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What will happen in the Canary Islands’ real estate market? Will prices rise or fall? Are Tenerife and Gran Canaria still attractive to foreign investors? How is the local government influencing real estate policies and taxes in 2025?
We’re frequently asked these questions because we’re deeply engaged in this market. Through our collaboration with notaries, real estate agents, and clients purchasing properties in the Canary Islands, we’ve gathered firsthand insights.
That’s why we crafted this article: to deliver clear answers, insightful analysis, and a comprehensive perspective on market predictions and forecasts.
Our aim is straightforward: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
1) Urban property prices in the Canary Islands will rise as more people move to cities for jobs
In recent years, the Canary Islands have experienced a steady population increase, with projections indicating a growth of over 100,000 people by 2031. This influx is primarily directed towards urban areas, where job opportunities are more abundant. The largest cities, Las Palmas de Gran Canaria and Santa Cruz de Tenerife, already house more than 80% of the islands' population, highlighting the concentration of people in urban centers.
Economic reports from the past have shown significant job creation in these urban centers, which has fueled a "red hot" housing market. In 2025, the demand for housing is expected to drive over 666,000 property transactions, with prices anticipated to rise by more than 12% compared to previous levels. This trend is supported by the historical increase in the house price index, which reached a 10-year record in 2023, particularly in urban areas where new construction prices have surged.
Moreover, government investments in urban infrastructure have made these areas more attractive to both residents and businesses. The availability of amenities and services, such as education, healthcare, and entertainment, in cities like Las Palmas de Gran Canaria and Santa Cruz de Tenerife, further draws people to urban living. This preference for urban life, coupled with increased rental demand, continues to push property prices upward.
Sources: World Population Review, Canarian Weekly, Statista
2) Long-term rental yields will drop as more properties become vacation rentals to meet tourist demand
In recent years, particularly in 2023 and 2024, the Canary Islands have seen a significant increase in vacation rental listings. This trend is largely driven by the growing number of tourists visiting the islands, with a record 14.1 million foreign tourists arriving in 2023 alone. As a result, property owners are increasingly converting their properties into vacation rentals to meet this demand.
The lenient regulatory environment in the Canary Islands further encourages this shift. Property owners find it more profitable to offer short-term rentals, as evidenced by the average annual revenue of €21K per listing. This profitability is a strong incentive for property owners to move away from long-term rentals.
As more properties are converted to vacation rentals, the availability of long-term rental properties has decreased significantly. In cities like Las Palmas de Gran Canaria, long-term rentals have decreased by 51% over the past five years. This reduction in supply, coupled with rising property prices, has made long-term rentals less affordable for residents.
Sources: Airbtics, Travelon World, Spanish Property Insight, Canarian Weekly
We have made this infographic to give you a quick and clear snapshot of the property market in Spain. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) Rental yields in the Canary Islands will rise as tourism recovers and short-term rentals gain popularity
The Canary Islands are seeing a boom in rental property yields as tourism bounces back.
In 2023, the islands hit a milestone with 14.1 million international tourists, including a hefty 5.7 million from the UK. This upward trend didn't stop there; in 2024, tourist numbers climbed by another 3.8%. The islands are buzzing with visitors, making it a hot spot for property investors.
Short-term rentals are the new favorite, with bookings skyrocketing. From January 2021 to January 2024, the average number of bookings jumped from 1.4 to 4.1. This isn't just a fluke; platforms like Airbnb have seen their listings swell from 32,084 to 46,591 in the same period. It's clear that short-term rentals are in high demand.
Why are short-term rentals so appealing? They're simply more profitable. A typical host can earn around €21,000 a year, which is double what you'd get from traditional rentals. With a median occupancy rate of 78%, it's no wonder investors are flocking to this market.
For those considering a property investment in the Canary Islands, the numbers speak for themselves. The combination of rising tourist numbers and the profitability of short-term rentals makes it an attractive option. The islands are not just a vacation paradise but also a promising investment opportunity.
Sources: Travelon World, Airbtics, PriceLabs
4) Fewer British buyers will affect the Canary Islands' real estate market after Brexit
The number of British buyers in the Canary Islands has been decreasing since Brexit, impacting the real estate market. One of the main reasons is the decline in the number of British citizens purchasing property abroad. Back in 2015, British buyers made up 24% of foreign property buyers in Spain, but by the second quarter of 2023, this number had dropped to just 8.8%.
Brexit has introduced increased complexity and cost for UK citizens buying property in the EU. Currency fluctuations, for example, can make properties more expensive if the pound loses value against the euro. Additionally, new residency and visa requirements have made it more complicated for British buyers to purchase and own property in the Canary Islands.
There are also reports of reduced British tourism in the Canary Islands, which could indicate a broader trend of decreased interest. Real estate agents have noted a drop in inquiries from British buyers, suggesting that other nationalities are becoming more prominent in the market. Economic uncertainty in the UK, such as inflation and the cost of living crisis, may also be affecting British buyers' ability to invest in property abroad.
Sources: Spanish Property Insight, Euro Weekly News, Canarian Weekly
5) Vacation property profits in the Canary Islands will drop due to stricter short-term rental regulations
In 2023 and 2024, the Canary Islands government proposed a new law to crack down on unlicensed short-term rentals. This law includes stricter regulations and penalties, such as fines exceeding €30,000 for operating without a license. The plan also involves enlisting up to 1,300 police officers to help enforce these new rules, indicating a significant increase in regulatory enforcement.
Looking at historical data from other destinations, we can see similar impacts. For example, New York City's Local Law 18 reduced the number of active short-term rentals, which led to a surge in hotel occupancy and revenue. In Amsterdam, strict rules limiting short-term rentals to 30 days per year drove tourists to hotels, resulting in a loss of 269M€ in total host earnings since the implementation of current regulations.
In the Canary Islands, the number of short-term rental beds reached a record 220,000 in March 2024, a 40% increase from 2022. This is more than the combined population of Lanzarote, La Gomera, and El Hierro, showing a significant reliance on short-term rentals. Additionally, there is growing hostility towards digital nomads and short-term rental operators, with locals expressing frustration at rising living costs and housing shortages attributed to the influx of remote workers and tourists.
Researcher Raul Hernandez from La Laguna University co-authored a study showing that more than a quarter of short-let premises belong to companies, highlighting the commercialization of short-term rentals. The local holiday home-owners association, Ascav, proposed creating a tax for all holiday accommodation providers to fund solutions to solve the housing problem, indicating the potential economic burden on property owners under stricter regulations.
Sources: Tenerife24, KarloBag, WTAQ, BNB Calc, Airbnb News
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6) Demand for co-living and flexible housing in the Canary Islands will grow as more digital nomads move in
The rise in digital nomads has been a significant trend over the past few years, particularly in 2023 and 2024. The Canary Islands have become a popular destination for these remote workers, with around 8,000 digital nomads from countries like Germany, France, the U.K., and the U.S. choosing to work from there. This influx is largely due to the region's attractive lifestyle and the government's efforts to draw in more professionals through campaigns like #AfterTeleWork.
The global shift towards remote work, accelerated by the COVID-19 pandemic, has led to a growing demand for flexible housing options. Digital nomads are looking for places that allow them to balance work and leisure, and the Canary Islands offer just that. The increase in coworking spaces, with over 500 new locations in Las Palmas de Gran Canaria alone, highlights the region's readiness to accommodate this new workforce.
Moreover, the economic impact of digital nomads in the Canary Islands is substantial. In 2022, over 86,000 teleworkers contributed more than €167 million to the islands' tourism revenue. This economic boost underscores the importance of providing suitable living arrangements, such as co-living spaces, to continue attracting these professionals. The local government has also invested significantly to enhance the region's appeal to remote workers, despite some local concerns about the social impacts of increased tourism.
Sources: Allwork.Space, DANews.eu, MightyTravels.com
7) Demand for luxury ocean-view properties in the Canary Islands will rise as wealthy buyers look for exclusivity
The luxury real estate market in the Canary Islands has been experiencing significant growth, particularly in 2023 and 2024. This is largely due to the rising demand for high-end properties with premium amenities, such as private pools and expansive terraces, which are attracting affluent buyers seeking a luxurious lifestyle. Notably, areas like the southern coast of Tenerife and exclusive neighborhoods in Gran Canaria have become hotspots for luxury real estate.
One of the key factors driving this growth is the increasing number of high-net-worth individuals (HNWIs) who are drawn to luxury destinations worldwide. This global trend has contributed to the growing demand for exclusive properties in the Canary Islands. Additionally, properties located near the coast or with sea views are highly sought after, commanding higher prices due to their prime locations and picturesque views. Coastal areas such as Costa Adeje in Tenerife, Maspalomas in Gran Canaria, and Playa Blanca in Lanzarote are particularly popular among buyers.
Furthermore, the Canary Islands have seen a dramatic increase in property sales, with a 45% rise in 2023 compared to the previous year. The total value of these sales also rose by 53%, indicating a general trend of increasing prices. Luxury property prices in Santa Cruz de Tenerife and Las Palmas have also seen significant increases, confirming a consistently rising trend where demand continues to outstrip available supply.
Sources: Vulkan Properties, Destinations by LeadingRE, Arum Group, Immobiliare Alle Canarie
8) Demand for international schools and family-friendly homes will rise as the expat community in the Canary Islands grows
The Canary Islands have seen a notable increase in their population, with a significant rise in foreign residents. In 2023, the population grew by 25,738, reaching over 2.2 million by January 2024. This growth was largely due to a 4.71% increase in foreign-born residents.
As more expatriates move to the Canary Islands, the demand for international schools is rising. The American School of Las Palmas, for example, has a growing student body with 30% of its students coming from international families. This trend reflects a broader global increase in international school enrollment, which grew by 53.5% from 2013 to 2023.
The economic outlook for the Canary Islands in 2024 and 2025 is positive, with GDP growth expected to create 49,000 new jobs. This economic boost is likely to increase the demand for family-friendly properties, as more expatriate families seek suitable housing.
The demographic shift towards a younger, family-oriented expatriate population, with a 7.5% increase in people born abroad, further supports the need for international schools and family-friendly properties.
Sources: danews.eu, Search Associates, BBVA Research, Canarian Weekly
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9) More young professionals moving to the Canary Islands for remote work will shift the demographics
The Canary Islands are quickly becoming a top choice for young professionals seeking remote work opportunities.
With the global shift towards remote work, the Canary Islands have launched campaigns like #AfterTeleWork to attract over 30,000 professionals in the next five years. This initiative shows the region's dedication to being a prime spot for remote workers. The islands are already home to around 8,000 digital nomads from places like Germany, France, the U.K., and the U.S., who have set up their remote offices there.
One of the key reasons for this influx is the significant upgrade in internet infrastructure on the islands. Thanks to the 2Africa subsea cable system, connectivity has improved, making it easier for remote workers to stay connected. This, combined with the islands' sunny climate and lively culture, makes them an ideal place for those looking to mix work with leisure.
Young professionals are drawn to the Canary Islands not just for the work opportunities but also for the lifestyle. The islands offer a unique blend of work-life balance, with plenty of outdoor activities and a welcoming community. This makes it a perfect destination for those who want to enjoy life while working remotely.
As more young professionals move to the Canary Islands, the region is expected to see a demographic shift. This change is driven by the increasing number of remote workers who are choosing to live and work in this beautiful archipelago. The local economy is also benefiting from this trend, with new businesses and services catering to the needs of these digital nomads.
Overall, the Canary Islands are positioning themselves as a leading destination for remote work, offering a unique combination of connectivity, culture, and climate that is hard to resist.
Sources: JoinGenius, AllWork.Space, EuropaWire, DANews
10) Rural property prices in the Canary Islands will drop as younger people choose city life
In the Canary Islands, rural areas are seeing a population decline as young people flock to cities.
Young folks are chasing urban life for better jobs and amenities, leaving the countryside behind. This shift is pushing up property prices in cities like Las Palmas and Santa Cruz de Tenerife, where prices have soared to €1,663 and €1,767 per square meter respectively. Meanwhile, rural property values are lagging.
City life is all the rage, with social media buzzing about urban perks like entertainment and healthcare. The trend is clear: younger generations are drawn to the vibrant city scene, which offers more than just a place to live.
Remote work is also playing a role, letting people enjoy city life while working from anywhere. This flexibility means they can have the best of both worlds—urban excitement and job stability.
With urbanization on the rise, rural properties are losing their appeal. The younger crowd is less interested in the quiet life, preferring the hustle and bustle of city living.
As this trend continues, expect rural property prices to dip as demand shifts to urban areas. The Canary Islands are no exception to this global movement.
Sources: Canarian Weekly, BBVA Research, CaixaBank Research
11) Rents for oceanfront properties in the Canary Islands will rise as demand grows
In recent years, the Canary Islands have become increasingly popular among international tourists, especially from northern European countries. This surge in tourism has led to a higher demand for coastal properties, as visitors seek accommodations with ocean views. As a result, rental yields in these areas have been on the rise.
Additionally, there has been a noticeable increase in property sales in coastal regions of the Canary Islands, such as Tenerife and Fuerteventura. Luxury residential developments with modern designs and stunning ocean views are particularly attractive to buyers, further driving up demand and, consequently, rental prices.
The limited availability of coastal properties also plays a significant role in the rising rents. As more people look to purchase or rent oceanfront properties, the supply remains constrained, leading to higher prices. This trend is supported by data showing that coastal regions in the Canary Islands offer higher rental yields, especially in popular tourist areas.
Sources: Canarian Properties, Le Figaro Properties, Destinations by LeadingRE
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12) Rent prices in inland areas will drop as more people choose coastal living
In recent years, we've seen a noticeable shift in where people prefer to live in the Canary Islands. Coastal areas have become increasingly popular, and this trend has had a significant impact on rental prices. For example, in Las Palmas de Gran Canaria, rental prices have nearly doubled from €7.2/m² in 2014 to €13.1/m² in 2024. Similarly, in Santa Cruz de Tenerife, prices have also doubled over the same period.
One of the main reasons for this shift is the growing appeal of coastal living. Many people are drawn to the coast for its pleasant climate and lifestyle benefits. This is supported by the fact that the Canary Islands are a top travel destination in Europe, attracting 13 to 14 million tourists annually. The high tourist traffic increases the demand for housing in coastal areas, further driving up rental prices.
Additionally, the economy of the Canary Islands heavily relies on tourism, which accounts for a third of the GDP. This reliance leads to greater investment in infrastructure and amenities in coastal regions, making them more attractive for both residents and tourists. As a result, more people are choosing to move from inland areas to the coast, contributing to the decline in rent prices in inland regions.
Sources: Canarian Weekly, Travels of a Life
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.