IBIZA Prime Real Estate Market!!

1st Semester 2016 Report !!

Snapshots

www.housesinibiza.com

www.housesinibiza.com

8th September 2016 Dear Friends, Clients and Customers, !We are now at the tail end of the season and with this perspective at hand and data for the season starting to emerge, we can safely conclude that in 2016 will be another strong year in terms of visitors and average spend. !The island is experiencing an increase of some 15-20 % in the out of season and the low and mid season visitors, which is good news, and means it can expand beyond the June-September season. !Our June to September season will also see record numbers again this year increasing by a forecast of 10-12%. !There are several luxury hotel projects underway, most will be on the market in 2017, increasing capacity significantly in the 5 & 4 star segment, albeit from a low base (less than 5% of the beds are 5 & 4 star), and house sales have increased significantly in recent years (over 50%). !Politically, the recent change in local government has meant, at least for the moment , an even stricter approach to planning and housing legislation. !Building and refurbishing permissions have been cut back, meaning the available legalised offer is, evermore scarce, and consequently this is driving prices higher. !Land to develop has become even more restrictive, and again those with actual planning permission have increased considerably in value. !The prime real estate market remains buoyant and we expect home sales to increase and prices to rise again in 2016, following the trend established in the past 3-4 years. Demand is mostly foreign and mostly cash buyers. !The vacation rental market again is expected to be strong this year and is now consolidating attractive rental yields for buy to let investors with net yields of around the 4-5%. !Prices can vary, but for prime quality real estate, expect to pay over € 4 mm for a 480 m2 finished product in the countryside with a large plot (30,000 m2 plus) or a similar sized house albeit on smaller plots (5,000 m2 minus) with a sea view and close to the sea. !Prime “fincas” to be rebuilt or refurbished depend largely on licenses, but again expect to pay between € 2-2.5 million and budget for building costs of € 2500/m2. !Good sized plots in prime locations with an active license to build can command prices of over € 2mm. !A frontline luxury apartment with some 150m2 with sea views on the golden mile in Ibiza town costs upwards of €1.5 mm !As it stands, it is still pretty much a sellers market! !! Clive Heathcote Houses in Ibiza

IBIZA Prime Real Estate Market!1st Semester 2016 Report !

!Summary

1st Semester 2016 Passengers

!Confirmed! the season is expanding. !

On course for another record year +15% YTD. !Over 100 private jets a day in season. !

Passengers include both inbound and outbound !Also included are resident passengers. !!

Passengers2016

Passengers Change % Aircraft Change %

July 1.312.955 11,0% 12.730 9,8%

June 1.067.182 15,1% 9.434 7,4%

May 1.562.351 18,3% 7.152 13,1%

April 341.394 14,5% 3.954 23,6%

March 194.460 18,2% 2.610 34,6%

Feb 128.862 14,1% 1.815 28,8%

Jan 126.758 19,1% 1.995 40,0%

Accumulated2016

Passengers Change % Aircraft Change %

July 3.942.488 14,9% 39.690 14,5%

June 2.629.533 17,0% 26.960 16,8%

May 1.562.351 18,3% 17.526 22,6%

April 791.474 16,0% 10.374 30,1%

March 450.080 17,2% 6.420 34,5%

Feb 255.620 16,5% 3.810 34,4%

Jan 126.758 1.995

2011- 2015 Passengers

!!!!Passengers have been steadily increasing in recent years. !

15% increase since 2011 !!!!!

0

1.600.000

3.200.000

4.800.000

6.400.000

8.000.000

2011 2012 2013 2014 2015

6.477.2836.212.1985.726.5795.555.0485.643.180

Passengers

1st Semester 2016 Tourists

!!

!On course for another record year in tourist arrivals

+11.3% YTD. !We understand that the figures for Benelux are mistaken and have erroneously been booked in the ROW figures.

(Last year Benelux was some 80,000) !Increase in UK, and sharp increase in France,Italy &

Germany. !The domestic market Spain falls by 15%.

Tourists2016 June May April March February January Accumulated % Total

Total 463.307 343.912 136.077 68.476 26.196 27.221 1.065.189

Spain 77.246 50.019 46.416 46.006 18.382 22.580 260.649 24,47%

Foreign 386.062 293.893 89.662 22.470 7.813 4.641 804.541 75,53%

France 24.302 21.159 10.515 ... ... ... 55.976 5,26%

Italy 59.428 46.363 17.920 ... ... ... 123.711 11,61%

UK 159.280 99.389 21.109 10.961 2.226 2.010 294.975 27,69%

Germany 56.180 62.224 9.547 4.771 ... ... 132.722 12,46%

Benelux 6.462 6.963 2.464 ... ... ... 15.889 1,49%

Scandinavia 2.378 1.314 ... ... ... ... 3.692 0,35%

ROW 78.032 56.482 28.106 4.271 ... 166.891 15,67%

2010- 2016 Tourists

!!

!!The island has experienced a sharp increase in tourists

growing by over 56% between 2010 and 2015 !2 016 looks to increase by some 10-15% higher than 2015 !!The island is probably close to full capacity in peak season !!

Low and Mid season visitors has grown significantly

0

600.000

1.200.000

1.800.000

2.400.000

3.000.000

2010 2011 2012 2013 2014 2015 2016 ytd 7

1.647.370

2.786.1622.733.558

2.447.5752.334.6922.378.967

1.780.685

Tourists

!Home sales

!!

!!Home sales 1Q 2016 shows an 9% increase on 1Q 2015 !

Sales continue to show growth and we expect to see again an increase this year !

Prime real estate is seeing the strongest growth with mostly foreign can buyers. !

The UK and the Benelux lead the market with good growth from Swiss and American buyers. !

Home sales

1Q 2Q 3Q 4Q Total %

2016 429 - - - -

2015 395 494 362 744 1.995 +16.5%

2014 416 424 325 547 1.712 +47%

2013 200 281 269 412 1.162

1st Semester 2016 Housing Stock

!!

!Housing stock has diminished somewhat in the past year. !

Average prices are the highest in Spain and have been trending upwards in recent years after somewhat stagnant

pricing during the financial crisis in Spain !!Prime real estate again has seen thew bigger increase. !Total housing stock on the island is some 70,000 units. !

Houses for Sale Units Average price € / %

Listed Internet 1709 4145

Houses 618 4669 36%

Over € 1,5 mm 224 6388 13%

Over € 2 mm 153 7095 9%

Over € 3 mm 67 9124 4%

€ Value building permits Residential

!!The € value of build permits has been steadily rising in

recent years as a reflexion of the sharp increase of purchase in the prime real estate market. !!!

2016 year to date (March) looks set to consolidate last years levels. !!

0

40

80

120

160

2011 2012 2013 2014 2015 2016 ytd

38

148

85

646652

€ mm Value projects

Building permits Residential

!!!Building permits also have been increasing sharply in

recent years with 2015 more than doubling 2012 figures. !2016year to date (April) looks to slightly increase the 2015

figure. !!!!

0

120

240

360

480

600

2010 2011 2012 2013 2014 2015 2016 ytd

145

414

260200

251

180

518

Residential building licenses

Real Estate Prices !

Ibiza

Real estate prices in Ibiza are hard to track and can vary enormously over the island and the product range. Only one thing is clear, and that is that prices not cheap on the island and very probably will become more expensive in coming years. !We estimate that prices have risen some 10% in the last 12 months and some 20-25% in the past three years for prime properties . Our forecast is that prime properties will continue to see price increases in the region of 15%-25% within the next coming years. !Prices in prime properties did not suffer significant price falls during the financial crisis in Spain which bought down house prices on the continent by as much as 40-50%. Here prices in prime, dipped a little and then stagnated during the crisis and since have picked up significantly. !Very strict urban planning laws, limited building permits, very scarce supply and increasing demand will continue to pressure prices upwards. !Prime country side 500 m2 build with 25,000 m2 plus size plots- €4 million plus. !Prime seafront/views 500 m2 build with 2000-5000m2 plots- €4 million plus. !Prime country side land plots with 25,000m2 plus with an active license to build 480m2- € 2 million plus !Prime country side farmhouse to reform/refurbish with plots of 25,000m2 plus with licenses- € 2,5 million plus !Prime apartments (Paseo Maritimo Ibiza) with sea views 200m2 plus- € 2 million plus.

!Ibiza figures

!!

The Island has some 571 km2 , with over 200 kms of coastline, over 50 beaches, and its highest elevation point is Sa Talaia with 475 m, !The island is split into 5 municipalities Eivissa (p 50,000 circa), Santa Eularia, (p 36,000 circa), Sant Antoni (p 24,000 circa), Sant Josep (p 26,000 circa) Sant Joan. (p 5,000 circa) !Total population is 141,000, of which 35,000 are foreigners. !There are some 70,000 housing units on the island. !The island generates some € 2,500 million in tourist expenditure. !75% of the economy is related to tourism.