Legalizations on rural land have boosted building permits in 2025
Architects have also noted that the war in Iran could increase construction costs, but they do not foresee a decrease in demand; on the contrary.
PalmBuilding permits issued in the Balearic Islands increased by 27.9% in 2025 compared to 2024, a growth driven, in part, by the extraordinary legalizations of buildings on rural land approved by the Balearic Government, as the Official College of Architects of the Balearic Islands pointed out this Tuesday. In this regard, during the presentation of the Housing Observatory held this Tuesday at a press conference, experts indicated that without the effect of the extraordinary legalizations, the increase would have been 5.7%, meaning there would have been 22.2% fewer projects. They explained that this increase is linked to the extraordinary regularization processes for buildings on rural land provided for in Decree Law 3/2024 and Law 7/2024, concerning housing and administrative simplification, respectively.
The growth in construction activity is occurring against a backdrop of high structural demand for housing, especially in urban and coastal areas. The combination of sustained demand, limited supply, and rising construction costs continues to put upward pressure on housing prices, making it difficult for a significant portion of the population to access housing.
The war in Iran could increase costs, but not curb demand.
On the other hand, the College has warned that the war in Iran could affect housing construction in the Balearic Islands due to the increased cost of materials, although it believes that demand could remain stable or even increase. This was stated by the Dean of the College, Bernat Nadal, who explained that the increased price of materials resulting from the conflict could raise costs for construction companies and make building more expensive. However, Nadal pointed out that housing demand might not be affected or could even increase due to the possible transfer of capital from areas of the Middle East to markets considered safer, such as Europe. Regarding the potential price increase for the construction of subsidized housing, the Dean of the COAIB clarified that only privately developed housing will be affected. He explained that the increased costs and the potential market downturn could negatively impact developments by private companies, but, in his opinion, the public housing stock will continue to grow normally if tax revenue increases.