Because of COVID-19, we have seen across the world a series of forced transformations or changes in habits that are in one way or another opening up economic opportunities. In the Balearic Islands, the pandemic has exacerbated the need for transformation in sustainability. This has implied a before and after in the tourism industry, and also it has been a turning point for people’s desire to spend semi-residential seasons in Mallorca. Many digital nomads have realized that with teleworking, they can dedicate part of their time to an environment such as Mallorca, with all the benefits of weather, services, and communication. And this opens up a range of opportunities that are not so traditional for Mallorca: economic investment not only for tourism and hotel investors, but for a whole range of real estate, residential, and co-living products, which can complement the tourism industry and promote seasonal adjustment and create great synergies for other sectors such as digitalization, the audiovisual and content industry, health research industry, online education, and so on. At KPMG, our mission is to support and help companies with all the global services we offer, and at the moment we are helping such new investment land in Mallorca.
Apr. 4, 2022
Partner, KPMG Baleares
Juan Antonio Gutiérrez
Mazabi is a multi-family office real estate advisor, manager, and investor, founded in 2009. Despite the strong position of international investors in the real estate markets of Germany, France, and the UK, Spain is becoming increasingly important because of synergies between real estate and the luxury hospitality industry. When talking about tourism, for example, Spain is a top player and Mazabi has invested EUR420 million in hotel real estate over the last few years with an objective to invest an additional EUR200 million in the short term to meet hoteliers’ need for liquidity to transform their business. We focus on resort hotels (with a preference for beachfront) and city center hotels (that attract both business and holiday guests) in premium locations such as the Balearic and Canary Islands, Costa del Sol, Cádiz, Madrid, Barcelona, Seville, Málaga, San Sebastián, Bilbao, and Valencia. Mallorca, in particular, given its status as a world-class destination, is attracting attention not only in terms of hospitality but also luxury residential. Mazabi considers the luxury real estate sector in Mallorca to be promising in terms of investment and is extremely interested in expanding its portfolio on the island.
CEO, Estel Ingeniería y Obras
Hotel transformation is increasing gaining importance as a business in Mallorca, taking into account that most of the hotels in Mallorca were built in the 1970s and 1980s. Many have undergone refurbishment to make them more attractive to tourists, but the challenge now is to update Mallorca’s hotel base in terms of ecofriendly factors such as energy efficiency or water consumption. Much remains to be done in the Mallorcan hotel industry, in this regard, and it opens the door for investment opportunities. Outside the hotel sector, the islands are privileged for everything that involves new developments such as hydrogen. We must begin thinking about the fact that we have limited territory and have to make the most of what we have and turn it around to be greener. In this regard, European funds can help significantly. In addition, people from northern Europe love to come here and purchase their second homes or permanent residence, which generates a luxury residential market that constitutes another investment opportunity in the islands.
Pedro Barbadillo, Director, Mallorca Film Commission
Director, Mallorca Film Commissionv
Mallorca has a long-standing tradition in the audiovisual industry dating back 25 years, when the destination became extremely popular for shooting commercials ranging from car manufacturers in Germany to department stores in Japan. Sunlight, connectivity, and the variety of locations all led to an industry that specialized over time, subsequently attracting large numbers of specialized talent. For 15-20 years, Mallorca was a hotspot for the filming of advertisements. Lately, Spain has started a policy to offer fiscal incentives for filming productions in our country with tax rebates going up to 30% in Mallorca. Currently, there are more than 50 productions going on in Spain. This has meant investment opportunities not only in terms of financing productions, but also infrastructure. Spain offers a multitude of natural locations, from deserts to snowy mountains, up to an hour away between sea, mountains, medieval towns, modern architecture; however, we are fairly lacking in terms of infrastructure as well as unlocking the potential of the workforce needed in terms of training and providing services to professionals generates business opportunities. In this regard, Mallorca can offer solid prospects for investors interested in expanding the island’s infrastructure.
Ramón Gayol Pintado
Partner, Real Estate, KPMG
Mallorca is an international destination different from other locations in Spain, with an elegant tourist center that sees an influx of overnight stays and tourists, and many opportunities to invest. There is an excess of liquidity and institutional money looking for new investment opportunities, including through real estate. Palma is affluent, and there are opportunities to develop international capital investments. Investors look for locations that always have a high level of influx and place special importance on types of assets they can invest in with relevant criteria, such as the increasingly important ESG principles. This also gives investors an important opportunity to reposition Mallorca in the hotel and tourism field through the conversion of hotels into more sustainable buildings. There is also an opportunity to solve problems and tension that might derive from the high demand for housing, betting on higher density for some developments. Apart from that, the luxury real estate sector in Mallorca has proven to be a safe bet, and there are even more opportunities to create new concepts and provide differential services to lure new investors, such as built-to-rent developments or the conversion of obsolete hotels or hotels in mature areas into residential developments for renting.
Partner, Transaction Services, KPMG
One of the first things that an investor looks after is a stable regulatory environment, availability of workforce, and financial resources now and in the long term. Mallorca provides that environment. Beyond that, it is the island with the best infrastructure on the Mediterranean, thanks to its airport, its sea connections, and on-island facilities. Mallorca has universities, trained talent, entrepreneurs, a thriving technological environment, new emerging value-added sectors, and on top of that the island has a well-established local banking business coupled with presence of national and international banks. Despite tourism will continuing to be extremely important, there will also be other layers of business and economic activities that will be relevant and will attract national and international investors. At KPMG, we can help via activities such as advising on acquisitions, the regulatory environment with specialized lawyers, and finding capital, among others. We can also provide professionals to advise these businesses and help investment go live and start delivering profits as soon as possible.