All quiet on the Menorcan front – except for houses
The Balearic island attracts older buyers while avoiding the problems seen elsewhere in Spain
Sunday 12 June 2011
Mallorca has the mass tourism and Ibiza the ultra-cool clubbing scene, but Menorca prefers a gentler existence.
Only 270 miles square and with a population below 100,000, Menorca, or Minorca, as its also written, may seem like a sleepy backwater in the otherwise buzzy Balearics. But this green and spacious island may have a lot to offer British buyers looking for a second home.
In its unique topography with 280 bays and inlets it's possible to lose oneself with a gentle boat ride out of the capital Port Mahon, which has the second biggest natural harbour in the world. Beaches abound as does a superb road, cycle and walking network and it's all less than two hours' flight time from Britain.
Menorca is the furthest Balearic island from the coast of Spain, and its property market also seems well removed from the turmoil that is still gripping the mainland.
"On the Costas you are looking at property prices having come off 40 or 45 per cent at least but in Menorca you are looking at reductions, since the credit crunch of 10 or 15 per cent," said Nick Byrne, a director of Portsmouth-based Waterside Property.
When you factor in the decline in the value of the pound against the euro since the credit crunch, this means that British sellers on the island are still getting close to 2007 prices. "The market in Menorca has just had two of the worst years on record in terms of volumes, but there are signs that things are on their way back," said Phil Jackson, a director of UK and overseas estate agents Maguire Jackson, in Birmingham.
The clue to the Menorcan property market not going the same way as the rest of Spain can be seen in the island's lush greenery. A combination of strict planning laws restricting developments on so called "rustic" land (their equivalent of green belt), none of the mass Spanish developers getting a toehold and the island's sleepy reputation has prevented an oversupply of property.
"There hasn't been the development free-for-all you have seen on mainland Spain. None of those ¤90,000 badly built villas on big developments with poor facilities and uncertain planning permission you've seen in Alicante or Malaga. Menorca is altogether quite a bit classier," Mr Byrne added.
And to emphasise the point of more careful development, all new-build property on the island has to have solar technology, far in advance of any UK legislation, and 10-year building guarantees are becoming the norm.
Less development also means fewer bank repossession properties. Across Spain more than a million homes are estimated to be in the hands of the banks – mostly through developers going bust. Many of these are being sold at heavy discounts, depressing prices further for those owners looking to sell through the normal route.
"In Menorca there are relatively few repossession properties to glut the market," said Colin Guanaria, a director of Balearic property sales company Bonnin Sanso. "What's more, properties tend to be very individual. A lot of owners have chosen in the past to buy a plot of land and then have a home built, which lends character and less of a uniform feel to property on the island."
A quick run-through of the properties on Bonnin Sanso's books highlights this point. Of course, there are a few of the classic Spanish holiday apartments at Son Parc – near the island's only golf course – but they were built in the 1980s by Taylor Woodrow. Two-bed apartments with balconies and use of a communal pool start at ¤150,000 but most are priced at the ¤180,000 mark. Further up the property food chain there are larger luxurious apartments available at Covas Novas from ¤199,000, while a new small development of five modern villas with bedrooms in Trebaluger starts at ¤350,000.
Buyers with much deeper pockets are well catered for. A four-bed apartment in Punta Reloj offering 210sq m of space with staggering views over Mahon harbour is available at ¤850,000. On the north side of Mahon with the most commanding views is where much of the islands most exclusive property is to be found, with villas and their own mooring ranging from ¤2m to ¤6.5m for the Villa Amanecer set in 969sq m of land and a massive infinity pool.
At those sort of prices, financing is not an issue – you either have several million euros or you don't – but lower down the scale, many buyers still find it necessary to borrow. "Five years ago, 30 per cent of buyers were cash. Now it's closer to 80 per cent. This represents the tighter lending that has come into play since the credit crunch," Mr Guanaria said.
A funny thing is happening in the Spanish mortgage market. People buying bank repossession property can sometimes get 90 per cent or higher loan to value mortgages whereas for everyone else it seems 60 per cent is the norm. "The Bank of Spain decreed that 60 per cent should be the maximum LTV for foreign buyers in Spain," Mr Guanaria said.
No wonder those looking to borrow often do so against their own property in the UK. "This has the key advantage of repayments being in pounds which means that buyers can be sure about what they are going to be paying," Mr Byrne said.
But Spanish banks such as Santander and Caixa are still willing to lend. "Provided you can show you can keep up with the repayments, the money is there," said Sean Adams, an associate director of Savils Private Finance. "The Balearics are interesting as defaults are lower as buyers tend to be of a higher quality than the mainland, so it is possible to get a 70 per cent LTV mortgage. But those who are cash poor but asset rich will struggle to find finance."
Buying a home in Menorca is no buy-to-let income-generating panacea. Property in some parts of the island cannot legally be let as a holiday home. Flights, although frequent in the summer, die off come the winter, reducing tourism. "Let's be clear: if you think you will make money by borrowing to buy and letting it out, forget it. Generally, speaking, if you cover 30 to 40 per cent of the mortgage cost you are doing well. Most people buy to enjoy and then do some letting at the side," Mr Guanaria added.
Mr Jackson agrees, saying older buyers tend to predominate in Menorca. "They have kids and grandkids and want them to use it at holiday time, whereas in other parts of Spain buyers tended to be at an earlier stage of life.
"If you're going for rental returns, then look at the Costas. If you want something a little more tasteful and largely for your own use, then Menorca is a good option," he said.
One area that doesn't seem too expensive is the management of property. Unlike in some popular second home locations where developers charge a small fortune for upkeep, in Menorca owners join a local residents' committee which takes care of the maintenance and splits costs according to property square meterage.
But buyers should be aware that initial purchases come with an 8 per cent upfront tax, and estate agents can charge fees of up to 5 per cent. These fees are standard throughout most of Spain, but Menorca does seem to offer something a little out of the ordinary. "It's nowhere near as flashy as the other Balearic islands but people really seem to like it that way," Mr Jackson said.
Colin Guanaria, Bonnin Sanso
"The island has not been hit by the blight of overdevelopment which in turn has minimised the number of bank repossessions. It tends to be slightly older buyers who holiday here for many years and then buy for the family rather than an attempt at a buy-to-let holiday investment, and that gives the market a more sustainable base."
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Debt in Britain: Numbers seeking help on how to cope with mounting bills goes up by more than half in three years
General election 2015: David Cameron's promise brings uncertainty to investors
Bargain Hunter: BT improves its mobile reception with 'incredibly competitive' deals
Have a happy new financial year
Are finance apps stealing your personal data?
- 1 Tidal launch: The most pretentious lines from Alicia Keys' valedictory speech
- 2 Trevor Noah: Jon Stewart's replacement faces online criticism over 'anti-Semitic' tweets
- 3 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 4 Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
- 5 Gamers confess the worst things they've done in The Sims
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
iJobs Money & Business
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...
£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...
Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...
Day In a Page
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000