Developing in Mallorca, Menorca, Ibiza or Formentera has its own conditions, and lenders take them seriously. Here is what a bank or fund typically looks at when assessing a project in the islands and how to prepare yours.
What makes it different
- Land and planning: fully serviced land is scarce, and the Balearic planning law (Law 12/2017, LUIB) and each municipality's planning affect what can be built. Confirming use and buildability with the town hall is step one.
- Licences: processing times vary widely between municipalities and lenders build them into the project timeline.
- Construction costs: island logistics (materials transport, labour availability) tend to push costs above the mainland average, and the budget should reflect it.
- International demand: part of the buyers are foreign. This affects how pre-sales are evidenced and closing timelines; have it documented.
- Asset types: besides residential there are hotel, refurbishment and mixed-use projects that local banks treat case by case.
What lenders typically ask for
- Confirmed permitted use and licence status.
- A recent approved valuation (Orden ECO/805/2003).
- An itemised construction budget consistent with real island costs.
- Track record of the developer and shareholders, and their equity contribution.
- Sales plan and expected prices.
- Drawdown and repayment schedule.
Typical structure
For mid-sized projects it is common to combine a bank tranche with alternative capital to complete what the bank will not cover, with the developer contributing its share of equity. From Palma de Mallorca we work on projects from €500,000 of financing and assess within 48–72 hours whether a tiered structure fits. See the general explanation in development loan in Spain and alternative finance.
Common mistakes
- Presenting the project without confirmed planning use, or with a licence application and no realistic timeline.
- Using a national-average construction budget without adjusting for the island.
- Going to lenders with an old valuation or an unclear reference date.
- Mixing unconsolidated information from several entities in one dossier.
Frequently asked questions
Do banks finance developments in Mallorca?
Yes, local and national banks finance developments in the Balearics under the usual criteria: equity, pre-sales and security. Projects with planning risk or unusual asset types are examined more cautiously.
Can a hotel project in the Balearic Islands be financed?
It is possible, but assessed case by case: the lender looks at planning status, licence, operator and business plan, and usually requires a different structure from residential.
What project size do you work with?
We work with projects from €500,000 of financing, residential, hotel or mixed-use, and give a feasibility answer within 48–72 hours.
The figures in this guide are indicative market ranges: they change with timing, lender and developer profile. Every transaction is assessed individually and this page is not an offer of finance.
Do you have a project that needs financing?
Tell us the basics and receive a feasibility answer within 48–72 hours. No cost until closing; the success fee is only payable if the transaction closes.
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