Costas suffer as Tenerife recovers

In a climate when UK house prices are stagnant, the Costas are feeling the pinch and other islands in the Canaries are finding properties hard to shift, Tenerife Property Shop reports sustained demand for property in the south.

On the mainland, a variety of bodies have mixed predictions for the rest of 2005.  According to the Director of the Cadastre (the local government property registry), Jes's Mirana, says that he expects the slowdown to continue over the next few years.

BBVA expects that a property market slowdown will be more marked in the Spanish coasts such as the Costa Del Sol and the Costa Blanca. Their report notes that the average time-to-sell in these areas is getting longer and predicts that demand from foreign buyers will decline modestly in the future, though not immediately.

A straw poll of agents selling property to foreigners indicates that demand from foreign buyers appears to be clearly down compared to previous years.

Elsewhere in the Canaries, such as Fuerteventura, the problems are slightly different. An estimated 6,000-7,000 new Fuerteventuran homes will be constructed in the next couple of years, as well as five new golf courses. The vast majority of buyers are expected to be British, most of them Woofties ' Well-Off-Over-Fifties.  But so far there has been a very slow uptake.

Locals warn that investors who buy off-plan, hoping to rent out and then re-sell a couple of years down the line, should be wary of the pace of Fuerteventuran development, which is currently in over-supply. Some accuse an authoritarian outgoing mayor of granting far too many licences to build and ignoring proper legal procedures in the haste to get everything signed.

Tenerife, in contrast, with its moratorium on turistic building, has no such oversupply.  Tenerife Property Shop report a growth in sales and enquiries which will lead to sales in the coming months.  'The figures we release may not be indicative of the island as a whole.  Tenerife Property Shop has an extensive marketing campaign which naturally brings in a large number of potential buyers.  Our figures may differ from other agents in Tenerife,' commented Mary Spencer, a Director of Tenerife Property Shop.

She went on to say that Tenerife Property Shop had forecasted a drop in demand as early as last summer but had taken measures to compensate.  'We represent a very large number of vendors and take this responsibility seriously.  Tenerife is in competition in the world market to a much greater extent than ever it was.  We have invested substantially to ensure that demand for property through Tenerife Property Shop is not only sustained, but will grow.  We are only just starting to see the results.'