Impact of the banking crisis and the corona/covid-19 epidemic on the property market in Ibiza.
This is not the first crisis that the Balearic Islands and thus Ibiza have had to weather and as happens in any crisis there is fear, uncertainty and the need for professional assessment and the experience of an expert on the ground.
As one of the most renowned and successful real estate agents in Ibiza with more than 20 years of experience in buying and selling properties, we would like to inform you, in this blog, for as long as the Coronavirus or Covid 19 period lasts, about developments and effects in times of crisis related to the property market in Ibiza.
Banking crisis / Economic crisis
The banking crisis of 2007-2009 came as no surprise, thanks to a very forward-looking way of working that early on indicated that an economic collapse in the financial market sectors in the very near future was about to happen. The well-known parallel economic crisis of 2008-2009 continued to have an impact on the world till 2010.
Buyers
With regard to the property market in Ibiza, at that time the section of buyers, who intended to acquire their Ibiza home through bank financing, practically disappeared.
Sellers
Real estate owners who had financed their home mainly through bank loans were no longer able to make their repayments and were forced to sell their property. Many of them sold below a purchase price that had artificially been raised by the real estate bubble in previous years.
On Ibiza, this affected mostly properties less attractive for foreign investors or prospective buyers due to the location or the lack of spectacular views.
Nevertheless, one could still make the odd bargain purchase, as some property owners with no need of financing had to sell for personal reasons such as illness, divorce or old age, and could only find a buyer for their beautiful Ibiza home if they lowered the price considerably.
Other sellers, who had previously overestimated the value of their property because of incorrect advice or completely illusive prices, were quickly brought down to earth and finally offered their properties again at a market-driven price.
To the general public the radical reduction of these overpriced properties suggested a drop in prices of real estate, which did not take place in this form on Ibiza; it was rather an adjustment to real market prices.
From our point of view, this was a very positive side effect of that crisis, and our tiresome struggle with the, at that time, completely unrealistic price expectations of some of the sellers and against many dubious real estate brokers and freelance agents finally came to an end. An honest and ultimately satisfactory work was possible again.
Coronavirus crisis
The origin of the economic crisis caused by the banks is of course in no way comparable to the now rampant Covid 19 or Coronavirus crisis.
This time it is about containing a life-threatening epidemic that could not have been forecast in this way and at this time.
Even working with plenty of foresight no one could, this time, be protected from becoming entangled in the negative economic impact.
Almost the whole world is affected by the coronavirus crisis, in some parts the economy has been completely paralyzed.
Coronavirus in Spain
Spain was particularly hard hit by the virus, which resulted in a complete lockdown, travel bans, quarantine for all individuals and the closure of all shops and businesses.
The restrictions were far more severe than in many other European countries.
Hardly any industry continued in Spain and hardly any company or business owner can count on profitable income now.
Real estate offices must also be closed. Even taking photos of properties or viewing apartments, houses or villas was prohibited until 11 May 2020.
Since almost 99% of the citizens of the Balearic Islands economically depend directly or indirectly on unrestricted international travel, the economy will be stagnating until airports around the world resume normal operations.
Continued high demand for Ibiza properties
Working hard from home throughout the entire Coronavirus crisis, it is great to see that we continue to receive daily inquiries from prospective buyers from all over the world interested in Ibiza real estate and that we already have a long list of clients who are waiting to be able to fly again and view their dream property with us.
Class, not mass
Conversations with and letters from our customers confirm every day that the desire for a proper home on Ibiza is greater than ever. Hotel vacations have lost much of their appeal due to Covid 19 / Coronavirus.
The awareness of the security of your own home is strongly shaped by the Coronavirus crisis. You don’t want crowded dining rooms or open buffets, you want your own pool instead of a hotel pool lined with tightly packed sun worshippers, you don’t want to have to queue at reception …
Class, not mass is the maxim now.
No decline in prices
Some property owners have already withdrawn their property from active sale. In times of crisis, many people realize that their money is nowhere better invested than in a property in a beautiful corner of the world, which has an excellent reputation and a huge demand worldwide.
We always have to tell investors and bargain hunters who contact us almost every day the same thing: So far, not a single one of the properties we have on sale has been reduced in price!
As in the economic crisis that lasted up to 2010, only very occasionally, real estate prices are lowered by owners who, for personal reasons, are forced to close a sale quickly.
Everything will be fine
Therefore, at the moment we can only say to our clients: Everything will be fine! Be patient until the present situation returns to normal and you will find out for yourself that the property market in Ibiza will remain stable, just as before the crisis, and more so that it will probably get stronger and result in an even greater demand.
This post is also available in Deutsch.