Finding a bargain area in Tenerife

One of the best ways to give yourself a head start as a property bargain hunter in Tenerife is to choose an area that is likely to rise in value at a faster rate than others. As Tenerife property prices continue their slow rise after stagnating during the recession, some areas will experience greater demand, which will accelerate price rises, while others will lag behind.  A good bargain hunter will need to use market knowledge and experience to home in on the area most likely to grow in value.

The first thing the Tenerife property bargain hunter will want to look at is some history.  He will need to know whether the area was more or less expensive than the average when the recession kicked in.  An area that started the recession with high prices may have been overvalued, but conversely, an area that had low prices may simply be undesirable to live in, and prices may be less likely to recover as it will be lower in demand.  Average prices are likely to be defined by the largest resort areas of Playa de Las Americas and Los Cristianos.  With the largest numbers of properties, these areas set the benchmark for the rest of Southern Tenerife.  So a buyer looking for a bargain area will be looking for somewhere where performance is likely to exceed the rate of recovery in these areas.

To apply this to the property market in the South of Tenerife, it could be argued that the area of Fañabé may have been priced relatively high as prices stagnated.  Transaction levels are currently low in the area, indicating that it has only a small share of current demand.  If demand continues to be low, prices are unlikely to experience much movement and the bargain hunter will need to hunt out specific bargains.

Predicting demand is key to the bargain hunter’s strategy.  Credit is likely to be tighter in the years to come, and that means that second home buyers are likely to have less to spend on their home in the sun.  Whereas most properties purchased in 2006 may have been in the 250- 400,000 Euro range, now the highest range of activity is less than 150,000 Euros.  With the low confidence in banks and restrictions in credit, it is the lower end of the market that is already experiencing high demand.  The more transactions, the faster prices will rise.

But simply looking at property prices is only revealing part of the story, and the canny property bargain hunter in Tenerife will want to probe deeper by looking at how the area itself has changed.  For example, an area may have undergone some improvement recently, which might make it more desirable to property hunters.  For example, the Costa del Silencio / Las Galletas area has enjoyed substantial investment in its infrastructure to change its previously tired image.  It is an area in which property prices were below average and has options for buyers in the sub 150,000 Euro bracket.  Demand for these properties may form the foundation for above average price rises as the area gains in relative price to the average, however much of the area is residential which may dampen its recovery.

The property market in the south of Tenerife is driven by the second home buyer, and any comparisons of areas need to be looked at from this perspective.  An area that is a nice place to have a holiday will rise faster and sooner in value than areas that are primarily residential.  The local Tenerife economy is reliant on tourism, and the recession has slowed it down to a great extent.  As tourism rises, demand for property will also rise in areas that the tourists visit.  It is not until the wealth generated from these tourist filters through to the residents that make their living on the island that residential prices will start to be affected.  In such an economy, the tourist areas will experience recovery before residential ones.

So what will tourists be looking for?  Certainly, the high rise concrete jungles of Las Americas and Los Cristianos are losing favour with the modern tourist, who are more interested in low rise, low density areas.  Sardine packed tourism has been on the decline since the heyday of package tourism in the eighties and early nineties.  Low density planning can be difficult to find in Tenerife’s most popular areas, but is an important factor in considering a property investment which will yield the best returns in the medium term.  Finding a location that can tick all the property bargain hunter’s boxes certainly narrows down the options.

So where do we tip as the best area for a property bargain hunter in Tenerife?  Where prices were undervalued at the beginning of the recession, yet has seen improvements in infrastructure to justify above average rises?  Where bargain hunters can still find property at under 150,000, in a low rise environment that is attractive to tourists?  There is really only one area that fits the bill... click here to find out where!