Commercial properties in Mallorca

Therefore, real estate companies in Mallorca with commercial properties in their portfolios also require more complex financial measures to safeguard the return expectations of investors or buyers.

Such properties include, for example, shops, hotels, restaurants, cafes & bars, workshops, offices, administrative buildings, medical practices, and warehouses. But they also include artists' studios, finca properties used for tourism, and galleries.

Overall, global economic development is moving away from a manufacturing economy and toward a service-oriented economy. As a result, commercial real estate is becoming increasingly important internationally. Demand for commercial space is also rising in Mallorca. The commercial real estate market, like the economy as a whole, is subject to global market fluctuations and, in Spain, of course, directly to the Euribor. The decline in prices during the economic crisis in recent years is already creating rising demand on an international scale.
In contrast, high vacancy rates and a large number of newly built commercial properties in the last two decades are still resulting in weak demand on average.

In addition, the commercial real estate market has undergone a strategic realignment since the 1990s. Real estate companies are now increasingly trying to sell their existing properties profitably. To this end, they focus primarily on commercial properties that are still under development. The further economic optimization of these commercial properties forms the basis for higher returns and has thus become the truly lucrative business sector of the island's real estate industry.

Foreign investors, in particular, view Mallorcan commercial properties as a worthwhile investment. Hospitality properties remain a sought-after commercial property. High-quality shops, hotels, restaurants, and cafes/bars in prime locations are also in high demand. Particularly popular are the locations in the Palma Old Town, the tourist resorts around Cala Major in the Southwest, as well as Puerto Andratx, and tourist centers such as Alcudia and Can Picafort.

The boundaries between commercial properties and residential or special-purpose properties on Mallorca are clearly defined by depreciation options, sales tax, financing options for the respective property, and building regulations. In between, there are properties suitable for both residential and commercial purposes.

A further distinction between the two major real estate categories is valuation. For example, residential properties used by the owner themselves are valued using the asset value method. This means that the costs of new construction are determined for these properties. Factors that reduce value, such as wear and tear on the building or structural defects, must be deducted. In contrast, the income approach is used for commercial properties and rental residential properties. The net profit that can be generated from a commercial property is the decisive factor here.

Property tax depends on the type of use and therefore distinguishes between commercial properties and residential properties or special-purpose properties.