Mastering Real Estate: An Interview with Florian Hofer, Managing Director Engel & Völkers Balearics
When mentioning Engel & Völkers, their name is immediately associated with the real estate market. The German brand is undoubtedly one of the most popular real estate agencies across Europe and their reputation precedes them wherever they have an office and a business. The history of Engel & Völkers began in Hamburg in 1977 and thirteen years later, in 1990, they opened their first office outside of Germany, in Palma de Mallorca, where they currently have more than 19 offices and are leaders in the luxury real estate sector on the island. After these forty-seven years of history, Florian Hofer is today the Managing Director of Engel & Völkers Baleares. Florian Hofer is a professional with a degree in business administration and accountancy, who has been linked with the brand for more than fifteen years. In this interview, Florian talks about the journey of E&V and the current state of the real estate market in the Balearic Islands.
As Managing Director of E&V Baleares, how would you describe the current real estate market of the Balearic Islands to someone new to the islands?
I would describe it as a highly valued and robust market. Turbulent times reveal whether a market has been correctly or excessively valued. The market in the Balearic Islands may seem high, but evidently, the quality and price-performance ratio fits.
E&V has become a benchmark in the Balearic Islands. How do you manage to stay on top year after year?
I believe a crucial factor is that we have maintained and constantly improved the quality of our services for 30 years. Unfortunately, this is not always easy in our sector. The highest quality standards and the company’s image attract clients as well as partners such as lawyers and developers, among others. All this has paid off over the years.
What do you think of the post-pandemic real estate boom on the islands, and where do you see it all going?
The pandemic brought about significant changes. The whole situation provoked a lot of reactions from people. I believe many clients are now coming to the Balearics more consciously, wanting to experience the Mediterranean lifestyle as part of their life, not just as a short holiday or retirement destination. The Balearic Islands make this possible. It’s not just about going on holiday for two weeks a year; you can have your primary residence in the Balearics and enjoy the daily benefits with your family. I think this will continue to fuel the market in the coming years, especially as the climate, infrastructure, lifestyle, and of course, the quality of construction is very high in Mallorca.
What would you highlight from a family perspective in each of the Balearic Islands? (Mallorca, Ibiza, Menorca, Formentera)
Mallorca – International schools, a year-round destination
Menorca – Secluded and tranquil family holiday
Ibiza & Formentera – Bohemian and upscale lifestyle
Could you explain how the profile and nationality of your clients have evolved since E&V opened its first branch in Palma de Mallorca in 1990?
Our clients have become somewhat more international. In the beginning, we had almost exclusively German clients; today, they are still our most important buyer clientele, but we also have many Spanish, Swiss, Austrian, British and in recent years, increasingly more Scandinavian clients. We also see good demand from Eastern European countries. American clients have also become more common in recent years. In addition to the growing internationality, the demographics of our buyers have also become younger. People are considering buying a property in Mallorca not only after retirement, but much earlier. It is worth mentioning that it is now more common for people to move their main residence to Mallorca rather than just buying a holiday home. The fantastic school infrastructure and excellent airport connectivity make this possible.
Taking into account the competitiveness of the market, can you highlight any innovation or plan that E&V Baleares has introduced to attract and retain clients?
I believe many measures and conscious decisions in recent years have led to our market position. A very important aspect is that we are, for example, the only real estate company in the Balearic Islands that covers all the islands and essentially all the areas on these islands. We have set ourselves a simple goal: we market everything that is beautiful. As for the rest, we have imposed no restrictions on ourselves. We have distributed this responsibility over many shoulders. The markets in the Balearics are very different. We currently have around 3,000 properties on the market. One person or a handful of people cannot be experts in the entire market. We have teams in each region, which allows us to maintain a high-quality standard. It would be easier and cheaper to operate from Palma with a large team covering all of Mallorca, but our concept is different. We have 23 shops across the Balearics, with local roots but with our global network. This is quite unique…
How does E&V Baleares deal with each regulatory change in the real estate sector?
Firstly, we believe that a society and a market need certain regulatory frameworks. Housing is an essential good, and this is an area in which politics must set the tone. A few years ago, we founded ABINI, the Balearic Association of Real Estate Agencies, to try to make a constructive contribution to the real estate debate through the association. I also believe that it is part of a reputable service to fully inform clients from a legal point of view. With our extensive network of lawyers and tax advisors, and our own expertise, I know that our clients receive comprehensive advice.
What is your view on the role of financing when purchasing a house in the Balearics?
External capital is as important to real estate transactions as equity and it is extremely relevant. Circumstances are sometimes a bit different here in the Balearics compared to other real estate markets. Most of the time external capital is used simply because, at the time of purchase, the necessary capital is not available. Therefore, the money is borrowed and secured with the property. However, in the Balearic Islands, it is often the case that the capital is available, but you also want to invest the capital, and if you invest in illiquid assets, you also need external capital to acquire a property. Either way, external capital is an important part of the real estate industry.
Taking into consideration that collaboration in the Balearic real estate landscape is crucial, how does the partnership between E&V and Lionsgate Capital enhance the client experience by combining our strengths to offer comprehensive real estate and financing solutions?
Mortgage brokers like Lionsgate Capital, offer not only a wide range of solutions to optimize residential and business investments but also let clients have the certainty of receiving an independent assessment and solution. After all, this is the same approach that Engel & Völkers has and that’s why we are such a great team.
What advice would you personally give to investors who want to purchase property on the islands this year?
An analysis of sales prices segmented by region and property type focusing on listings above 500,000 euros, paints a picture of stable or rising prices in 2023, with regional differences reflecting local market dynamics. Mallorca is moving towards its consolidation as a prime destination for private and business property investment. I also recommend buyers contact Lionsgate Capital’s financing experts, who have in-depth knowledge of the mortgage and finance sector in Spain. The Lionsgate Capital team can help buyers optimize their property investment with the best financing solutions.
What is your favorite Sunday plan in the Balearic Islands?
Take a hike organized by Mallorca Preservation Foundation with the family to discover the beauty of that “hidden” Mallorca or stroll along Portixol and enjoy the gastronomical offering of the area, whether it be an aperitif with sea views or a good lunch in one of its trendy restaurants.
Interview by Juanita Casanas and Drew Aaron
President and Chairman of Lionsgate Capital
Their goal at Lionsgate Capital is to create unparalleled solutions for the most demanding clients and create value through service, making Lionsgate Capital the major player for financing in the Balearic Islands and mainland Spain.
