Breathtaking volcanic landscapes, golden beaches and guaranteed year round-sunshine, plus bargain properties and strong investment potential - the Canary Islands have it all.
Long-established as a holiday destination, the Canary Islands have always been popular with Brits looking for a holiday with guaranteed sun. And with average year-round temperatures of 22 degrees and a cool Atlantic breeze tempering the excessive July and August heat, it’s not hard to see the attraction. Add in world-class scuba diving and beautiful (albeit slightly forbidding) volcanic landscapes crafted from black rock mountains and grey sand beaches, and the area becomes one of the most interesting spots in Spain. As well as the obvious holiday destinations of Tenerife, Lanzarote, Fuerteventura and Gran Canaria, the lesser-known islands - principally La Gomera - are worth investigating.
Offering the most accessible year-round sun available to the British – and at the end of just a four-hour flight – the Canary Islands have long been one of our favourite second-home locations.
With average temperatures in the mid-twenties they consistently feature amongst the highest performers for holiday lettings websites too. They are firmly established markets for many Europeans, and well-supplied with flights – unlike the Cape Verde Islands for example – making them ideal for buy-to-let investors.
Yet the Canaries have not been especially fashionable of late. Slightly overshadowed in the last couple of years by the emerging non-euro “cheap sun” nations such as Egypt, Tunisia and Morocco, they are now benefiting from the unrest in the North African region.
The islands have not escaped the Spanish property downturn, but reduced purchase prices combined with a buoyant rentals market adds up to some healthy potential yields. So if you want to buy a property and rental income is your main priority, where do you look?
Property hotspots in the Canary Islands
One of the most popular area with tourists, Tenerife is the largest of the Canary Islands and also the most easily accessible with regular flights from most UK airports making Tenerife a plausible option for a second home.
If you’re looking for a property with rental potential, Tenerife is the main player. It’s by far the most popular island, generating more enquiries per property, per year that the other islands in the archipelago. That’s hardly surprising when you consider that 1.5million Brits went there in 2010, a 10 per cent rise on the previous year.
Playa de las Americas is very popular - crammed with bars and restaurants, water sports and a marina for fishing trips and pleasure excursions, the area is a great buzzy place for a holiday. Prices here start at €90,000 (£75k) for a one bedroom flat with swimming pool. In more residential (northern) areas you can buy a villa from a knock-down €180,000 rising to over €1,000,000 for larger, more exclusive properties. Rentals are generally very strong in these resort areas. One-bedroom apartments on golf resorts typically cost around €100,000, although you can find them for €80,000, with a rental potential of around £200 a week.
Twenty minutes drive from the airport is San Eugenio Bajo, a family-friendly area on the edge Playa de las Américas – close to the hedonistic nightspots for when the kids are in bed, but set back enough so you’re not kept awake. Beaches within walking distance include Playa la Pinta beach in Puerto Colon and Fañabe beach. And because of these attractions and the good year-round weather property in the area has a long rental season and therefore great income potential. You can expect to pay around €300,000 or an average family home.
To the south, Las Americas merges with Los Cristianos and contains rows of holiday apartment complexes leading from the seafront. It is these complexes behind the beach with plenty of facilities which reap the richest rental rewards.
Further up the coast, the popular area of Adeje stretches from the resort of Playa Fanabe with its golden beaches through the pretty fishing village of Caleta and north to Playa Paraiso, a new development of low-rise town houses and four high-rise buildings offering apartments at value prices. There’s a lively little area for nightlife and more decent beaches nearby. Apartments here are cheap at an average of €120,000, but houses will set you back a little more at around €250,000 .
Other resorts worthy of a mention include Playa de Las Teresitas and San Andres where studios cost €80,000 and bring in €195 a week; one beds with sea views around €140,000 but can earn €250 per week.
With regular flights to Lanzarote from most UK airports and a mere 37 miles from one end to the other, almost anywhere in Lanzarote becomes an easy trip for the holiday-home owner.
Lanzarote is the most volcanic of the Canaries, but don’t let that put you off, it is also (arguably) the classiest and most expensive. It is beautiful to look at, in an unconventional sort of way, carefully and artistically designed and preserved with tight planning rules. Most of the houses are built in a white cubist form, to a maximum of three storeys. Around 70 kilometres by 25, it has a population of 140,000, four per cent of whom are British.
Painter (but no decorator), sculptor, and architect Cèsar Manrique (1919-1992) convinced the Lanzarote authorities to ensure any new developments were built no taller than two storeys high. He also convinced them that residential properties should be painted white and draped in bougainvillea, the ornamental clambering plant typically flowering into a shock of pink.
Although prices have increased as the island continues to shed its undeserved Lanzagrotty tag, you’ll still be able to find apartments under €100,000. Don’t expect any change from a cool €1,000,000 however, if luxury villas are more your thing.
The three main resorts on Lanzarote are all located along the southern coast: Puerto del Carmen, Costa Teguise and Playa Blanca. Playa Blanca is the newest, has a swish new marina, is handy for the beaches at Papagayo and popular with families.
If you’re looking for a property that you can rent out, then bear in mind that the rentals marketing is firmly focussed on two major resorts, Puerto del Carmen for apartments and Playa Blanca for villas.
The well-known Puerto del Carmen is the islands oldest – and most expensive - resort, with an attractive old town starting with a fishing harbour and lively strip that extends to six kilometres of beachfront. For a property investment, it’s probably the best; it’s the biggest and is only 10 minutes from the airport, with the best of the weather and beaches most property is only a short walk from one of the great beaches and entertainment.
Property prices have been less affected here since the recession started but there are still many bargains from keen vendors. A good range of options is available here from studios and small apartments priced from €75,000 and new-build villas from around €220,000. The Matagorda district is very sought after, with a lovely quiet beach and just a five minute cab ride into town with two-bedroom apartment in one of the best complexes starting at around €249,000 or, a two/three-bedroom bungalow which will cost €235,000.
The quieter but more expensive resort of Playa Blanca at the southern tip of the island, is a thirty-minute drive from the airport and home to a raft of four and five star hotels. There are a good choice of restaurants and beaches, with the well-known Papgayo beach a short drive away watersports and diving options on offer in the town.
In Playa Blanca you can buy a two bedroom villa for €190,000-€240,000. Or a three bedroom, two-bath villa for €369,000.
Finally, Costa Teguise is the obvious choice for those wanting to make the most of the island’s nightlife, with one-bedroom apartments starting at around £50,000 on developments such as Los Molinos and Tuscan Apartments.
The least commercialized of the main Canary Islands, Fuerteventura also offers the best beaches, with golden sand blown over from the Sahara, great water sports and a growing rentals market helped by increasing numbers of independent flights.
Fuerteventura boasts kilometres of tropically-white sand beaches flanked by turquoise waters. Indeed so idyllic is this island, holidaymakers have been known to put down a deposit on a place to live during a short break. Expect to pay as low as €70,000 for a one-bedroom apartment or bungalow in a residential complex with a shared pool.
The expat communities tend to be concentrated in the holiday resorts of Corralejo and Caleta de Fuste where you’ll find a range of property, extending from studios up to luxurious villas backing on to the island’s two golf courses.
Corralejo, in the north is the place to be if making a rental reutn is your priority, with the purpose-built resort of Caleta de Fuste being very popular. The resort is located six to seven minutes’ walk from the beach and shops, has a pool, gym and tennis courts. Brand new one-bedroom apartments here cost €79,000 (£70K) and you can expect to pay €70,000-€75,000 for a resale.
Word on the island is to avoid the area of Parque Naturelle (with half completed complexes that are hard to sell) but look for resale three-bedroom villas close to Las Dunas – at the popular Las Pergolas III they cost €250,000-€300,000.
Three-bed homes on the El Sultan complex also rent well, says Webber. Fifteen minutes’ walk from the centre, near Baku waterpark, new townhouses cost €220,000 and if its a golf resort you’re after, there’s Fuerteventura Golf Resort in Caleta de Fuste with properties starting from €190,000.
Las Palmas is the capital of Gran Canaria and the biggest city in the Canary Islands. It’s a thriving metropolis and an important trading hub for both this island and its neighbours. With a population of almost 400,000 in the city centre and several suburbs stretching to the city limits, there is a wide variety of property options on offer and also a large number of people looking for rentals. City apartments start from €75,000 for one bedroom, or €130,000 for two, whilst more spacious villas with a garden and pool can be found for €495,000.
Expats, in the majority, live in the more arid south of the island. Here the younger ones tend to work in bars or restaurants, where their English is put to good use dealing with tourists while the older ones are more likely to run the restaurants with those proficient in Spanish finding work in schools, generally teaching English.
The island is very diverse, with small coves, long sandy beaches, British breakfasts and Spanish beach bars in amongst five-star hotels and lovely old fincas amid lemon tree groves.
Although this is not Spain’s version of Florida (that would be Tenerife), expats do retire in Gran Canaria, and the healthcare is good.
The last few years have seen Gran Canaria’s property market take a hit from the credit crunch or la crisis as it’s known locally.
The upside, however, is that with a surplus of property – albeit with fewer bank repossessions than the Spanish mainland – prices are typically down 25 per cent from their peak. So even in this relatively expensive buying area, compared to mainland Spain, you can now pick up an apartment from as little as €100,000 – and the majority of the islanders tend to live in flats.
One and two bedders dot the south coast (peaking at around the €200,000/ £166k mark) with duplexes – priced from €230,000 (£191k) to €750,000 (£622k) – more common in the newer developments in and around the capital, Las Palmas, and posh neighbour of Maspalomas. The mega-resort of Maspalomas located on the southern tip of the island is famous for its rolling sand dunes and its unrivalled beaches. The local government has exercised restraint on development in recent years and as such the area has seen a resurgence of its flora and fauna, the murky waters of the lagoon are once again home to several varieties of fish and bird life.
Puerto de las Nieves (‘The Port of the Snows’) is greener and more verdant, located in the North. Less populated, it is a quiet harbour town that most visitors pass through on their way to or from Tenerife. However, this is a mistake and the destination is a great place for a second home, especially for fans of watersports who are well served by the wilder coast’s suitability for diving, surfing and fishing. There are also plenty of hiking trails in the craggy highlands surrounding the town if you want the adrenaline rush without having to don a wetsuit. As it’s less densely populated and far from the madding crowd, property is more affordable here.
Meloneras, which claims a greater concentration of five-star hotels than anywhere else on the island. Head to the mountains above the southern resorts, to Monté Leon for instance, for larger chalets and villas. This is the Beverly Hills of Gran Canaria, with high-end prices reaching the €1,000,000 mark, though you’ll still be able to buy a three-bedroom detached villa there with a pool for €450,000.
For a quirkier choice of accommodation, there are the cave houses, with hikers’ favourite Artenara boasting the majority of these. They don’t often come onto the market, but cost around €130,000 when they do.
However, those looking to relocate may do better to look west and south, with the rather more residential Puertos Mogán and Rico and the holiday destination of Arguineguín. Although they are resorts in their own right, they have a greater service infrastructure such as schools and feel less transient than Playa del Inglés. They’re also as competively-priced as the better-known Playa del Inglés.
The process of buying a property in the Canary Islands
Compared to many European countries the purchase process in the Canary Islands is essentially straight-forward, although foreigners buying in the isles will need to first obtain a fiscal number (numero de identificacion de extranjeros) and then enlist the services of a lawyer who speaks both Spanish and English.
There is a proliferation of agents on all the main islands and once you’ve found your dream pad, you will need to pay a small reservation fee - whilst your lawyer carries out the necessary legal checks - after which you will sign a contract and pay your deposit.
When buying a property in the Canaries, it’s vital that you make a will. What many people don’t realise is that you can have two wills (one for UK assets and one for Spanish assets) and this is often the sensible way of making inheritance cheaper and quicker. For many buyers, putting the property in joint names can be a good way to reduce inheritance tax, but this will depend on many factors including the property’s value, and your total assets and personal circumstances. Even small differences can affect which is the best form of ownership; don’t assume that things are done the same way in Spain as in the UK.
Upon signing the contract, you will usually pay a deposit of around 10% of the purchase price, before paying the balance (resale property) or the first of your agreed staged payments (off-plan). At this point the taxes and fees (usually around 10-14% of the purchase price) are payable and the property is registered at the Land Registry.
Other costs to take into consideration are;
- V.A.T tax in the Canaries is only 5% and is know as the Impuesto General Indirecto Canario. This is applied to new build properties, whereas resale properties are taxed at 6.5%, and is known as Impuesto Sobre Transmisones Patrimoniales.
- Notary fees, cost in the region of 3% of the property price, depending on the number of pages of the title deeds (or Escritura), its complexity and the value of the property. The title deeds, or Escritura, are extremely important when investigating the legality of a property. This document shows who the legal seller (and buyer) is and provides a fully detailed description of the property. This must be signed in front of a Spanish Notary and is then sent to the Land and Property register.
- Stamp duty of 0.5–1% is payable on a new property or around 7% on a resale and if the property is within a complex, make sure you check the monthly maintenance charges payable for costs such as swimming pool and garden upkeep.
- Lawyers fees amount to 1% of the property price, depending on the lawyer and the price of the property.
- Document tax is 0.75% of the property price, this tax is known as the Impuesto sobre Actos Jurídicos documentados.
- Use an independent commercial lawyer to check that the owner is named on the property register, and where there are any outstanding debts charged to the property that could be passed on to the purchaser - a ‘Nota Simple’ will confirm this.
- If you are buying off-plan, there are various documents that the developer of the complex/property is required, by law, to show you. They include;
- An insurance policy or bank guarantee to ensure the buy is protected in the event that the property is not completed.
- Proof of ownership of the complex/property, as well as all planning permissions and licences that they have obtained.
- An insurance policy against any building defects - The developer must be registered at the Registro Mercantil, with its trade name, address and date of registration.
- Memoria de Calidades or a specifications list of the fixtures/fittings and gas/heating networks etc.
- It’s also worth noting that in the Canary islands, the developer is also obliged to intervene, at no cost to the buyer, to correct any faults with the property or to indemnify the buyer for any damages caused.
Rentals: it has been reported by owners that authorities in the Canaries are beginning to clamp down on rental rules. This relate to restrictions in renting out to anyone other than family and friends if you live in a designated residential area; and also to rules which stipulate that rentals within residential complexes must be managed by a single company.