at Cala Llonga, which is situated on the north side of Mahon’s harbor, have increased in value, said Kerry Phillips of Bonnin Sanso estate agency. The most expensive homes on the island are front-line properties and they are priced between €800,000 and €7 million (US$927,429 and US$8.12 million), she added.
The majority of buyers are from mainland Spain and from the island itself, while the British account for the largest proportion of purchases by foreigners. The French have traditionally bought on the island, but they are becoming even more prominent. Belgians, Germans, Americans, Swiss and Austrians are now buying in greater numbers, according to the Engel & Volkers report.
The areas that receive the most attention from top-end buyers include Cala Llonga, which has beautiful homes on cliff tops with access to the sea via pathways, and Binibeca, on the island’s south coast, which has prime properties with gardens that led to stairs, hewn from the rock, that wind down to the sea, as well as Es Grau and Sa Mesquida.

Many visitors spend their summers here, staying for three to four weeks in July or August, either at their own residence or managed holiday villas. Second-home buyers must apply for a tourist rental licence from the local authority if they wish to rent out their property. Short-term lets are restricted to certain areas, and the license is valid for five years. The license cost between €800 and €800 and the processing of the documentation can take months, according to Ms. Phillips. “Many homes come with the license, which saves the owner the hassle and cost of applying for it,” she said.

In terms of new developments, two new projects are being built on the north side of the island. Located in Son Parc resort, Nature Son Parc is a new development of 277 new homes and a hotel with 264 rooms by the developer Quabit Inmobiliaria. Pre-launch marketing started in July, but prices have yet to be released.

At Coves Noves, a mile east of Son Parc, Engel & Volkers Menorca is marketing a new development of six detached three-bedroom homes with white stucco homes exteriors, private pools and views of the beach. Prices start at €590,000.