Buying commercial properties in Mallorca
John F. Kennedy once said “When written in Chinese, the word ‘Crisis’ is composed of two characters – one represents danger, and the other represents opportunity”. This statement also applies very well to the current market for commercial real estate during and after the COVID19 pandemic. While the luxury property market in Mallorca has proven to be very stable in all crises, the commercial property market is showing signs of weakness. Due to the crisis, many entrepreneurs had to close their companies. They mostly lacked the necessary liquidity to “still get through the winter” and wait for the new start in 2021. This leads to the “opportunities” described by Kennedy, to possibilities and perspectives for investors to make investments in Mallorca at a reasonable price level, to take over companies, to build up businesses – whether in the hotel industry, gastronomy, trade or services.
Are you interested in a commercial real estate in Mallorca? Do not hesitate to contact the experts from Minkner & Partner – in Santa Ponsa (+34 971 695 255), Palma (+34 971 425 016) and Port Andratx (+34 971 672 250).
Which commercial properties in Mallorca are particularly requested?
Well, on an island that lives predominantly from international tourism, hotel properties are the first to be mentioned. These are available in a variety of structures - as a large apartment hotel by the sea, a charming country hotel, a bread-and-breakfast house or a boutique hotel in Palma. While the larger hotels are mostly sought after by international funds, country and boutique hotels usually find the interest of individual investors. In the broadest sense, the group of hotel and accommodation properties also includes the group of villas and fincas licensed for holiday rentals, which are currently enjoying considerable demand.
Another important group are gastronomic real estates, which include restaurants, bars and cafés. Here, because life in Mallorca takes place “outside” for many months of the year, commercial properties by the sea with large terraces and in the popular holiday resorts of the southwest such as Port Andratx, Camp de Mar, Paguera, Santa Ponsa, Portals Nous, Illetas, Cala Major and Palma are in demand.
Palma's shopping streets and resorts attract an international audience. Here you can find shops selling international brands as well as traditional shops, galleries or young shops offering inventive products and goods from young companies and start-ups. Thanks to the price calming it is now also possible for start-ups to establish themselves here.
There is also a very good, wide range of office space available for the service sector. Here, too, the timing is right and the purchase prices have been adjusted after many freelancers and service providers discovered the home office as a new form of work during the pandemic crisis. And finally, Mallorca's “poligonos”, the business parks, also have a good supply of halls and storage space.
Taking over commercial properties through “traspaso”
A special Spanish variant of the takeover of a commercial property is the so-called traspaso. This is a contract between the previous holder of the business and the prospective successor. With this type of contract, the acquirer enters into the (usually long-term and with favourable conditions) rental contract of the previous holder and takes over the business equipment, the furniture and possibly also the inventory. The landlord/owner of the commercial property must accept the tenant, but may increase the rent by 20%. Often the landlord and tenant have also agreed that the landlord will share the traspaso fee with a certain quota. Many contracts exclude the possibility of transferring the rights and obligations to a third party through the traspaso. For this reason, the rental contract between the owner and the last holder should always be studied thoroughly before any serious contract negotiations. In this respect, it is also advisable to consult an experienced lawyer or tax advisor. A traspaso contract requires the notarial form.