Balearic Islands
Balearic Islands show tourism capacity limits: Spain's fastest growth (4.0% in 2024) but residents need 60.8 years to afford housing—double national average.
The Balearic Islands represent Spain's most dynamic economy and its most tourism-dependent one—a combination creating paradoxes visible in housing data. GDP grew 4.0% in 2024 and 3.2% in Q3 2025, consistently leading or matching Spain's fastest-growing regions. Yet residents need 60.8 years to afford a home allocating 30% of salary—double the Spanish average. The islands' prosperity prices out the workers who deliver it.
Mallorca leads with 4.4% Gross Added Value growth, followed by Ibiza (3.3%) and Menorca (1.5%). Hotel accommodation grew 6.4% between 2019-2024, nearly double the national average. Employment concentrates on Mallorca and the Ibiza-Formentera axis, with 17,400 new jobs projected for 2025-2026. The unemployment rate could fall to 8.5%—impressive for a seasonal economy. This performance makes the Balearics the 11th-ranked region by nominal GDP (€44.7 billion) with per capita income of €36,093.
Yet the tourism sector is "nearing full capacity during peak seasons," creating structural limits. BBVA forecasts growth slowing to 1.6% by 2026 as the engine runs out of steam. Overcrowding, labor shortages, and housing access problems emerge when visitor flows exceed infrastructure capacity. The islands demonstrate a carrying-capacity constraint: success in attracting tourists creates congestion costs that reduce the quality drawing tourists in the first place. Unlike mainland regions that can expand supply through construction, islands face fixed land constraints that convert demand pressure into price pressure.