Why Buy Luxury Property in Ibiza 2024 ?
Buying a Property in Ibiza is Buying Into an Island Lifestyle
Ibiza has built a brand that is known globally as the coolest place to chill out in the world. Social influencers, celebrities and billionaires flock to this island as well as 3.7 million other vacationers and party goers who spend over 4 billion Euros a year to be part of the vibe of this tiny island where beach clubs outnumber beaches.
Where else would you want to buy a luxury property? Nowhere else can possibly compare to the 571.6 km² of sunset paradise, this jewel of Spain’s Balearic islands which only 154,210 lucky people call home.
Luxury property in such a thriving economy is sought after and in short supply. Scarcity makes owning a luxury villa in Ibiza all the more desirable and the market prices reflect that.
Who buys luxury property in Ibiza?
The list of people who own property in Ibiza can read like an A-list of celebrities, socialites and billionaires. Many are deeply private and keep their ownership under wraps, while others are more public.
David Guetta (DJ), Carl Cox (DJ), Shakira (with footballer Gerard Piqué), Cristiano Ronaldo (footballer), Zinedine Zidane (footballer). David Villa (footballer), Pepe Reina (footballer), Kate Moss (model), Jade Jagger (model, daughter of Mick Jagger) are just the tip of the iceberg. There are dozens and dozens more.
Even so, "celebrities" are in the minority and most properties are bought and owned by successful people in the world of business, many of whom run their companies remotely from the secluded luxury of their luxury villa in Ibiza. In almost any business networking and meeting other successful people is the best way to create new opportunities and this undoubtedly is in the back of many property buyers’ minds. Being in Ibiza is about being sociable and making diverse business connections is part of that experience.
Another important type of luxury property buyer in Ibiza is the investor. The capital value of property in Ibiza has had strong and sustained growth which is forecast to continue, however that is just one part of the equation for an investor because that same property is ideal to rent out at premium prices.
You can draw up an even longer list of celebrities spotted in Ibiza who do not own property but rent it for their vacations. Leonardo DiCaprio, Adrien Brody, George Clooney, Orlando Bloom, Nicole Kidman, Justin Bieber, Matthew McConaughey, Kylie Minogue, Bono, Paulina Rubio.. To name but a few. And of course there are thousands more eagerly willing to rent a luxury villa in Ïbiza in order to rub shoulders with them.
What links them together, apart from the fact that they have the resources to buy a luxury home? They all share the "Ibiza Cool" philosophy and they fit into the life. When you buy your home in Ibiza, you may be very pleasantly surprised when it comes to meeting the neighbours.
Why do the Super-rich buy luxury property in Ibiza?
Read the travel brochures and estate agent blurbs and you still won’t understand what makes Ibiza unique and why it has become a magnet for the new breed of super rich.
Most will tell you that the fundamental reason that sustains and drives the demand for property in Ibiza is the environment and the lifestyle that allows. Ibiza is not only a nice place to visit, it is also a nice place to live. That’s very true, but you could say the same about dozens of other places from Cyprus to Santorini, the Mediterranean is littered with beautiful islands and idyllic beaches.
Others may argue that the temperatures throughout the year reach neither cold nor hot extremes as Ibiza enjoys an island climate providing ideal conditions to enjoy the outdoors and the beauty of nature. True, but again, not unique. A short trip to Spain’s other island group, the Canaries would be a better place to work on your winter tan.
The guidebooks will tell you that, strategically located as it is, Ibiza’s history has left its marks in the shape of ruins, the walled town of Dalt Vila. But these sights neither lure the thousands of visitors to the Island nor do they tempt the multi millionaires and pale in comparison to the rich history of other islands such as Malta.
You don’t have to reach back in the past a long way to start to uncover Ibiza’s secrets. Ibiza’s more recent history from the 1960’s when it was a haven for hippies through to its reinvention as the post millennium party and clubbing Xanadu of Europe created the backdrop for today’s island culture.
Perhaps it was the celebrities, the DJ’s, the artists performing who needed somewhere to stay and things to do while they were on the island. Maybe it was the influence of Canadian Rolph Blakstad who fused nature and architecture to create beautiful homes.
The island has been experiencing its next metamorphosis as the new age, eco-friendly luxury escape for the rich and famous is layering itself over its hedonistic foundations. From the Michelin starred restaurants to the beach clubs with waiting lists backed up for weeks unless you have connections, Ibiza has become the most exclusive place in the world to chill out.
Joining this new club of luxury property owners is not just about status and money, it’s about being part of a new "Ibiza Cool" whose members quite literally own the keys to paradise, a sustainable way of living surrounded by creativity, art and the sublime pleasures of life.
Why do the Super-rich buy luxury property in Ibiza?
If you are considering buying a luxury property for your own use then a key factor is how easy and convenient it is to reach it whenever you want to stay there, be it for a weekend or a more extended period of time. On the other hand, if you are purchasing a luxury property in Ibiza with a view to investment, then you want to make sure that your clientele can easily reach the villa.
Of course there are hundreds of commercial flights from almost all of Europe’s travel hubs and even ferries that ply their way regularly from the mainland, but these are not luxury travel solutions. It is likely that you and your clients will reach the island by private jets or yachts for a more leisurely pace.
A key advantage that Ibiza has for the super rich is its geographical position, proximity and short flight times to major European cities. According to data from AENA, the Spanish airport operator, in 2023, Ibiza Airport recorded 14,694 private jet operations. To put this in perspective, in the busiest month of July there were 3,307 private flights using the runway in Ibiza which made up nearly a third of all air traffic that month.
According to Superyacht news, around 95 per cent of the superyachts that come to the Balearics visit Ibiza, and yacht insurers Nautia that Ibiza Magna marina, with 85 superyacht moorings, is the most expensive marina in Europe. Owners can also tie up at 5 other marinas around the island including Marina Ibiza, which is the most modern marina on the island, just 11 miles from Formentera and offering over 350 moorings for yachts up to 55 metres.
Ibiza luxury property prices: Scarcity is the key
According to the Instituto Balear de Estadística (Ibestat), 3,712,160 visitors came to the area which is a staggering growth of 52.9% in the last five years, since 2019. In 2023 these visitors spent 4,293 million Euros.
With so many visitors spending so much money in such a small place, it’s no wonder that real estate is in high demand. A real issue in the market is scarcity and this particularly applies to luxury properties in the market.
Only 15% of properties are purchased by residents for use as their primary residence. The remaining 85% of Ibiza property sales are second homes or investment.
There simply are not enough properties to meet demand. There were only 1,785 properties bought and sold in Ibiza in 2023, slightly down on the previous year although well above the average of 1584 properties over the last 5 years.
The scarcity of properties has led to a 32.75% rise in the value per square metre and average property prices are well above those in mainland Spain and other Balearic islands.
| Year | Properties sold / bought Source: Institut d’Estadística de les Illes Balears | Price per m2 Source: Idealista |
|---|---|---|
| 2024 January | 116 | 6435 |
| 2023 | 1785 | 5913 |
| 2022 | 2213 | 5147 |
| 2021 | 1406 | 4814 |
| 2020 | 1022 | 4863 |
| 2019 | 1495 | 4847 |
However closer inspection shows that of these 1785 properties sold in 2023, only about 15-20% would be considered to be truly luxury properties. So the market for luxury properties is very narrow at between 250 to 300 homes in the last year.
As you would expect, this end of the real estate market has experienced an even greater rise in value and this trend is likely to continue as there is comparatively little new construction on the island in this property class with developers preferring to maximise returns by building apartments rather than luxury villas.
Is Ibiza luxury property a good investment?
When compared to other investments such as stocks, bonds, bitcoin or gold a property in Ibiza has a value to which none of the others can compare. And that is your quality of life. You cannot enjoy any of those other types of investments in the same way as you and your family can enjoy a luxury villa in Ibiza. So when you are considering what to do with capital, this can’t be ignored.
Another advantage over other types of investment is the availability of mortgages. If you choose to borrow part of the purchase price of the property then your capital outlay is reduced and your return on that investment is likely to be higher (see the example below).
In terms of ROI, luxury property in Ibiza compares very favourably with any other investment instrument and the market is a safe one. Ibiza luxury property is purchased and sold by the top percentile of income earners and like any luxury goods it has shown itself resilient in value despite the ups and downs of the general property market.
Buy to let a luxury villa in Ibiza
As an investor, your primary interest is likely to be the income that the property will generate. The growth in capital value of the property, while substantial and an important part of the equation, is not something that you will realise until the property is sold.
Below we look at a typical Return on Investment that you might expect from renting out a luxury property in Ibiza.
| Cash Buyer | Mortgage Buyer | |
|---|---|---|
| Property Price | 10 000 000 € | 10 000 000 € |
| Initial Investment | 3 000 000 € | |
| Loan amount | 7 000 000 € | |
| Costs of purchase, taxes | 1407 617 € | 1407 617 € |
| Total acquisition costs | 11 407 617 € | 11 407 617 € |
| Low Season Rental 30 days | 80 000 € 20k per week | 80 000 € 20k per week |
| Mid Season Rental 75 days | 400 000 € 40k per week | 400 000 € 40k per week |
| High Season Rental 60 days | 400 000 € 50k per week | 400 000 € 50k per week |
| Total Rental Income | 880 000 € | 880 000 € |
| Property Management Costs | 880 000 10% | 880 000 10% |
| Loan repayment (3.70%) | ||
| Gross Income | ||
| ROI |
Buying land to build a house in ibiza
Buying land to build a house in Ibiza is another option for an investor, however this requires research and a lot of patience. The time and associated costs involved will often make this an impractical investment solution unless you are a professional developer.
As in anywhere in the world there are zoning regulations which restrict the percentage of the land you purchase which can be built on. For example you would need a plot of at least 15,000 M2 if the land is classified as rustic before you can build anything, whereas "suelo urbano" would require a much smaller plot. The price per square metre obviously reflects this.
The price of the land will also rise exponentially if the plot has planning permission, if not expect a long wait as you apply for the various licences required. Measure this in years! It can take two or three years to have your permission granted.
The actual building process will typically add a further two years onto the timescale, so it is not uncommon that the whole process will take five years from initial purchase to actually having a home that you can move into.
Reforming a Finca into a luxury villa in Ibiza
Many people dream of buying a dilapidated house in the countryside and reforming it into a luxury villa in Ibiza and this is certainly an option. When purchasing such a property, part of the due diligence process will be to ensure that all of the current building is legal, if not this will cause complications.
Cosmetic changes to the existing structure can be performed without any permissions but if you are considering any structural changes then you will need the appropriate licences, architectural plans and this will take time. Just as in the case of building a villa from scratch, it can take a couple of years to have everything in place for urban land and even longer if you are building on rustic land.
So if you are considering a project which involves refurbishing and extending a rustic finca in rural Ibiza, the timescale can be quite similar to building a new property. From start to finish it may take four to five years. If you are considering this as an investment rather than realising a dream, you may find that there are less risky and time consuming alternatives.
Is a tourist licence required to let out Luxury Property in Ibiza?
Is a tourist licence required to let out Luxury Property in Ibiza?
You do not need a tourist licence if the property is let out for a month or more, but you do need a licence if the rental period available is shorter than a month. So if you want to rent out weekly, for example, the property must have a valid tourist licence.
There is a cap on the number of tourist beds available in Ibiza, with the intention of ensuring that the industry is sustainable and the island does not become overcrowded, straining its limited resources and the environment.
If you want to let out your property as a vacation rental in Ibiza then it must have a Tourist License in place. A vacation rental is defined as a rental contract for less than a month. Since 2022 there has been a 4 year moratorium on new licences so it is not possible to get a new one, although you can still go through the application process.
Fines of up to €40,000 can be imposed on owners if their property is let out for shorter periods than one month and the authorities do check properties advertised on websites, particularly holiday rental sites such as Airbnb or Booking.com.
If you want to buy a property for holiday letting then it must already have a licence in place and naturally you can expect this to be reflected in a premium price.
Searching for luxury property for sale in Ibiza
Most buyers coming from countries such as the UK, Germany or France searching for property for sale in Ibiza will be immediately struck by the lack of transparency in the Ibiza property market. This is particularly evident when it comes to buying luxury property
Whereas the "household name" agencies whose brand names we may be familiar with in our own countries may be perfectly adequate when it comes to buying an apartment in a complex, they are unlikely to effectively source the best luxury villa for you. These properties will tend to be "Off Market"
How to find ‘Off Market’ property for sale in Ibiza
If you want to find Off Market property for sale in Ibiza, it is a case of who you know. And this boils down to using the right estate agent to find these hidden, sought after gems.
The reason for this is that at the top end of the market where properties are 15-20 million Euros or more, most transactions happen behind the scenes in confidentiality because these sellers do not want their private homes advertised all over the internet. They do not want a rookie estate agent from a large firm traipsing through their villa showing it off to Uncle Tom Cobley and all.
For this reason, the most desirable villas may not ever be placed on the open market and their sale will only be entrusted to one or very few boutique real estate agents. In order to access these off-market properties, you need to choose the right agent.
How to choose the right estate agent for luxury Ibiza property buyers
At Bazaar, we pride ourselves on our many years of experience and the network of trusted professionals, agencies and contacts we have built.
When choosing the right estate agent to work with as a buyer looking for luxury property it is worth taking some care. The right agent is going to be much more useful than you might originally think, saving you so much time and potential stress.
Choose an estate agent with experience, there are so many wannabe agents on the island that it is easy to fall into the trap of a timewaster. An experienced agent is going to understand your needs and your lifestyle choices so they can introduce you to the most suitable properties on the market right away.
Unlike many countries and even other areas of Spain such as Marbella, there is no MLS for agents to share properties. Instead agencies work together because of trust and experience based on years of practising in the sector. Working with a good, well connected agent means that they will have access to properties offered by all the other agents on the island, saving you time by ensuring that you don’t need to juggle agents and appointments, wasting your valuable time.
Just as important as experience are the agent’s contacts. A well connected agent is the only one who is going to be able to find the right off market properties that might suit you and have the owner’s trust to arrange a viewing of the property.
Your agent’s contacts are vital in making sure that the process goes smoothly and you work with trustable professionals. Ibiza attracts many chancers from all walks of life and you are going to need to rely on a lawyer, an appraiser, perhaps an architect, a mortgage advisor, a designer and potentially all sorts of other specialists. An experienced agent will know and recommend the best professionals to deal with.
When is the best time to buy a property in Ibiza?
As Ibiza property values rise, it makes sense to purchase a property sooner rather than later, however during the months popular with tourism it can often be difficult to access a property because it is occupied. Therefore, if you are looking for a property for sale in Ibiza, the best time when you will be able to view the properties is in the off season, between November and March.
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