In a move that could reshape the urban planning landscape of the Balearic Islands, the regional government led by the conservative Partido Popular (PP) has agreed to key demands from right-wing Vox party to allow the reclassification of rural land for residential development — a controversial decision soon passing through the Balearic Parliament.

A political trade-off to address the housing crisis

The new policy, embedded in a legislative decree awaiting ratification, opens the door to converting so-called “transition zones” — currently categorised as rustic land — into land eligible for urban development. The change will only apply to municipalities with populations exceeding 20,000, and the final decision to rezone will be up to individual municipal councils.

This measure forms part of a broader set of amendments designed to tackle the acute housing shortage affecting the archipelago — one of Spain’s most overheated property markets. The government has pledged that 50% of any new homes built under the scheme must be designated as subsidised housing (VPO) or subject to capped pricing, and developers will also be required to cede 15% of total building potential to town halls for public housing initiatives.

Key municipalities in the spotlight

If passed, the rule could significantly impact several larger municipalities in Mallorca, including Palma, Calvià, Marratxí, Llucmajor, Alcúdia, Inca, and Manacor — areas already experiencing intense demand for housing.

José Luis Mateo, regional housing minister, defended the plan as a necessary intervention in the face of growing housing pressure. “These modifications are designed to make more affordable housing possible in a context of clear residential emergency,” he stated.

Strategic urban developments expanded

Alongside the rural land reforms, the agreement also expands the scope for building on already urbanisable land. Originally confined to Palma under the “Strategic Residential Projects” (PRE) scheme, the initiative will now be available to any municipality in the region with over 10,000 residents. However, such developments will remain subject to approval by the relevant island council (Consell Insular).

This wide-ranging change will significantly increase the potential volume of new housing across the Balearic Islands, including on smaller islands such as Menorca and Ibiza, where growing tourism and foreign investment have drastically reduced housing affordability.

A contentious balance of development and preservation

While proponents frame the measures as critical for solving the islands’ worsening housing affordability problem, critics warn that reclassifying rural land risks triggering overdevelopment, environmental degradation, and creeping urban sprawl — all at a time when the Balearic territory is under increasing strain from mass tourism, climate pressures, and resident discontent over rising costs of living.

As with many regional policies negotiated across ideological divides, the long-term consequences will likely rest on how local councils choose to implement — or resist — the powers now being placed in their hands.

The latest figures from Spain’s notaries offer a revealing snapshot of where foreign buyers were purchasing property in 2024, broken down by nationality and region.

Two maps help visualise the story, each showing the top two foreign nationalities buying in each Spanish region—one for non-residents (on the left) and one for resident foreigners (on the right).

A tale of two markets: Residents vs. non-residents

The data is split between non-residents—foreigners buying property in Spain while living elsewhere—and residents, who already live in Spain when they purchase. These are fundamentally different markets: one focused on second homes and investments, the other on homes for everyday life.

The resident map tells a familiar story of immigration patterns. It’s dominated by Romanians and Moroccans, who form part of the largest immigrant groups in Spain and tend to buy property where they’ve settled. Romanians come out on top in much of the north and centre of the country, while Moroccans are number one in several southern and eastern regions.

However, there are notable exceptions. The British are still a force in the resident market, taking a podium position in Andalusia, Murcia, and the Balearics—regions with long-established British expat communities.

The holiday-home market: Who’s buying from abroad

The non-resident map, on the other hand, is a colourful mosaic of second-home preferences shaped by climate, connections, and tradition.

As expected, the British maintain strong positions, topping the table in Andalusia and Murcia, and coming second to the Germans in both the Balearics and the Canaries. But there’s been a notable shift in the Valencian region, where the Dutch and Belgians have pushed the British off the podium altogether—a surprising development given the historical dominance of UK buyers there.

The French remain influential close to the border, taking first or second place in Catalonia, Navarre, and Aragon, while the Germans are a strong second behind the French in the same regions and hold top spots in the Balearics and Canary Islands—two of Spain’s biggest tourist markets.

But the real headline is the rise of the Americans. Once barely visible in the data, US buyers now top the list in five regions and come second in another two, putting them on the podium in seven out of Spain’s seventeen regions. That puts them level with the French for total podium appearances, despite having the Atlantic Ocean and a time zone or two to cross.

They even share the podium in Madrid with the Chinese, suggesting that while Beijing and Washington may be locking horns in a trade war, their citizens can agree on one thing: property in the Spanish capital is worth the investment.

With US demand surging in recent years, it remains to be seen whether a potential Trump 2.0 presidency will accelerate or reverse that trend. Either way, Americans have clearly arrived on the scene—and they’re buying.

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