Buying a house in the Balearic Islands: the complete guide to investing in Spain

Idyllic beaches, mild climate, luxurious lifestyle… For many, the Balearic Islands embody the Mediterranean dream.

Ibiza, Formentera, Mallorca or Menorca: these islands are a top destination for anyone wishing to buy a house in Spain, whether as a second home or a rental investment.

Here you will find the most sought-after areas of the region and the investment opportunities, the local property market prices, the key information for foreign buyers… Everything you need to know to avoid pitfalls and make a sound investment.
 

1. The most sought-after areas in the Balearics

When deciding to buy in Spain, and specifically in the Balearic Islands, some areas stand out.

In Mallorca, the capital Palma offers a chic urban lifestyle, rich heritage and culture, plenty of amenities and an international airport. The capital is in high demand, especially properties with terraces and sea views. Coastal towns such as Calvià, Port d’Andratx, Portals Nous, Sóller, Pollença and Santa Ponça attract buyers looking for high-end properties, luxury villas or apartments.

Houses and apartments in Mallorca
 

In Ibiza, highly touristic towns such as Eivissa (Ibiza Town), Santa Eulalia and San José meet the expectations of investors looking for luxury and nightlife. The coastline and small coves are more appealing to those seeking premium properties in a calm environment, without sacrificing service quality.

Houses and apartments in Ibiza
 

On the island of Menorca, Mahón and Ciutadella remain more unspoilt and offer a good balance of peace, authenticity and price per square metre. These more family-friendly locations are among the most sought-after.

Houses and apartments in Menorca
 

Formentera has a very limited market. The scarcity of properties explains their high prices. Els Pujols, the island’s tourist centre, is highly attractive for rental investment and offers a lively selection of apartments and houses close to the beach. Traditional seaside houses in La Savina, luxury villas in Migjorn and Cap de Barbaria are also in great demand.

Houses and apartments in Formentera

2. Current property market prices

• Average price per square metre

According to the Spanish Land Registry (www.registradores.org), in the Balearic Islandsthe average declared sale price was €3,696/m² in the first quarter of 2025. Real estate professionals, however, report an average asking price of around €5,200/m² in the same region in summer 2025.

Within a year (Q1-2024 to Q1-2025), the average price per square metre in the Balearics increased by +10.3% (www.registradores.org).

The median price of a 100 m² house in the Balearics rose from about €260,000 in 2015 to €490,000 in 2025, and in prestigious locations it can easily exceed €900,000.
 

• Significant disparities depending on location and property type

The most touristic and sought-after towns are also the most expensive. In Mallorca, the average price per square metre is €9,500 in Andratx, €7,600 in Calvià, €5,500 in Palma de Mallorca and €5,800 in Santanyí. In Ibiza, expect around €8,000/m² in Sant Josep de sa Talaia, €8,900 in Santa Eulària des Riu or €8,400/m² in Sant Joan de Labritja. In Formentera, the average property price is €9,200/m².

In the more rural and less touristic areas of Menorca and Mallorca, property is more affordable. Prices average around €3,700/m² in Ciutadella de Menorca, €4,200/m² in Es Mercadal and €3,200/m² in Mahón. In Mallorca, the cheapest towns are San Juan (approx. €2,200/m²), Manacor (€3,100/m²) and Petra (€2,300/m²).

3. Is it profitable to invest in the Balearics?

As everywhere, it is important to know the local property market to make a profitable investment, whether for capital appreciation or rental purposes.
 

• Which type of property should you choose?

Prestige villas, often with pools, sea views and lush gardens, are very expensive to purchase but can generate high capital gains and substantial rental income during the tourist season.

Apartments in the centres of Palma, Ibiza or other highly touristic towns are very attractive for seasonal rental investment and show good year-round occupancy rates.

Fincas and other rural properties to renovate make it possible to buy a house at a reasonable price, with the charm of traditional countryside homes. If renovation costs are well calculated, you can not only obtain the house of your dreams but also achieve a nice capital gain on resale.
 

• Rental yields

The strong tourist demand in the Balearic Islands ensures good occupancy rates for holiday rentals, which can increase annual rental profitability. On average, rental yields for holiday lets range between 6% and 8%, sometimes higher in highly touristic areas or for top-of-the-range properties. Long-term rentals generate yields of around 3% to 5%.

Ibiza, with its strong tourism sector, shows excellent gross yields of about 7–8%, as does Formentera, which has a more exclusive and preserved image. Mallorca offers rental yields ranging between 5% and 6%, while Menorca, quieter, achieves a gross return of 5% to 6%.

Maintenance costs, taxes and seasonality (high vs low season) must be factored into calculations.
 

• Potential capital gain

Property prices per square metre in the Balearic Islands have been rising steadily since 2014. They now far exceed those observed before the 2007 property crisis, with an increase of +84% (source: INE – Instituto Nacional de Estadística).

This trend shows no sign of reversing, particularly in areas highly sought after by foreign investors. You can therefore expect a significant capital gain when selling your property, especially if it has been renovated or bought in a high-potential area.

Note, however, that as in many countries, capital gains are taxed. In Spain, they are subject to a flat rate of 19% for non-residents (IRNR). For residents (IRPF), the rate is progressive and can reach 30% for properties over €300,000. On top of this comes the Plusvalía Municipal, a municipal tax on the increase in land value.

4. Buying as a foreigner: what you need to know

Foreigners are free to buy property in Spain. All that is required is a NIE (Número de Identificación de Extranjero). For full details on the procedures and steps to follow, see our guide to buying property in Spain.
 

• Regulations and restrictions

Before buying a house or apartment, check the property’s urban planning status, permits, ownership titles, and make sure it is not located in a protected zone subject to specific restrictions.

Pay attention to the regulations on tourist rental licences. The number of licences granted per island is strictly limited. In some Balearic towns, no new tourist rental licences will be issued until at least 2026. Properties that already have a licence can continue to use it, but the licence is tied to the owner and is non-transferable upon sale.

Holiday rentals are also subject to the new Horizontal Property Law. In condominium buildings, tourist rental activity requires a vote (and authorisation) by the homeowners’ assembly.

Other obligations related to tourist activity include the cédula de habitabilidad (certificate of habitability), minimum equipment requirements and the display of the licence number.
 

• Taxes and additional costs

In addition to the sale price, you must budget for transfer taxes, notary fees, possible renovation and maintenance costs, local taxes (such as IBI) and, depending on the case, property management fees, co-ownership charges, and capital gains tax.

If the property is intended for rental (seasonal letting), there are also specific tax obligations, including the declaration of rental income and the costs of acquiring the tourist licence.

Finally, in the absence of a bilateral agreement between your country of residence and Spain, you may be subject to double taxation. Depending on the agreement, the owner may benefit from tax credits or exemptions. Most EU countries, as well as the United States, Canada, Switzerland and the United Kingdom, have signed a bilateral agreement with Spain.
 

• Practical advice before buying a house in Spain

When investing abroad, it is always advisable to call on a real estate agency specialising in the local market to guide you on price differences between municipalities and on local regulations.

You can also contact a specialised lawyer who will assist you throughout the process.

It is essential to carry out the necessary checks. The notary will review all documents relating to the property (land registry, compliance with standards, etc.). See also our article “Buying a house in Spain: the list of required documents” to find out more.

Buying a house in the Balearics means combining Mediterranean quality of life with a secure investment: whether you are looking for a villa with sea views, an authentic finca or an apartment in Palma, the archipelago offers unique opportunities for those wishing to buy in Spain and invest with peace of mind.
 

Discover now the property that suits you among Mer et Demeures’ listings in the Balearic Islands:

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