Ibiza Real Estate Market and Investment Insights July 2023

 

The Ibiza 2023 peak season is now just about to cross its meridian and probably a good moment for a half time report on what is the season looking like and what is happening around the island.

The feeling is that while the year has started strongly in terms of visitors and spend the holiday season understood as June to September is a little patchier and lumpier with what seems to be fewer tourists and lower occupancy. Hotels will probably see higher ADR’s but with lower RevPar’s and there seems to be some discounting on prices seen earlier in the year.

The vacation rental market is also seeing similar flows with lower than usual occupancy and a number of price offers being launched to attract last minute bookings.

Prices have increased sharply in recent years and the market is simply re adjusting. This is healthy and necessary to maintain a certain equilibrium Overall we view this a positive , the saturation seen in peak months was far too overstretched and a longer more evenly distributed season works very well for everyone and provide for a much higher quality experience.

The real estate market in Ibiza remains strong though as expected house sales are slowing and real prices should start to consolidate in coming quarters. While high quality offer is still fairly limited there seems to be a little less FOMO and a little more time to take decisions and the market is becoming more demanding in terms of value for money. 

We do not expect to see significant prices falls, just slower transactions and an overall consolidation.

The investment climate remains robust with solid demand from investors and players, the most prominent being the sale of the Pacha Group (excluding the Lio Cabaret restaurants) for an undisclosed sum.  The seller are investors led by Trilantic Europe who purchased the company in 2017 from its founder Ricardo Urgell.  The buyer is the Dubai based Five Holdings, a real estate and hospitality group.

The W hotel in Santa Eulalia, owned by investors represented by Scala Capital  the  has been sold to the Italian Statuto Group further underpinning the demand for assets on the island.

We believe we are about to enter a stage of consolidation across the board and across island,  albeit with a reasonably strong undercurrent of demand at a price.

Not a bad time to be positioning! 

What happening in Ibiza these days ?

Some more movement in the hotel space

The Italian Statuto group has purchased the W Hotel in Santa Eulalia Ibiza from a group of investors led by Scala Capital.

The hotel with 125 rooms & 37 suites is located on the beach in Santa Eulalia and is managed by the W Hotel brand of the Marriot Portfolio. The hotel has been operating under the the brand since 2019 after a significant refurbishing of what used to be the Orquidea Aparthotel.

The Statuto Group led by Guiseppe Statuto, and owns flagship trophy hotels including the San Domenico in Taormina, the Danieli in Venice or the recently opened Palazzo di San Marcello, managed by the Six Senses in Rome.

Pacha Sold!

Ok, so it finally hapenned! Pacha Group, the renowned nightlife conglomerate, has been sold change to the Dubai-based company FIVE Holdings. The deal was struck between FIVE Holdings CEO Kabir Mulchandani and the previous owners, Trilantic Capital Partners. Trilantic will retain ownership of the club brand Lío, known for its cabaret shows and fine dining experiences.

FIVE Holdings, previously known as SKAI Holdings before rebranding in 2017, is a prominent Dubai-based real estate and hospitality group.

Trilantic led a group of investors in 2017 purchasing a large majority from the founder Ricardo Urgell for an undisclosed sum. Unconfirmed press report indicated at the time at total valuation figure between €275 and €350 million. At the time the group had no debt

The sale to Five Holdings doesn’t include the Lio Restaurants which currently contribute to a little over 1/3 to group EBITDA. The value of the transaction has not been officially disclosed though some press reports are juggling a €300 million price tag.

This change of hands from financiers to hospitality professionals is no doubt a promising sign. Perhaps more expansion plans going eastward whilst maintaining the current main brand engine as it stands. At some stage, Trilantic will sell the Lio Cabaret Club, which is very profitable, though with a Damocles sword hanging over it as the lease at the flagship Ibiza venue runs out in a couple of years. Exciting times!

Movements in Privilege?

So what is the rumor mill churning out these days? The iconic venue in San Rafael, Privilege, formerly the legendary KU, and now in the hands of the Matutes group is a buzzy subject. The renovation works are underway and seem to be led by the brainchild of Hï and Matute’s partner The Night League responsible for positioning the club to the undisputed top of the international club league and the creation of the very successful Ushuaïa day club. There is much speculation that it will renamed Space Ibiza after the iconic club created by Pepe Rosello which closed in 2016 and whose trademark is in dispute, but that is only hearsay for the moment what does seem a little more firm is the content will be geared around live music which would be a wonderful addition to the current island musical offer and would fit nicely into the portfolio without creating any cannibalism.

What is sure is that Yann Pissenum will put his magic to work so get ready for a mindblower for the 2025 season!

A couple of international brands land on the island

Designed by The MAINE’s Founder, Joey Ghazal, the 18th-century ‘white washed’ parish has been restored to feature vintage Spanish Colonial pieces sourced from mainland Spain, amongst a beautifully curated garden. MAINE Ibiza will also open through the day, offering a blackboard menu of vibrant, healthy bowls, vegetarian & vegan options, and Mediterranean market platters using all fresh and locally sourced produce. With three restaurants in Dubai, and its first international outpost in the heart of London’s Mayfair, which opened in 2021, the brand is now looking to conquer another European hot spot, opening on the famed White Isle in June.

Founded by Arkady Novikov, the group initiated its international expansion in 2011 with the opening of its Mayfair restaurant, in Miami, Sardinia, Doha, Bodrum, Istanbul & Jeddah followed, and now opening in Ibiza. The Pan Asian restaurant is neatly nested into one of the corners of the luxury Ibiza Gran Hotel in the heart of Ibiza Downtown.

A new Beach Club Playa Soleil

Playa Soleil, a collaborative project between the teams behind Ushuaïa and Hï Ibiza, as well as the lifestyle company that includes ROTO and Beso Beach, will be set in a beautiful beachfront on the legendary Bora Bora beach club site.

Lets check some of the recent figures for the real estate market

A few words about politics…

The center right party PP (Partido Popular) obtained a majority in all the Ibiza municipal election in May this year, the insular government, The Consell d’ Eivissa and secured governing the autonomous Balearic government, el Govern.

This has strongly reinforced the capacity to execute their program with little hindrance and hopefully address some of the pressing issues the island has. No excuses this time round and there is sufficient gunpowder in the budget.

On the 23rd of July, the country will be holding a general election, pools are indicating a PP majority but will most likely need the support of the more extreme right-wing party VOX, viewed as unsavory by many including within the PP itself. The left progressive block led by the socialist PSOE and the more leftist amalgamation of parties under the SUMAR brand look like they will not add up to an absolute majority and the odd 10% of the remaining seats will go to the smaller nationalist and independence parties. 350 seats are in play with the absolute majority at 176.

Keep your eye on…

• 

• 

• 

Something has got to start moving around these venues at some point

Ibiza in the press

Next Issue September 2023