At a time when the global property sector is struggling through never-ending doom and gloom, here in Tenerife, there does seem to be a small break in the clouds.
Many people on the island suffered through the first years of the economic crash as the crisis sank its claws into the markets of UK and Europe. As jobs were lost and belts tightened, people in the affected countries could no longer afford their annual vacation. With decreased numbers of tourists arriving on the island over the last five years and their respective “spend per head” becoming smaller and smaller too, many who had relocated here and built businesses reliant on the tourist trade faced tough decisions.
Almost every expat resident who still lives in Tenerife knows of someone who has had to leave the island due the current global financial situation as friends, family members and work colleagues decided to cut their losses and return to UK or Ireland as a result of the ever deepening crisis.
Tenerife Property Bubble
Prior to the economy crashing worldwide, Tenerife property had been in an ever-inflating bubble. Properties that were once affordable and reasonably priced quickly became over-valued with some experiencing a ten fold or larger increase in just a few years. The prices being asked for modest apartments or small townhouses were unrealistic while those for more luxury properties were simply off the charts. Of course when the bubble burst in Tenerife it went with a bang. Some mortgage holders, now stuck with paper held by the bank that was worth three times more than the property, chose simply to default.
The silver lining is that in the aftermath of the crisis, property prices in Tenerife are flattening out, with property owners now having a realistic understanding of what their property is really worth. The days of over inflated prices are well and truy over, opening the door to a new generation of property buyers who have set their sights on a new life in the sun.
Tenerife Property Market
If you imagine being stuck in the UK on a grey and rainy morning with the prospect of getting the kids to school then struggling through traffic to get to work, it is not hard to see why buying an apartment in Tenerife, with its year-round mild climate and glorious sunshine is such a popular daydream for so many Brits.
The weather gives Tenerife a great advantage over other destinations both as a holiday destination and as a place to move to to raise your family or start a business. Being located within four hours of travel, the island is far enough away to be ‘exotic’ yet close enough to make travel easy and relatively inexpensive. Consequently, it is one of the holiday destinations that remained ‘do-able’ for many, even through the worst of the crisis and Tenerife is also well placed to be one of the first destinations to bounce back once the dark clouds of the economy start to drift on by.
Those who are looking to buy property in Tenerife, may be looking for a new home in the sun to raise their kids or they might be buying an apartment as an investment, one that they can let out to holiday makers and which therefore will pay for itself in rental fees. This has long been a favourite tactic with investors in Tenerife and it is still a very popular choice in 2011.
There may still be a few thunderheads on the horizon but there but there does seem to be a slight break in the gloomy clouds of global economic recession and Tenerife looks like it could be one of the first places to enjoy a long awaited ray of financial and economic growth.
Thank you to Lupain Properties S.L. for this positive report on the Tenerife property market. Please visit their website for more information on property in Tenerife and to find a wide range of properties to sell and rent on the island.
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I would say that the property market is doing better at either end of the spectrum. The cheap end of the market and the expensive end are both on an upswing while the middle band, where most people need a mortgage, is standing still. We are receiving more Tenerife property rental enquiries, especially from people wanting to rent before they buy.
I dont see any light at the end of this particular tunnel. Prices are still falling and will continue for at least another 12 months. I wrote an article about Tenerife property prices last summer saying the exact same thing when many agents were “seeing green shoots” I am due to update that article for the next 12 months.
We have had a busy year with plenty of sales so far but thats because we have manged to get a lot of very well priced property on our books. There are simply no reasons why prices would stabilise or rise from where they are today. My opinion is that the hardest hit will be residential areas (Roque del Conde, Las Chafiras, El Madronal, Adeje town, San Eugenio alto – everywhere outside of the tourist zones on the higher side of the motorway) and they are going to be hit hard. I would guess at least 10% of current prices (thats sales prices) over the next 12 months.
Its a good time for buyers to keep an eye on the market and wait for the right opportunities, there will be plenty more to come.
Hi Andy,
Always a pleasure to hear from you. I look forward to seeing the update to your green shoots article. I bet it will be an eye-opener.