Investing in Ibiza: a year-round paradise for property buyers

Once famed solely for its summer parties, Ibiza has undergone a remarkable transformation in recent years. More than a summer hotspot, the island is increasingly recognised as a year-round destination for visitors seeking relaxation in the sun. And for those looking to invest in property within this haven, the lifestyle and financial gains can be substantial.

Data in Knight Frank’s 2024 Wealth Report underscores Ibiza’s appeal among high net worth individuals. The island sits comfortably within the top 10 luxury residential destinations globally in the Prime International Residential Index (PIRI) 100, with prime property prices rising by 12% last year.

Jack Harris, a Partner in Knight Frank's International Residential team with a decade of experience covering the European market, believes Ibiza’s evolution into a destination that offers “something for everyone”, combined with near year-round sun, is behind increasing investor interest.

“Ibiza’s strength lies in its ability to provide an escape from metropolitan life,” he explains. “It’s a place where one can recharge the batteries (yoga is a staple on the island), enjoy world-class cuisine and reconnect with nature - whether on the beach or in the heart of the island’s countryside.”

5 bedroom villa for sale in Cap Martinet, asking price €7,300,000

From flower power to modern luxury

Ibiza’s reputation as a party hub was solidified during the ‘flower power’ revolution of the 1960s when Europeans descended on the island, attracted by its welcoming vibe, natural beauty and superb weather.

While certain areas still pulse with nightlife, Harris notes a significant shift. “Luxury hotel brands like Six Senses and boutique residential residences are reshaping the island’s landscape,” he says. “Improved flight connections and a diverse range of activities that extend beyond the traditional summer season have made Ibiza a year-round destination.”

Harris continues: “The island’s year-round population has grown – many international families have made it their full-time home. Local cultural festivities, wellbeing workshops and annual sports events ensure there’s always something to enjoy, alongside activities like scuba diving, mountain biking, and leisurely evenings in town.

Rising demand and property prices

Demand for Ibiza properties among international buyers remains robust, and Harris says there are no signs of this demand dwindling. “Indeed, as the island continues to evolve to appeal to a widening audience, I expect demand to continue rising,” he predicts.

However, a shortage of supply, coupled with strict planning laws, has led to rising property prices. Knight Frank data reveals that US$1 million will garner buyers 50 sq m of luxury space.

Balearics' wealth tax overhaul

In a significant development, the regional government of the Balearics has announced substantial changes to its wealth tax. The threshold at which the wealth tax applies has risen from €700,000 to €3 million. This change, effective for 2024 wealth tax returns submitted in 2025, significantly reduces yearly costs for foreign buyers owning property in the Balearics, adding to their investment appeal.

Harris says, “Any fiscal changes such as these are seen as a positive move for international buyers whose decision-making is largely sentiment-driven and will only shine more of a spotlight on the allure of the Balearics.”

Seven bedroom villa for sale in Es Figueral, guide price €5,400,000

Investment opportunities in Ibiza

With luxury tourism flourishing, many investors eye Ibiza for rental property opportunities. “As well as providing an income stream, the island being within two hours by plane from most European cities means an owner can enjoy their property with ease,” Harris points out.  

For those considering purchasing, Harris advises buyers to first familiarise themselves with the island’s offerings through repeated visits. “With that said, there is strong activity on the island, so you may need to be prepared to move with relative speed if you identify the perfect home,” he warns.

“Understanding financing options and enlisting the guidance of experienced professionals is crucial, from obtaining an NIE number to finding an agent you like working with. Fortunately, we work closely with excellent professionals in the region who will be able to offer tailored advice.”