Juanita Casanas

TBY talks to Juanita Casanas, President of Lionsgate Capital, Spain, about the real estate sector, property tax, and investment in Mallorca.

How has the real estate sector evolved over the last two years, and how has Lionsgate Capital adjusted its offerings for clients accordingly?

After the pandemic, there has been a significant boom in real estate. Many who had long considered property ownership suddenly made it a priority, especially after being confined to city apartments. The widespread embracement of remote work prompted a desire for improved quality of life, family time, and nature. This led to a major influx of buyers and permanent residents in places such as Mallorca, particularly among international families with businesses abroad. Many of these families now reside here full-time, with children attending local schools, while commuting back and forth for work a few days a week. Despite a recent increase of interest rates, buyers’ enthusiasm remains strong overall. The market is segmented across various socio-economic classes, with high-net-worth individuals arising as main investors due to a higher resilience toward interest rates fluctuations. Moreover, construction costs and property prices are increasing due to sustained demand, making properties remain more expensive than in previous years. Our target clientele is high-net-worth, typically starting from EUR 1 million. While most of our clients are English and German-speaking, Lionsgate Capital caters to diverse nationalities, including Europeans, Americans, and individuals resident in UAE, Hong Kong, and Singapore, amongst others. While there is an increase in American and international clients, Europeans still dominate, though this varies by region within Spain.

How have the advantages of acquiring properties in Mallorca evolved? Additionally, what key factors should investors prioritize when seeking potential investments?

While advantages of financing a property purchase remain consistent, many buyers in Spain may encounter unfamiliarity with local practices compared to their home countries. Thus, ensuring clients have accurate information before buying is crucial for making well- informed decisions. Tax benefits, especially for high-end properties and maintaining liquidity are still relevant. Unlike certain other countries, financing at the time of purchase is typically recommended in Spain. Diversification and higher returns continue to be key motivations for real estate investment. Our approach focuses on tailoring strategies to optimize each client’s investment and achieve the highest returns. It is important to recognize that these advantages can vary depending on factors such as client profile, property value and investment approach. A comprehensive understanding of each client’s unique circumstances enables us to provide tailored guidance for investment optimizing.

In 2024, there have been modifications to property tax regulations in the Balearic Islands. What implications do you anticipate these changes having on the real estate sector and investor interest?

While the wealth tax threshold has been raised, the tax itself remains in place, subject to potential changes with future political elections. Despite affecting long-term buyers, this uncertainty has a minor impact. Properties under EUR3 million are now exempt from the wealth tax, which benefits lower-end buyers; however, high-end property buyers still incur taxes. Thus, financing remains advantageous for tax reduction in the long term, providing stability amidst potential tax changes.

What trends or emerging opportunities should investors consider in the real estate market?

In Mallorca, investor interest has expanded island-wide due to high demand and limited property availability, resulting in a scarcity of bargains. While the southwest remains popular, attention has spread to the north and central regions, with investors exploring opportunities across the island. Client preferences and investment goals drive decision-making, whether it is for personal or investment purposes.

How does Lionsgate Capital approach the client’s journey through financing?

When it comes to mortgages, the nature of the investment varies significantly, whether it is residential properties, hotels, businesses, or other ventures. At Lionsgate Capital, we tailor our approach to each client’s preferences, financial circumstances, and investment goals, providing personalized assistance. While many clients initially purchase homes for personal use, they later explore investment opportunities on the island, such as property developments, businesses, or hotels, expanding their portfolio across various sectors and locations. Mallorca is a treasure due to its excellent connectivity and diverse appealing offerings, including a wide offer of international schools, Michelin-starred restaurants, boutique hotels and a thriving farm-to-table scene, which caters to a wide range of tastes. Its unique combination of sea and mountains captivates visitors, leading many to cherish their time here. Furthermore, Mallorca’s reputation for safety is a significant attraction, in particular for clients who prioritize Mallorca over other European destinations due to its perceived security. Choices regarding safety are made after thorough research and comparison.

Digitalization is gaining strength as a trend. What role will technology play in the future of real estate financing and investment in Mallorca?

Technology is omnipresent and continually progressing, particularly with advancements such as AI. Staying current is an essential part for integrating innovations that directly benefit our business operations. While technology is vital for automating routine transactions in high-volume businesses, our clientele consists of high-level individuals with intricate needs, making complete automation impractical. Our focus is personalized, bespoke services, leveraging technology to optimize daily operations and enhance client experiences.

What are your insights on the upcoming trends in Mallorca’s real estate and financial markets, and how is Lionsgate Capital preparing to adapt to these changes?

Lionsgate Capital closely monitors interest rate fluctuations, which are currently favorable in Spain compared to other countries. We anticipate further decreases in interest rates in the coming years. Additionally, alternative financing options, such as investment funds, are gaining traction, particularly for development projects and short-term financing needs. We advocate for Spanish lenders to embrace innovative products available in other markets, such as co-living, co-working, build-to-rent, and co-owning schemes, which have proven successful elsewhere. The expansion of financing options in Spain to encompass these emerging trends would be mutually beneficial for both investors and the overall market.

What is Lionsgate Capital’s final message for investors contemplating investments in Mallorca?

For anyone purchasing property or investing in real estate in Mallorca, understanding the differences between Spain and their home country is crucial. Regardless of their financial standing, knowing the most advantageous approach is essential. Lionsgate Capital stands ready to provide comprehensive information to potential buyers, ensuring they make informed decisions.