On the island of Tenerife, the housing market hit bottom about a decade ago. Now tourism and development are bringing it back — but it’s a slow process.
A Quiet Courtyard House in the Canary Islands
Genesis Murillo Varas
A Classic Canary Island Villa Near the Coast
$1.6 MILLION (1.49 MILLION EUROS)
This three-bedroom, three-bathroom house is in Tacoronte, a rural city near the northeast coast of Tenerife, the largest island in Spain’s Canary Islands archipelago.
The 4,844-square-foot house was built in the 18th century for Agustin de Torres Perdomo, a descendant of Canary Islands conquerors who claimed the land for Spain three centuries earlier. On one of Tacoronte’s oldest streets, it has a plain concrete facade that belies what lies beyond: an interior courtyard bordered by covered terraces, gardens and a two-story structure in the traditional Canary Islands style, with wood balconies, elevated galleries, paneled doors and multi-paned windows.
“Even though it is a very old house and has been renovated, it was kept in the style,” said Agata Kowalczyk, who is listing the house through her agency in Puerto de la Cruz. Houses in this style, she added, are typically found on the northern part of the island.
The living spaces have high, wood-beamed ceilings and include four sitting areas, an open kitchen with gas and electric cooking surfaces, and three areas for casual and formal dining. The owners installed a radiant floor heating system, and the fireplaces are functional, although Ms. Kowalczyk said heating is rarely necessary in Tenerife’s subtropical climate.
A covered walkway on the second floor has beamed ceilings and several seating areas. Credit…Genesis Murillo Varas
All of the ground-level rooms open onto the cobblestone courtyard, where dragon trees and other tropical flora surround several seating areas. The second floor has two large bedrooms (one en suite) connected by a salon of nearly 550 square feet, with a vaulted, wood-beamed ceiling. All rooms have access to a windowed gallery overlooking the courtyard. A covered walkway on the second floor has beamed ceilings and several seating areas.
The 12,000-square-foot grounds include a sauna, Jacuzzi and 277-square-foot swimming pool in an enclosed area connected to the house, a wood-fired barbecue and a separate en suite guest studio.
Tenerife, about 200 miles off the coast of Morocco, is the largest and most populous of the Canary Islands. The city of Tacoronte, with about 25,000 residents, is about a mile from the island’s steep northern cliffs overlooking the Atlantic Ocean. Tenerife Norte Airport is a 10-minute drive; Santa Cruz de Tenerife, the island’s capital and largest city, is 20 minutes away; and Puerto de la Cruz, a port city that attracts tourists with its historic churches, beaches and large hotels, is 25 minutes away.
The Canary Islands are an autonomous region of Spain, with European Union status, that has enjoyed steady economic growth for years, thanks to throngs of tourists and the development that came with them. But as on the Spanish mainland, the real estate market there suffered during the global economic crisis more than a decade ago, with homes losing nearly half of their value, said Simon Sananes, a tax adviser specializing in real estate in Puerto de la Cruz.
“When the crisis hit Spain,” he said, the region had recently “overflowed with construction of new buildings.”
At the market’s peak, in the first quarter of 2008, prices across the Canaries averaged 1,912 euros a square meter (about $200 a square foot); at its nadir, in the first quarter of 2015, the average price was 1,145 euros a square meter ($115 a square foot), according to data compiled by Spanish appraisal company Tinsa.
Since then, Mr. Sananes said, the housing market in the Canary Islands has slowly rebounded, with an average 7 percent increase in sales year over year since 2015, although according to the Tinsa report, the average home value remains about 30 percent below the 2008 peak.
The grand entry opens into an intimate living room with a covered terrace outside.Credit…Genesis Murillo VarasThe old wine cellar has been refurbished as a dining area with space for antique kitchenware.Credit…Genesis Murillo Varas
One sign of the recovery is the growing luxury market in the coastal south, said Caroline Müller, director of the Engel & Völkers office in Costa Adeje, in southern Tenerife. She estimated that in the past three or four years, there have been price increases of 30 to 40 percent in that market, and 15 to 20 percent in the surrounding areas.
Traditionally, Northern European buyers have favored the island’s cooler, cloudier north side, with its nature reserves and hiking trails, while British buyers have preferred the south for its year-round sunshine. But “now we have a very good mix here,” Ms. Müller said, “and very strong buyers from Belgium, Poland and Scandinavia.”
The island’s southern region has caught up with and even surpassed the north, she said: “What’s happened in the last few years is that the infrastructure has become much more modern than in the north, thanks to the hotels and other tourism-related operations.”
Her office currently lists several luxury properties in the area, for 1.5 million to 3.2 million euros ($1.7 million to $3.5 million).
Who Buys on the Canary Islands
“We have a mix of everyone — it is really incredible,” said Ms. Kowalczyk, when asked about the buying market on Tenerife. “Many European buyers because Europe is so near.” She said that of the million or so people living on the island, almost 50,000 are German nationals who have residency, with British buyers comprising the second largest group of part-time residents.
Mr. Sananes said although the British have historically been a strong contingent, the combination of the uncertainty of Brexit and the closure of Thomas Cook, a British tour operator that had introduced many potential buyers to the island, has slowed such queries. “Brexit is still a big question mark for us,” he said, “but we have more Russians, people from mid-Europe and the newer members of the European Union coming in.”
Tatjana Dunker, an agent with Tenerife-based RCR Inmobiliaria and a first-generation resident of German and Spanish heritage — a mixed lineage typical of the island — likened Tenerife “to the big island of Hawaii, with more tourism and easier access,” compared with the other Canary Islands.
Ms. Dunker estimated that about 90 percent of her buyers in the north are German, but she also has seen an increase in Russian buyers. Interest is high in rare, historic properties, like a three-story, 18th-century house she has listed in nearby La Orotava for 975,000 euros ($1.1 million).
Less expensive than Tenerife but also popular with nature lovers is the small, rural island of La Gomera, a one-hour ferry ride from Tenerife’s southern coast. “We have more cliffs than beaches, with footpaths predating the Spanish occupation,” said Sophie Belt, an agent with the Casa Gomera agency there.
Ms. Belt said a number of Europeans have invested in Pueblo Don Thomas, a residential complex on La Gomera developed by a company that owns one of the ferry lines. Her agency has a listing for a fully furnished, three-bedroom, 4,000-square-foot villa with a pool and ocean views for 598,000 euros ($660,000).
There are no restrictions on foreigners buying property in the Canary Islands, except for agricultural properties classified as “rustic,” which require special permission when purchased by non-E.U. residents.
As for obtaining a mortgage, Vera Liprandi, a lawyer with De Cotta Law, said that because “mortgage procedures are not straightforward in Spain, it might be advisable for non-E.U. buyers to obtain a mortgage in their home country or pay with their own funds.”
She recommended conducting a land-registry search to ensure that the sellers are entitled to sell the property, and that it is free of debt and liens.
Buyers typically make a 10 percent deposit upon signing the contract. Notaries can witness contract signings and facilitate payments of taxes and fees, but Ms. Liprandi suggested hiring a lawyer to perform a full due diligence, and to obtain and prepare documentation.
Foreigners buying property valued at more than 500,000 euros ($552,000) are eligible for a golden visa, which offers residency and a path to Spanish citizenship.
Languages and Currency
Spanish; euro (1 euro = $1.10)
Taxes and Fees
Existing home sales are subject to a 6.5 percent transmission tax, paid by the buyer; new homes are assessed a 6.5 percent value-added tax, and a 1 percent stamp duty.
Buyers are required to obtain a fiscal number, or NIE, by applying at a local police station with a passport.
Notary fees range from .03 to 0.45 percent of the property value, and registration fees from 0.02 to 0.18 percent of the value.
The annual taxes on this home are 1,400 euros ($1,545), Ms. Kowalczyk said.
Agata Kowalczyk, Agata’s Real Estate Tenerife, 011-34-689-770170; agatatenerife.com
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