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The recent decision by the Spanish government to terminate the Golden Visa programme has raised concerns among investors and property buyers. This programme, which granted residency to non-EU nationals purchasing properties worth €500,000 or more, played a role in attracting foreign capital to Spain's real estate market. However, its overall influence has been relatively limited, particularly in the Canary Islands.

At The Property Gallery, we have not observed any significant negative impact on the property market in Tenerife. Demand for real estate remains strong across various segments, from residential homes and holiday apartments to investment properties and high-end villas. The Canary Islands continue to attract buyers due to their stable economy, favourable climate, and strong tourism sector.

Overview of the Tenerife and Canary Islands Property Market

Continued Demand from Foreign and Domestic Buyers

Tenerife and the Canary Islands have long been a desirable destination for property buyers from the UK, Germany, Scandinavia, and other European nations. Even after Brexit, British buyers remain a dominant force in the market, seeking both permanent residences and holiday homes.

Spanish and Canarian buyers also continue to invest in the local property market, supported by a recovering economy, low interest rates, and stable employment rates. The demand for rental properties has grown as well, making buy-to-let investments particularly attractive.

Property Prices and Market Trends

The property market in Tenerife has seen steady growth in recent years, with prices appreciating due to high demand and limited supply. Recent reports show:

• Price Growth: The average price per square metre in Tenerife has increased by approximately 6-8% annually in key areas.

• Foreign Buyer Interest: International buyers make up a significant portion of total transactions, particularly in coastal and resort areas.

• Rental Market Boom: The demand for short-term holiday rentals and long-term leases remains strong, supported by a thriving tourism industry.

While luxury properties continue to attract high-net-worth individuals, there is also a growing interest in mid-range and affordable housing. Many buyers are looking for well-located apartments, townhouses, and villas that offer good value for money.

How the Golden Visa's Termination Affects Tenerife and the Canary Islands

Minimal Impact on the Broader Property Market

While the Golden Visa programme contributed to foreign investment, its role in the overall property market of Tenerife and the Canary Islands was not significant. The vast majority of foreign buyers in the region purchase properties below the €500,000 threshold, meaning they were never reliant on the Golden Visa to begin with.

Even among high-end buyers, many have alternative residency options, such as the Non-Lucrative Visa or the Digital Nomad Visa, which continue to make Spain an attractive destination for relocation.

Strong Tourism and Economic Stability

The Canary Islands benefit from a strong tourism-driven economy, which directly influences the real estate sector. Key factors supporting the market include:

• Year-Round Tourism: Tenerife attracts millions of visitors annually, driving demand for both holiday rentals and second homes.

• Infrastructure Development: Ongoing improvements in transportation, healthcare, and digital connectivity enhance the island's attractiveness.

• Tax Advantages: The Canary Islands enjoy a unique tax regime, including lower VAT rates (IGIC), which benefits property buyers and investors.

Investment Opportunities in Tenerife

The termination of the Golden Visa does not alter the fundamental strengths of Tenerife as a real estate investment destination. Several key opportunities remain:

• Buy-to-Let Properties: With high occupancy rates for both short-term and long-term rentals, investors can generate steady returns.

• New Developments: Modern residential and resort-style developments continue to attract interest from buyers seeking contemporary living spaces.

• Coastal and Rural Homes: Properties in sought-after coastal locations and picturesque inland villages remain in high demand.

• Eco-Friendly and Sustainable Housing: With a growing focus on sustainability, energy-efficient homes are becoming more popular among buyers.

The end of Spain’s Golden Visa programme is unlikely to disrupt the property market in Tenerife or the wider Canary Islands. The region remains a highly attractive destination for property buyers and investors due to its exceptional quality of life, stable property values, and thriving tourism industry.

At The Property Gallery, we continue to see strong demand across all segments of the market. Whether you are looking for a holiday home, an investment property, or a permanent residence, Tenerife remains one of the best places to buy real estate in Spain.

For personalised advice and to explore the best property opportunities in Tenerife, contact The Property Gallery today.