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Saturation in the Tourism Market – what does that mean for the Mallorca Property Market?

DOCU_GRUPO Tourists crowd Palma de Mallorca's Arenal beach on the Spanish Balearic island of Mallorca

Tourist numbers, and the overall strength of the tourism industry, generally follows a pretty similar cycle to that of the property market. This is of course normal where the property market is heavily influenced by foreign buyers and the general economy also strongly biased towards tourism. Growth in the tourism industry generally means more jobs (yes there may be a short lag) and that means more income and mortgage lending to boost local demand. On the international buyer front, the factors that drive a rise in tourism numbers – the health of the economy in the countries from where the visitors come from; the relative attractiveness of other locations (security etc) and the quality of the overall offer – are also all relevant when it comes to property buyers.

So the fact that this year has seen record levels of tourism, it is to be expected that the property market should also have been “chipper”!

So what should I read into concerns of “saturation” in the tourism market, all be it concerns from local residents when questioned about the impact of so may visitors this year?

It goes without saying that if residents are feeling more than a little overwhelmed (2 out of every 3 interviewed felt there was a need to restrict numbers) then, in parallel, there is every chance that regular visitors, such as those that have second homes in Mallorca, and who are an important component of the demand side of the property market, are also going to feel the same. If the attractions of Mallorca – it’s beaches, towns and villages (particularly Palma and emblematic locations like Deia. Valldeossa, Soller and Pollensa), the Tramontana mountains etc – are at breaking point, because of tourist numbers, then the “attraction” of your home here is also likely to diminish. You expect to need to get to the beach early on the mainland to book your m2 of beach, but not in Mallorca, You expect traffic jams and a parking nightmare in cities like Barcelona, but not in Palma. You expect to be stuck behind tourist buses in the Costa de Sol but not in Mallorca!

So “yes” it is relevant that we may have reached a “saturation point” and “yes” it is something that needs consideration. All sectors of society need to come together an discuss a “win win”. The locals must win and so must the visitors. We need more visitors out of season, we need a more diversified economy and we need a greater variety of attractions for visitors. Above all we need a political consensus that is not dictated by any one lobby, be it the large hoteliers or those behind the “free for all” in the residential holiday rental market. We want quality not quantity because that is what Mallorca is all about – a small island (quantity) with buckets of attractions (quality)! We need a model that is environmentally and economically sustainable and dynamic, that is controlled but not strangled!

It is clear that this is on everyone’s agenda, but now we need to see if there is a will to find a consensus across political lines and between all sectors of the economy!

So is this “problem” about to undermine the Mallorca property market? The short answer is “no” but that doesn’t mean we should not all face up to the problems facing the Island, and the need to address these issues. I firmly expect the market to maintain it’s upward trajectory into 2018 but, if nothing is done, expect “saturation” (along with the associated thorny issue of residential short term rentals) to be driving forces behind a brake in the market in 2019 – 2020. I am not saying a downturn or crash, but yes a “pause for thought” at least!

 

 


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Added on Friday, September 22, 2017

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