Finding that perfect rental in Palma de Mallorca can be somewhat of a challenge. The rental market, or maybe the lack thereof, is a an interesting/annoying thing. But before diving into that sea of manure some background is nescessary. Palma is city with approximately 550.000 people, including close suburbs. It’s a metropolis of different nationalities. Yes its true, neither the Germans, Swedish or the British “owns” this island even if a lot of people in these countries seems to believe soo.
The “normal” house/apartment standard in Spain are much lower than in the northern Europe or US. Yes, it can be ridiculously pretty and picturesque but be prepared that electrical sockets are loose or missing. Moisture spots and cracks in the roof. Electrical wires exposed. Leaks when raining. Noisy. Bad isolation and no heating in the winter (its actually quite cold in jan-mar). And so on.
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The “housing market” is extremely volatile, not from the point of view that the actual prices fluctuates but rather because that there are so many foreigners (with a lot of stash) that have absolutely no idea what the local prices really are before they buy. These people really affects the market and its absolutely impossible to know what an apartment/house is going to get sold for. How can they not know the prices?
Easy, because they turn to real estate agents from their own country. Brits turn to British real estate agents, Germans to German real estate agents and so on. The comparison of prices is between the objects on the same real estate agent homepage or between other, in the home language, real estate agents. These agents have preposterous, from a local standpoint, compensations and quite often way to high prices compared to the local market.
Yes, i totally get the comfort of using your home countrys real estate agents – you speak the same language, the have offices in your home country and so on. Its definitely ok to use these, just be aware of the price and compensation differences! You are paying a lot more than you otherwise would. Buying the casa of your dreams is a complicated story and way out of scope for this blog. Some minor tips though, i might get back on the subject later.
- Want to see the real local market? Head to Idealista or Fotocasa for some more stringent prices.
- In spain you normally bargain the set price down and not up as is custom in other countries such as Sweden.
- Add 10-15% to agreed priced for additional costs on the side related to the deal.
- Objects can have multiple real estate agents at the same time. This is a source of confusion for many. For instance this means some other broker can sell the house the same moment you are looking at it.
- Get help through the process! A gestoria can help you navigate, or a real estate agent that you trust “enough”.
- Lawyers is a necessary evil when buying an estate in Spain.
Rentals / Alquilados
This is going to be based from ours and our friends experiences, valid but not a full view. The rental market is actually even more disturbed and problematic than the sales market. The rental prices in Palma is really high and there are way to few rentals out there in comparison to the demand. Yes, those two always go hand in hand. A one month deposit is custom, two is common even though its actually illegal (who cares, someone will take it). A nasty thing which is more or less mandatory here is a one month rent payment to the real estate agent. Yes, you read that right. You pay the agent and not the landlord. To make things worse quite a lot of the real estate agents aren’t strong believers of professionalism and there are no official titles or training necessary. The broker can be your friendly farmer neighbour trying to make a extra buck. Its unfortunately not uncommon that real estate agents:
- don’t answer at all when you are showing interest or asking for a visit.
- keeping old apartments/houses online even though they already are rented out.
- don’t show up in time for viewing.
- cancel viewings just before agreed times.
- suddenly stops communicating with you
The Palma market from an FIRE perspective
In one word, Horrible (terrifying)! Mallorca is expensive. Palma even more soo. From a frugal FIRE standpoint try to stay clear of Barcelona, Madrid, San Sebastian and Mallorca. Both purchases and rentals are bad compared to the rest of the country.
So how much is it? Well its quite hard to answer because it is very much depending on your requirements and expectations. A normal sized (50+ square meters) two bedroom flat is usually between 900€(1000$) – 2500€(2800$) depending on location, condition, pool, appliances, etc. Average about 1500€ i guess if you don’t include suburbs. Have a look at Idealista to get an idea of the current market. If you really want to get those nasty rents down, there are awesome cheep rentals spread out both in the suburbs of Palma as well as on the island as a whole. You don’t have to live in the city center!
Worth it? Dunno? Our plan is to rent this first year and see if we want stay permanently. In that case we will sell our old house and buy something nice/suitable here instead. The housing prices are better than the rents from a financial point of view, and buying prices in general (excluding front line luxury objects) is a lot lower than northern Europe cities. We might not be able to stay within our FIRE margins this year, but if we buy a place next year we will.
What do you think, could you make it work?