The Balearics are sometimes portrayed as sun-kissed Mediterranean islands avoiding the property market problems afflicting mainland Spain but Menorca is proof that the downturn has hit even small and relatively exclusive communities.
“Top-end prices on Menorca are down 20 to 25 per cent as against 50 per cent for the rest of the market,” warns Michael Cunnington of MJC Associates, an English-speaking Balearics agency which also represents Savills. “We have far more properties than buyers at the top end. Villas, townhouses, apartments and farmhouses are in plentiful supply in all price ranges,” says Maribeth Davies of Hamptons International, which sells Menorcan homes through local agency Bonnin Sanso.
However, unlike mainland coastal Spain, the Menorcan oversupply of homes is not caused by over-development. Much of the island’s 125-mile coastline – protected by Unesco World Heritage Site status – remains unspoilt. Most modern apartment blocks are low-rise and have good leisure and shopping facilities. From May to September tourists swarm through Moorish towns such as Ciutadella, the former capital on the northwest of the island, but for the rest of the year the island is relatively quiet.
So when the number of homes on sale exceed demand it is simply because of a shortage of buyers. One reason for this is that Menorca – unlike the internationally better known Balearic islands of Ibiza and Mallorca – relies heavily on Spanish holiday home buyers: with a national unemployment rate of 26.2 per cent, these purchasers are now scarce.
Engel & Völkers, an estate agency with a network of offices across Spain, says Spanish and British buyers on Menorca have fallen by about 50 per cent since 2010. “In the last two years there has been a shift away from the traditional Spanish/British buyers to French/Belgian, who now account for 50 per cent of our market, followed by Russians (25 per cent) then British, German and Italian buyers,” says the director of Engel & Völkers’ Menorca office, Francisco Arnau López.
Overseas buyers fall into two groups, according to Cunnington: “There are couples with young children looking for a secure, tranquil destination within two hours’ flying time [of home]. The other group is couples aged over 50 looking for peace and quiet in a safe environment for permanent living or as a holiday home.”
A second problem for the international property market is the island’s accessibility. There are very few direct flights from and to major European cities during winter, obliging most visitors without private aircraft or yachts to travel via Barcelona or Alicante, or go to Palma de Mallorca and take a light aeroplane for the 20 miles to Menorca. As a result several Menorcan resorts effectively close down for six months of the year, giving most of the island’s 95,000 permanent residents an undisturbed winter.
All of which makes Menorca something of a hidden gem. Its administrative capital, Mahon, in the southeast, is dominated by relatively bland modern architecture but it has an attractive centre with 17th and 18th-century buildings. Its harbour is renowned for its size – it is up to 1km wide, 5km long and up to 30m deep, making it a popular stopping-off point for those sailing across the Mediterranean.
Two-thirds of the population lives in Mahon and Ciutadella, with the rest scattered across the island’s 270 square miles. There are only a few other significant settlements such as 17th-century Es Castell and Sant Lluís, both in the southeast, and the inland town of Alaior.
“We have some beautiful properties, especially rural fincas, some of which extend to their own part of the coastline. During the boom years these did not come onto the market and it’s now that owners want to sell, particularly Spanish owners who have felt the pinch of the crisis,” says López.
Engel & Völkers is selling for £2.36m a 7,500 sq ft house on a large plot at Sant Lluís: it has four bedrooms and views of the sea 1km away, as well as a private well and, 500m from the main property, a separate two-bedroom guest suite. The agency is also marketing a 13-bedroom house on a beach: it has several buildings connected by a promenade, combining to give 6,000 sq ft. The price is £7.32m.
Overlooking the sea at Mahon, Hamptons International is selling a fully furnished 9,000 sq ft seven-bedroom villa with a pool, mooring and harbour views for £4.75m. The agency is also marketing a 6,000 sq ft Mahon harbour villa with five bedrooms, a pool and panoramic views for £2.84m.
Those values remain high even after recent falls but agents admit that sale prices are often just 70 per cent of asking prices: many high-value homes languish on the market for years as vendors have no urgent need to sell and hold out for close to the asking price.
“Clients that have bought have owned in other parts of the Mediterranean and settled on Menorca because they found the south of France too expensive, or flight access too complicated to Greece, or consider places like Corsica to have more crime,” says López.
The more dramatic price reductions, however, are found at the lower end of the market, which until recently was busy with Spanish purchasers.
The website of Bonnin Sanso lists 200 Menorcan homes described as “bank repossessed”. Most are priced under £250,000 and some dip as low as £60,000 with the majority showing pre-repossession values 30 to 80 per cent higher – a reminder of the enormity of the downturn now intruding into Spain’s furthest reaches.
Daytime summer temperatures are mid to high 20s, January dips to 8C
Some homes sell with more than one agent, at different prices, so check carefully
Agency, legal and registry fees add up to 12 per cent to a purchase price
Local by-laws restrict letting holiday homes in some parts of the island
English is not as widely spoken as on Mallorca or Ibiza
What you can buy for …
£500,000 A three-bedroom apartment overlooking Mahon marina
£1m A 2,500 sq ft rustic hillside inland finca
£5m A 6,000 sq ft eight-bedroom coastal house with pool