Luxury Property at a Bargain Price

The financial crisis hit Spain four years ago with the collapse of the US bank Lehman Brothers, triggering a financial and property crisis for the whole country that continues to this day.

Discounts of 40-50% on property are now the order of the day.

The property bubble, with thousands of half-finished and at least as many empty apartments, along with numerous unpaid mortgage loans and a lack of liquidity at the Spanish banks to refinance the overpriced loan contracts tied to the soaring Euribor, led to thousands of forced sales of property. At first the crisis seemed not to affect Mallorca, but the Germans' favourite island was eventually caught up in the pull of the financial crisis too, and in recent years the property business has suffered from falling sales figures for new builds and in the luxury property sector. In some cases, villas with a market value of two million euros or more are being passed on to cash-rich buyers at discounts of over 50%. So-called "distressed properties", or repossessed assets, are now being sold by the banks at considerable reductions in order to replenish their balance sheets with recovered liquidity.

Either way, the island's estate agents come out ahead: if their own clients' properties can't be sold, they can at least handle the banks' repossessed assets quickly and smoothly, with sales at drastic price reductions.