Tenerife’s property market booming ahead of the Costas

Despite the recent property crisis in Spain, Tenerife’s property sales are still rising. Reports that the housing bubble in Spain has burst have led to an increase in property sales elsewhere around the mainland. Tenerife, fortunate to have all year round perfect weather, is well placed to cater for the large number of people from the UK wishing to purchase somewhere in the sun. Tenerife must be viewed as a ‘micro-market’, operating within the larger Spanish economy but independent to factors affecting a crash from the Spanish market.

The property boom in the Costas looks to slow due to an over supply of property, corruption scandals and land grab issues, diminishing the confidence of the buyer.

In 2001 the Tenerife government voted a moratorium on new touristic building, limiting the supply of new homes thus preventing over building. Despite the restricted supply, with no artificial media frenzy similar to that incited on the Costas, price rises were more moderate.

Currently, property in Tenerife continues to rise in value, while the Costas stagnate and are even expected to drop in the next 12 – 18 months.

The foreign buyer market remains strong in Tenerife. Research shows 42,000 homes are owned by the British alone, and property owners are achieving high rental income.

The incentive of year long sunshine and the increasing number of tourists, 6 million in 2006, has led to a demand for low cost flight operators to obtain new routes.

Tenerife’s resident population is one of the fastest growing in Europe. New mortgage lenders and applications are increasing and rental costs are high, encouraging locals to buy as soon as they can and ensuring local demand remains strong.

These factors combined with future predictions, would indicate that demand for property will be rising correspondingly, due to the close correlation between the number of visitors to the island and the number of properties sold to foreigners.

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Leslie Beeson of Savills associates Tenerife Property Shop comments “We have recently encountered a sharp rise in the number of investors who have sold out of mainland Spain and chosen Tenerife in which to reinvest their money”.

The future for property in Tenerife remains positive. A recent report commissioned by Halifax Holiday Insurance Services identified that almost all popular destinations of today will experience dramatic change by 2030. However, research has shown Tenerife will be relatively unaffected by global warming, experiencing only a few more tropical storms and some coastal erosion. It is only a matter of time for property pundits to jump on the global warming band wagon and start to analyse the effects on the international property industry, and when they do, Tenerife will benefit enormously.

For further information, visit savills.com.