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The Canary Islands Property Market 2021

Click here for lots more information about the Spanish Property Market in general.  Many of the issues covered also apply to the Canaries. The report below looks at the statistics relating to the most important of the Canary Islands for the overseas property market.  As the figures show, the islands of Gran Canaria and Tenerife dominate the foreign market.

Introduction to the Canary IslandsProperty Market

Property finders Canary IslandsThe Canary Islands comprise eight islands, of which Tenerife, Gran Canaria and Lanzarote are the most active in terms of the overseas property market.  However, in comparison with some other regions it is a relatively small part of the overall overseas market. In 2019, the last year for which we have full-year statistics, the Canaries had 7.6% market share.  In contrast, the big 3, that is, Andalucía, Cataluña and the Comunidad Valencia (Costa Blanca), made up 71% of the overseas sector.

Nevertheless, before the virus struck the overseas property market in the Canaries was continuing its post-2008 recovery. From a low in 2010/11, overseas property buyers returned in increasing numbers year-on-year, peaking in 2018.  However, in common with several of the regions that attract foreign buyers, the Canaries did lose some ground in 2019 and there were 18% fewer foreign buyers.  Given that over 30% of all foreign buyers in the Canary Islands are British it’s possible that the weak GBP was a factor.

Then COVID-19 arrived and Spain’s first lockdown started on March 14th 2020.  This meant that the property market nationwide only operated normally in the first 10 weeks of the year.  Many transactions already in the pipeline and ready to complete faced delays because Notaries were only allowed to undertake emergency work during the lockdown.  Unfortunately for sellers and buyers alike, property completions did not qualify as ‘emergency work’. Other purchases collapsed  completely.

 

Where the Numbers Come From

To make any sense of the market it is important to isolate the statistics for Q1 of 2020. However, the statistics from the Notaries, usually the most reliable source for the overseas market, are published half-yearly. Nevertheless, given the disruption caused by lockdown and subsequent travel restrictions I think it safe to assume the majority of the overseas buyers counted in their 1st half year figures actually bought in Q1 and only a minority in Q2.  So, I decided half-yearly statistics weren’t much use and I had to find alternative sources to extrapolate what happened before lockdown started. Therefore, this year I am using statistics from the Ministry of Development (Mo de Fomento) as well.

In spite of that, compared with the statistics we quote in other reports, the data regarding the overseas property market in the Canaries is, in my view, partial at best.  This is due to the fact that the Notaries don’t separate out the individual islands. They just count the Canary Islands as one unit and give one number in respect of overseas buyers in the period. Secondly, the breakdown from the Ministry of Development only covers two islands, Gran Canaria and Tenerife. In spite of these two issues I think there are some things the figures can tell us.

Where the Activity Is

First of all, by digging into the 2019 statistics, it is clear that Gran Canaria and Tenerife dominate the overseas property market in the Canary Islands.  Comparing the Notaries’ final total for the Canaries as a whole in 2019 with the Ministry of Development’s count over the same period for just Gran Canaria and Tenerife we see that 96% of overseas buyers chose those islands. In terms of split, it’s quite even; 53.2% bought in Tenerife and 46.8% in Gran Canaria. So, although not a complete picture it’s good enough to get a feel for where the market was just before the virus struck.  And, of course, what happened next and where the market might be heading.

Looking at the overseas sector in other regions in Spain it turns out that something between 65% and 75% of activity in the fist half of 2020 actually occurred in Q1. And it was no different in the Canary Islands.  Taking the Notaries half-year figure of 2,464 foreign buyers in the Canaries overall  compared with the Q1 total for the two main islands it indicates that 71% of foreign deals were done before the virus arrived.  Normally, quarterly returns are more or less stable throughout the year with, perhaps, a slight dip in Q3 covering the summer months. So, for 70% of deals to show up in Q1, leaving only 30% in Q2, that can be classed as unusual.

The Importance of the Overseas Market

Beautiful evergreen forest in Garajonay national park on La Gomera island in Spain[/caption]Over the full-year 2019, overseas buyers had a 18.6% market share of Spain’s overall property market.  However, in several of the locations most popular with foreign buyers the market share was much higher.  The Canaries were one of those regions, with foreign buyers taking 31.2% market share.  And looking at the 2020 returns so far, that market share appears to have increased in the early part of the year, up to 34.8%.  I expect that to fall once 2020 is fully accounted for

Foreign Spending Power

Not only do foreign buyers in the Canary Islands take a market share way above the national average, they also spend more.  According to the Notaries’ figures for the first half of 2020 overseas buyers spent on average €1,791 per square metre.  That compares with the domestic average of €1,350.  However, in the Canary Islands the average spend was €1,899, well above the domestic average and higher than both Andalucía and the Comunidad Valencia on the mainland.  Compared with the average spend per square metre in 2019, foreigners spent 4.4% more in the first period of 2020, above the 3.6% increase registered across the overseas sector as a whole.

What’s Ahead

Our view is that demand from overseas buyers was holding up very well throughout 2020 and the early part of 2021. While, no doubt, some potential buyers have put their plans to purchase a property in Spain on hold others are telling us that they intend bringing their planned purchase forward. They just want to get on with it. However, until travel restrictions are relaxed it is impossible to assess how much of that demand will translate into actual transactions. 

For more about each island in turn please visit this Locations page, for information about the uniqueness and variety that property buyers can find in the Canary Islands.  

©The Property Finders

 

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