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Press release

Mallorca Zeitung - No. 935 - 5th April 2018, article by Frank Feldmeier

40 square metres suffice

Developers and investors have discovered the potential of micro-apartments in Majorca

and are presenting a project for 140 residential units. Yet the industry is complaining

about restrictive building regulations.

New real estate projects on Majorca are often touted with superlatives like “even more

luxurious”, “ever larger”, “an even better view”. In recent years, construction has focused

on villas and exclusive developments. However, most customers are looking for the exact

opposite of large and priceless: they want apartments that are smaller but affordable with

average Majorcan salaries. The chairperson of the association of developers on the

Balearic islands (Proinbar), Luis Martín, says: “There is practically nothing in the field of

40 sq m apartments, despite there being huge demand”. Investors are also extremely

interested; however are limited by the restrictive building laws on the islands.

The target group of buyers and tenants for micro-apartments is strongly represented on

Majorca in quantitative terms, even though they don’t have the deepest pockets. They

mainly include: people working in the tourism industry, who generally just want a place

to stay in season; young people looking for their first home; and individuals.

From Frankfurt to Palma

The interest of German investors and property developers has also been piqued, and

they have come together to present a project of 140 micro-apartments in Palma.

Mercurius Real Estate, a subsidiary of the Frankfurt-based financial service provider of

the same name, has already built and sold one-bedroom apartments in German city

centres. On the other hand, builder and property developer Domus Vivendi has been

active on Majorca for over 20 years; in particular in the luxury segment, with projects like

Elements in Puerto Portals.

The two partners consider the capital of the Balearics to be the ideal location for similar

projects like those in Germany. A press release states: “The city’s population, which is

growing at a steady rate is, as is generally the case in Spain, faced with a scarcity of

rented accommodation.” When it comes to the highest rents in Spain, Palma comes in

third position, behind only Madrid and Barcelona. That is why the company wants to apply

the concept of part-furnished micro-apartments to the Majorcan city. The planning

application is currently being prepared; they hope to receive planning permission from

the town hall in Palma in the first half of 2019. Details are yet to be announced.

Saturated German market

In addition to the expected demand in Palma, the project is also a response to the current

situation in Germany. Mercurius Real Estate believes that the real estate development

market is saturated, especially in the company’s home city of Frankfurt. The lack of

opportunities is increasingly drawing investors abroad. The company has revealed that

the development has an investment value of 40 to 45 million euros.

Luis Martín from the Balearic property developers association has also noticed an

increasing interest from investment funds acting across Europe in projects concerning

minipisos (micro-apartments). Majorca is following on from experiences with this model

in Germany and in Scandinavian countries. Martín has been a fan of micro-apartments

for a long time and is now seeing the first signs that Majorca’s politicians have recognised

the signs of the times. The chairperson of Proinba sees an opportunity for the municipality

of Palma in particular; as, in contrast to other districts, the city administration has chief

responsibility for building regulations - in other areas the building regulations are under

the authority the island council. The municipalities of Manacor, Inca and Alcúdia

represent other attractive locations for projects like this.

The main problem to date has been restrictions on building heights and the limit on the

number of residential units per area, explains Martín. The aim is not to cover the island

in concrete or to build along all the coastlines, but what is the problem with softening the

restrictions on Palma’s radial roads, for example?

Martín does not entertain the argument that empty real estate needs to be brought to

market before new buildings are erected. Most large apartments in the centre of Palma

are too expensive for the target group of micro-apartment residents. The demand is much

greater for smaller apartments of 35 to 50 sq m in size, and for one- or two-bedroom

apartments. They could be built in two- or three-storey buildings, with shared laundry

rooms and drying rooms. “Depending on the price of the land, apartments like this could

be brought to market at a price of 90,000 to 100,000 euros.” The possible range of rental

prices for minipisos is not yet known. The question of whether Palma is getting to grips

with the issue of holiday rentals remains unanswered. On the one hand, it is the reason

for the lack of housing; but it could - if the city plays ball - represent a great incentive for

micro-apartments.

About the Domus Vivendi Group

Over 30 years of international experience in the development and construction of high-

quality real estate; from the preliminary design phase through to the turnkey handover.

In Time - In Budget - In Quality are combined with extensive industry knowledge, many

years of experience and proven expertise. As part of project management, Domus

Vivendi plans, manages and monitors construction projects from their initial phases to

customer handover. The Domus Vivendi Group has a current project volume of over 550

million euros.

For further information, please contact:

DOMUS VIVENDI GROUP

Domus Vivendi GmbH & Co. KG

Roßmarkt 10

D-60311 Frankfurt am Main

Tel.: +49 69 920 2079 00

Email: info@dv-group.de

Web: www.dv-group.de