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Property Investment in Tenerife

Updated on April 1, 2012

Property Investment in Tenerife

The commencement of a new year is always a great time to consider what might have been and what the coming year may bring for the Tenerife property investor.

Locations like, Hong Kong, Singapore and Australia saw growth in property prices during 2010 but most countries within Europe, and the United States saw property prices continuing to fall further, although some stability is now coming back to those markets. It has been just over three years now since the financial crisis started propogating through the economies of the world with a wave that has consumed confidence in the vast majority of property markets. Obviously some property markets have been less affected and on reflection we would say Tenerife has been one of those steadier locations.

There are a lesser number of properties on the market in Tenerife than there were 3 years ago, why? Most property owners in Tenerife purchased to enjoy a holiday home, many of those buyers had a long term game plan, and most eagerly looked forward to sustained growth in property prices. Part of that success is attributable to the Government limiting development back in 2003 so there has not been a massive oversupply of new homes being built in Tenerife. Also, we have seen many properties withdrawn from the market during the past 12 months because most Tenerife property vendors do not need to sell at a loss.

If you have read anything about Tenerife, or you have been a visitor, you will probably know that it has the most enviable climate in the world. Also its unique British-Canarian mix of culture has made it one of the most popular holiday destinations in the world, so many visitors return to Tenerife year after year. That why so many people buy a property in Tenerife, they just fall in love with the place.

There are now strong signs that the property market in Tenerife has levelled out, so 2011 could see some growth in property prices, why? Tenerife has gently become a haven for property buyers from, Russia, Scandinavia, Eastern Europe and other countries which have not been so much affected by the the world recession. Many of these investors now see growth in their own economies which rightfully is a good time to take stock of the property market in Tenerife.

There are no signs now that Tenerife property prices are still falling, perhaps this is due to the market now being supported by a broader range of investors. Last year, most property investors were concerned that prices may still plummet in Tenerife. The indications are that 2011 will be a year of growing confidence because price falls have now stabilised.

Another factor which has influenced the tenerife property market in has been the Euro v Pound dilemma, the fall in the value of the pound has definitely affected the confidence of property buyers. Potential UK property buyers, and there have been so many in previous years, have not only had to worry about whether property prices will rise but also, whether the pound will slide further against the Euro. Fortunately, last year we saw that stabilise.

The UK, has strong economic measures in place, but conversely, the increasing financial problems within the Euro zone, could well force the value of the pound to rise against the Euro. An increase in the value of the pound should bring about a rise in the number of UK property buyers in Tenerife. However we think that the market is likely to be sluggish until exchange rate stability has be sustained for at least a few months.

In conclusion it is fair to suggest that 2011 will be a better year for Tenerife property investors and with prices up to 50% lower than they were at the start of the crisis, now could be great time to buy a Tenerife Property. Nothing is set in tablets of stone, but without doubt, now has never been a better time for those interested to start hunting for bargains.


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      Lestie 6 years ago

      Hello Pam,

      I can understand what you are saying and everyone should be aware of the law. I don't know whether you used a lawyer to purchase you apartment but is is always wise to do so. The problem with this situation is that the Government have only recently decided to rigorously enforce a law which became statute back in 1995.

      The controversial 1995 Letting Law made many apartment complexes illegal for holiday lets. Yet owners on many new residential sites and complexes continued to let their properties out and were fined only occasionally.

      Then followed strong complaints by Ashotel (The Tenerife hotel association), who claimed its members were losing out because of the illegal “beds”, which prompted a lengthy investigation by the Tourism Board.

      The Law clearly states that complexes deemed “residential” cannot be used for holiday lets at all. On the other hand, touristic apartments can obviously be let out for holidays, but only if a sole agent has been appointed to the complex to handle all transactions.

      You should have been made aware of all this of course at the time you purchased you apartment. I do not know what redress you may have because I do not know anything about your purchase.

      I suggest you examine your files and speak to the president of your community to see if any other owners have the same concerns as you.

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      Pam 6 years ago

      We bought our apartment as a hole in the ground in 2002. We were told by the agent what we could obtain in rent per week. At no time were we told by the agent, authorities or anyone else that we could not let out. Now in effect our property is worth less because we are on a residential complex. In my mind we should be able to sue for mis selling. If this is strongly implemented then I can just see disaster for all businesses in Tenerife.

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      Lestie 6 years ago from Tenerife

      The issue of illegal lettings in Tenerife is well known and most clients are aware of it. I think you will find that most estate agents in Tenerife would not steer a client towards purchasing a property which is on a complex without a touristic letting licence. There are plenty of licensed complexes and we note prices are tending to be higher on those developments.

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      Island Monkey 6 years ago

      This article does not take into account the issue if illegal lettings on residential complexes. Many owners were duped into buying an apartment, believing they would be able to offer short-term lets. However, they later found out that this is illegal and the Canarian authorites are now fining owners who break the law. This means that many owners cannot keep up their mortgage payments, so they are selling (or rather the´re trying to sell). Expect more of these apartments to come onto the market, with prices being slashed. Of course, estate agents are keeping their cards close to their chest, except one that I know of, and his name is John. Well done to him for his honesty!!