In the peaceful Canary archipelago, we find Tenerife, an island blessed with warm weather all year round, dazzling natural landscapes, dreamlike beaches, and a rich cultural offering.
It is not surprising that Tenerife attracts millions of tourists each year, radically transforming its economy and, of course, its real estate market. In this article, we will explore how tourism has affected and continues to affect the real estate industry in Tenerife.
The tourism boom
The development of tourism in Tenerife began in the 1960s when air and sea connections facilitated the arrival of tourists mainly from Northern Europe. This flow of tourists has continued to increase, surpassing five million annual visitors in recent years.
This tourism boom has caused the service sector to become the main economic engine of the island, and the real estate market has not been immune to this phenomenon. The growing demand for tourist accommodation has led to a substantial increase in property values, especially in the most popular coastal and tourist areas.
Effects on the Real Estate Market
Properties with prime locations, especially luxury villas with sea views, have seen their prices rise exponentially due to the growing demand for vacation rentals. This boom has attracted foreign and domestic investors looking for lucrative opportunities in the short-term rental sector.
On the other hand, demand has also encouraged the construction of new infrastructures and residential complexes. Real estate developers have found a market eager for high-quality, modern properties with additional services, which can be rented to tourists or used as second homes.
The Role of Regulations
In response to the vacation rental boom and its impact on the housing market, local and regional authorities have implemented various regulations to protect local residents and ensure sustainable growth. Among the measures adopted are restrictions on licenses for vacation rentals and regulations aimed at preventing real estate speculation. These regulations, although necessary, have generated new dynamics and challenges in Tenerife's real estate market.
Tenerife's real estate market, like its picturesque landscape, is dynamic and changing. While tourism will continue to play an important role, it is essential to maintain a long-term perspective that allows for sustainable and equitable development for all those who consider Tenerife their home, be it for a week's vacation or for life.
If you're interested in investing in Tenerife, check out our deals for investors or get in touch with a real estate advisor.