Who Owns the Apartments? When Companies and Funds Buy Up Mallorca

Who Owns the Apartments? When Companies and Funds Buy Up Mallorca

14.62 percent of sales in the Balearic Islands recently went to legal entities – what does that mean for daily life on the island?

Key question: Is housing on Mallorca quietly turning into an investment asset – and who pays the price for it?

Last year, according to official registry data, around 14.62 out of every hundred property sales in the Balearic Islands were to companies: real estate firms, investment funds and other legal buyers. In total, 14,633 ownership transfers were recorded in the Balearics; about 2,139 of these ended up in the hands of companies – roughly one in seven sold apartments. Compared with the previous year, the share has grown by just over two and a half percentage points, a trend also examined in Mallorca in the Stranglehold of Speculation: When Apartments Become Financial Products.

These are not just numbers in an official gazette. At the bakery on Passeig Mallorca, when the shop assistant hands over the bread, you hear the same worries as in the Santa Catalina neighborhood: young families saying that apartments are scarce and mixed-rent units are hard to find. On the Plaça Major retirees talk about rising additional costs, and tradesmen’s vans park in front of the café in Portixol – everywhere you feel that the housing market is changing.

What forces are driving this? Two factors stand out. First: return on investment. Rising prices make homeownership an attractive investment. Buyers can rent out — short-, medium- or long-term — or split units to generate multiple rental incomes. Second: tax considerations. Purchasing through a company can, in certain cases, be more favorable tax-wise than a direct private purchase, especially in the high-end segment. Regionally differing tax rates – in the Balearics and also in Catalonia relatively high charges are applied to luxury property purchases – lead buyers to optimize their structures.

The consequence: part of the supply shifts into the hands of institutional investors; apartments are increasingly held as pure capital investments. For neighbors this means less interaction, because the new owners are not necessarily local, an issue discussed in Almost every second property in the Balearic Islands in foreign hands – what does this mean for Mallorca? For tenants this often means higher rents and a smaller supply of freely available apartments.

Three points have so far been underrepresented in public debate: first, transparency about who really stands behind a legal entity. Second, the effect on the mid and low price segments – not only on luxury properties. Third, the practical feasibility of municipal interventions: how can municipalities react when the toolkit is fragmented?

The discussion needs to go deeper: it is not enough to talk only about percentage shares. We need reliable information on whether company purchases leave apartments vacant on a large scale, convert them to tourist rentals or turn them into units for short-term lets, as highlighted in Illegal Subletting in Mallorca: When Long-Term Tenants Become 'Inquilinos Pirata'. Often missing is a view of the chain reaction: when an investor buys numerous apartments in El Terreno, rents rise there — a dynamic covered in Buying and Renting in Mallorca: Why Prices Are Pushing Locals to the Edge — and What Could Help Now — as a result people look for cheaper areas, which puts pressure on other neighborhoods.

How could countermeasures be implemented? Here are some concrete proposals that are local, legally examinable and practical:

1. Tighten transparency obligations: Registers of beneficial owners should be actively usable. Municipalities and citizens need insight into who stands behind company purchases – not just the formal buyers.

2. Tax differentiation: An increased transfer tax rate for legal entities when buying residential property, combined with exemptions for neighborhood purchases by local cooperatives, would create incentives.

3. Purpose binding and use control: When an apartment is acquired by companies, conditions could apply: minimum rental periods for long-term lets or bans on splitting into numerous rented units without permission.

4. Use municipal pre-emption rights: Municipalities have instruments such as pre-emption rights; these should be used strategically to secure social housing and occupancy models.

5. Vacant-property levy: A municipal tax on longer-term vacant apartments could make holding flats purely as an investment less attractive.

6. Support for local buyers: Tax relief or low-interest loans for private buyers and housing cooperatives would strengthen the chances for residents with local ties.

In practical terms: if a municipality in Port de Pollença or Palma takes action, it needs reliable data, clear responsibilities and the political will to apply instruments. This is not simple, but it is possible – for example through coordinated measures between the island council, municipalities and the regional tax administration. Some political efforts have even considered involving higher-level institutions, as noted in Who Owns the Island? Sánchez Brings the EU into Play Against the Second-Home Boom.

On the everyday level: a boy on his way to school on Carrer de Sant Miquel asks why his friend soon has to go to a different school; his mother explains that the rent became too high. Such scenes show the human side of a statistic. Housing is not an abstract commodity, but the place where life happens.

Conclusion: The increase in company purchases is no accident and not merely a technical issue. It affects neighborhoods, prices and social balance. If politics and administration do not respond to the trend with transparency, targeted levies and support instruments, the island’s face will shift further toward an investor market. Those who want to avoid that must act now – with measures that are legally sound, locally enforceable and socially balanced.