The Canary Islands, which are the territory of Spain, located in the Atlantic Ocean just off the west coast of North Africa, are sometimes also referred to as the “Islands of Eternal Spring”: The warm climate all year round of around 25 degrees, together with endless sandy beaches and richly diverse natural surroundings attract many sun worshippers from Central Europe in particular. But the islands, including Tenerife and Gran Canaria, are not only popular holiday destinations. They are also increasingly in demand as primary places of residence. “More and more holidaymakers who used to just travel to the Canaries during the European winter are now looking to live here all year round. The lines between first and second homes, and work life and recreational time off are becoming increasingly blurred. This trend has emerged in the wake of the pandemic, and remote working will continue to drive the positive dynamics of the Canary Islands real estate market moving forward,” says Juan-Galo Macià, CEO of Engel & Völkers Spain, Portugal and Andorra.
Canary Islands: Real estate in demand all year round
Tenerife is most sought-after residential location
The seven main inhabited Canary Islands are Tenerife, Gran Canaria, Fuerteventura, Lanzarote, La Palma, La Gomera and El Hierro. There are also various other smaller islands that make up the Canarian archipelago. Although the islands are geographically close to one another, they vary not only in terms of their different landscapes but also when it comes to their respective real estate markets.Tenerife, the largest island of the Canary Islands in terms of surface area, recorded the highest average sales prices and prices per square metre in the Canary Islands in the first half of 2022. The coastal region of Costa Adeje in the south of the island once again retained its top position as one of the most desirable and exclusive residential areas on the island in 2022. A luxurious lifestyle and a wide range of recreational amenities, including excellent golf courses, attracted international buyers in particular to the region, who accounted for around 71 percent of the overall transaction volume. In very good locations, like the exclusive gated community known as the Abama Resort, the average price per square metre was 6,500 euros. Exceptional premium properties commanded up to 10,900 euros per square meter in this area. Villas directly on the coast in a traditional style with contemporary fittings and close to a golf course are in especially high demand here. Such properties sold for an average of approx. 2 million euros. Luxury villas with exceptional features commanded top prices of up to 6.8 million euros.
Santa Cruz, the capital of Tenerife ever since 1833, enjoyed equally high demand in the first half year of 2022. The picturesque port city is known for its exotic atmosphere, its historic and contemporary architecture, and its green open spaces. As a result of the great interest in buying, prices per square metre increased to 2,640 euros in the first half of this year (2021: 2,195 euros per square metre). Engel & Völkers registered particularly strong demand for existing apartments in the capital of approx. 150 square metres in size with several bedrooms. “Santa Cruz offers recreation and entertainment in equal measure. Young families focused their search for a home on central apartments with ample space. The majority of prospective buyers are looking for larger properties, with a view to living here permanently. Last year this ratio was as much as 88 percent,” says Maren Harder, Managing Director of Engel & Völkers Santa Cruz de Tenerife.
Engel & Völkers has seen a similar trend on Tenerife’s neighbouring island of Gran Canaria. The almost circular island, which is also regarded as a “mini continent” due to its microclimate and diverse natural terrain, offers comparatively moderate prices in all locations, as well as a wide range of different properties and the competitive cost of living. In the island’s capital Las Palmas, which is one of Gran Canaria’s sought-after residential locations, around 70 percent of Engel & Völkers clients were looking for a primary residence, with 20 percent searching for a home as an investment with ROI potential, and 10 percent seeking a second home. One particular highlight of this cosmopolitan island capital is its three-kilometre beach. Prices per square metre of 1,810 euros were reached here in the first half of 2022 for homes in a beachfront location. For townhouses in the city centre average prices were as much as 317,000 euros.
Outside the capital, properties in rural locations and quieter areas, in the north and southwest of Las Palmas, like Teror, were in equally high demand. Here, sales prices of an average of 386,000 euros were recorded. José Maria Nuñez, Managing Director of Engel & Völkers Gran Canaria North, attributes this growth to the increased interest in country living: “The trend and the need to live as close to nature as possible continues, even now that the pandemic is over. The north of Tenerife is seen as the green soul of the island, and interest in properties with large gardens and terraces has risen sharply here recently.”
International prospective buyers dominate real estate market
Despite the pandemic, the real estate market on the Canary Islands was once again strongly dominated by international buyers last year as well as the first half of 2022. They tended to gravitate in particular towards those regions with a wide range of leisure facilities and premium villas in direct proximity to the sea, such as the Costa Adeje in Tenerife. The majority of these international buyers came from Germany, Luxembourg and Switzerland, accounting for some 37 percent, followed by the UK at 16 percent, France at 10 percent and Italy at 4 percent. A similar picture emerged in Gran Canaria, where the proportion of international clients was 40 percent in 2022. Here, too, buyers from German-speaking countries made up the largest buyer group, at 32 percent.
Outlook: Year-round demand continues to drive market dynamics
Residential real estate in the Canary Islands, particularly in prime locations, is set to remain an appealing prospect and a stable investment for property buyers. “The Canaries are still regarded as a ‘hidden gem’ by many. Their popularity is on the rise though, especially as a location for a year-round home. 2021 was a very good year for the Canary Islands real estate market, as was the first half of 2022, and we’re confident that these positive market dynamics are set to continue in the long term and that the islands will attract many more international buyers this year,” Juan-Galo Macià predicts.