Very few moments in life can compare with the excitement of receiving the keys to your new home on Ibiza. Knowing that you have just bought your own small piece of this unique island paradise is a wonderful feeling. However, the quest to reach this point can sometimes prove frustrating and a true test of your patience and resolve.
In this two-part series, we aim to help potential new homeowners navigate the property landscape, with the help of expert advice from some real estate specialists here on the island. Here we outline everything you need to know to get started.
For part two of our series, covering the law go to Buying a home on Ibiza: the legal side.
State of the market
There has been a noticeable growth in the Ibiza property market, evidenced by the abundance of new estate agents established in recent years. In that time, private houses have been selling well and a recent tightening of the law relating to the rental of apartments for short-term lets has seen more properties become available.
The housing market on Ibiza is very unique - the combination of small housing stock and tight restrictions on new building projects (not to mention the relative scarcity of idyllic islands in the western Mediterranean!) makes for exceptionally high land values. There are bargains to be had but everything is relative - property prices have been pushed higher and higher due to demand and with some prices comparable to central London or New York City.
Nevertheless, deluxe property specialists believe there is still good value to be found in the market. They maintain that property on Ibiza offers considerably better value than having the money in the bank – as summer rental values are very high and houses generally sell for a profit. If you could afford a property for two or three million Euros with a guest apartment and tourist licence, you may never need to work again. Properties of this kind have the potential to be rented out for fifteen to twenty weeks, potentially generating €150,000 per year.
What's your budget?
The individual nature of houses on the island makes accurate valuation an inexact science. Prices quoted are often the aspiration of the owner, rather than based on any proper evaluation of sales data. Nevertheless, properties on Ibiza are generally worth what someone is prepared to pay for them, so be prepared to negotiate.
Entry-level prices for properties on the island are very high – expect to pay in the region of €250,000+ for a two-bedroom apartment and €600,000 for a semi-detached family home. A spacious, four-bedroomed detached house with a pool will typically cost upwards of €1.5 million. A “bargain” price, for a stand-alone house, would be in the region of half a million Euros, if you're lucky enough to find one.
On top of the purchase price, it is necessary to have at least 10% to 12% extra in reserve for the cost of conveyance (transfer of property), including taxes and legal fees. We'll be covering this in more detail in part two of this series.
Working with an agency
Build your own and get the Project Elite plot with a construction license via Villa Contact
Finding a good agent is essential. There are many to choose from, so finding one that you trust and who is interested in guiding you is the first important step. A good agent will be able to widen your search and may even lead you to consider a different choice from your own original ideas.
Real estate agencies on Ibiza charge high rates of commission for their services compared to other countries, so don't feel shy about giving them plenty of work to do. Also, they generally collaborate and share their commissions with other agencies on the island, so be sure to benefit from their connections, experience and expertise. If you give them your personal preferences, they will be happy to assist you in your search and should have access to many other properties beyond what they advertise online.
All good agents will have close relationships with lawyers and notaries (the people that validate legal agreements) on the island. They should be able to help draw up the necessary contracts and guide you through the conveyance process.
Renting your property
For many, owning a home on Ibiza will mean there is a need to rent out the property to finance a mortgage or other borrowing. Until recently, a moratorium was in place and applications for tourist licences were suspended. This has since been lifted and applications are being processed once again. Robbie Gray of Villa Contact estimates that buyers can expect to pay a premium of 10% for a property with a tourist licence in place. For essential reading on the matter, an explanation of the current situation regarding tourist licence applications can be found here.
Building your own place
Views like these are why many people want to have their own Ibiza home
The price for a plot of rural land, with a licence for a building project, would typically start at a minimum of half a million Euros. A valid building plot would need to have a minimum surface area of 15000 metres squared and entitle the owner to construct a 320 metres squared house with pool. Similiarly, an urban plot of land would be a minimum of 1500 metres squared.
Much of the housing stock on Ibiza was constructed in the '70s and '80s from inferior materials and some older houses are beginning to show their age. Potential buyers should make themselves aware of the quality of the construction by contacting a local surveyor and familiarising themselves with the potential implications of building regulations for reform and renewal. In certain cases, it may be worth treating an older property as little more than a plot of land with a building licence - with the potential to pull down and redevelop.
It is also worth bearing in mind that the process of construction may realistically take up to 18 months from purchase to completion and that a new-build house would not qualify for a tourist licence until it is at least five years old.
Now you are all set to get started. Take a look at part 2 for our advice covering the technical and legal side of buying a property on Ibiza and see our real estate section for a more complete list of agencies.
Prices, exchange rates and information correct as of Jan 2023
Article edited and republished January 2023
