Month: March 2023

As the summer season approaches there’s a strange standoff happening in the UK press as the Daily Mail (surprise surprise) has gone to war on Ibiza and Mallorca in the Balearic Islands with increasingly negative headlines.

In short the UK press is presenting Ibiza and Mallorca in the Balearics as increasingly unaffordable for Brits, both tourists and residents with Lanzarote also coming in for stick for suggesting it needs to diversify away from the traditional budget Brit holiday.

It’s an interesting take on events which isn’t actually a million miles away from the truth although the sensationalist UK press are presenting it as a new phenomenon even though it’s been happening for years.

In truth Ibiza has been going more upmarket for over a decade but it was desperately needed after so many years of relying on budget tour operators filling 3 star hotels with plane loads of square deal tourists, this was the package holidays ‘glory days’ of stacking it high and selling it ‘cheap’ but with tour operators constantly squeezing prices it led to little or no investment in the core product.

We all know what happened to those tour operators once the internet opened up the market and people could start building their own dynamic package: flying from an airport of their choice and getting a private taxi to their desired hotel. Prices started to edge up but it was a win win as the penny dropped for the hoteliers who invested this new wealth back into their business adding luxuries and facilities to improve their product.

In very few years the whole template of Balearic hotels became a completely different animal appealing to new markets. In the mid 90’s the Hotel Playa d’en Bossa was one of Thomson Holidays many family hotels with its superb beach location and enormous kids club. Today it is the Ushuaia Beach Hotel. Things change and Ibiza’s secret has been to be ahead of the curve.

Enough of the brief history lesson, let’s get back to the UK’s press ‘outing’ the Balearics as an expensive destination. No sh*t Sherlock however as I’ve previously written about (link here) it doesn’t always have to be that way and the difference now is that tourists have the choice where previously they didn’t.

Other Spanish resorts have looked at their own template and realised they have to diversify and try to attract a more affluent crowd. This isn’t a bad thing and when it comes to some of the Canary Islands it was chronically overdue. Meanwhile Egypt, Greece and Turkey will keep doing their thing by offering very competitively priced holidays. It’s great to have a choice isn’t it! You pays your money and you takes your chance.

So is the Balearics now more expensive than ever? You bet your life it is but it was well overdue and looking at last year when records tumbled it obviously hasn’t affected the bottom line with these profits being reinvested back into the product with prices edging up even more.

There’s no denying that the recent boom has brought challenges, not least a housing crisis for those who’s job it is to service the tourist industry. The local government talks a lot but has no solution so the emphasis remains with employers to house their staff and include it in their employment package but with low supply and high demand it’s easier said than done. The flip side of this is if you are lucky enough to have invested in Ibiza property over the last 20 years then the capital growth is off the scale. There’s a yang to every yin.

The market has changed, it’s constantly evolving and the Balearics are a snapshot of that but it isn’t a negative. Has the ‘cheaper’ British market been squeezed out? A little, although Jet2 holidays is a roaring success filling the gap of the traditional tour operators with an amazing array of airport and accommodation options and some fantastic prices if you stay away from kids holidays.

There’s always going to be winners and losers and the UK press’s depiction of Ibiza amd Mallorca, although not entirely inaccurate, paints a distorted picture of the truth. Ibiza and the Balearics are finally catching up with other truly world class destinations, not by chance but by hard work and strategic planning but there’s still a long way to go.

Perception is everything and there’s 3 sides to every story. There are plenty of challenges but whether the UK press like it or not, Ibiza and the Balearics have never had it so good.

Summer is around the corner. With it comes plenty of challenges and one that gets more headlines than most is the Ibiza housing crisis – there isn’t anywhere to rent at a reasonable price.

There are 2 main profiles of tenants, those who require short term rental i.e. 6 months (usually over summer) and those who want an annual rent for a minimum of 12 months. In the not too distant past it was relatively easily to find a summer apartment, in 2005 my agency alone had over 100 summer units for rent whereas today we have precisely zero..

The simple reason why summer only apartments have all but disappeared is the high demand from people wanting to live in Ibiza all year round and the prices landlords can now charge for a 12 month let. It’s been getting more difficult every year, high demand has gradually pushed up prices to such a level that landlords can now maximise by renting for 12 months and receive an excellent income.

The rising population of the island over the last 20 years has moved the Ibiza economy forward so many can afford to live here all year rather than for a transient 6 months then needing to go off-island for work in the winter. Ibiza offers a lifestyle that is unmatched by many other places with quiet winters and busy summers, not forgetting the famous 300 days of sunshine per year.

This obviously doesn’t help those coming to the island desperate to find a place to live for summer but this is the reality of the situation. It’s a basic supply and demand scenario. Low supply, high demand of apartments is pushing up prices for the few apartments there are to untenable levels.

Personally speaking, as an agent I haven’t had a reasonably priced apartment offered to me for a long time, agents don’t get the units like before as there’s such a long queue for apartments that most owners have plenty of tenant options without needing an agent.

A recent survey showed that the majority of tenants in Ibiza Town are paying 700-1300 EUR per calendar month for their home. This may sound cheap but historical contracts can only be raised by inflation every year. It’s now difficult to find a decent dwelling for this price and things aren’t getting any easier however after a stagnant few years new apartment blocks are being built again.

The Balearic government has talked about capping the price of rental properties but this will never happen in a free market although local licensing and/or taxation could be a way of control, something has to give sooner or later. Social housing has also been mooted but the local authorities do a lot of talking but don’t seem to want to get involved as this opens up a hornets nets.

So, unfortunately, don’t expect things to get much better any time soon. My advice is look to rent a room or share a 12 month let to spread the spiralling costs or if possible try and buy. As you can see from above, it’s a good investment with solid returns.