Every year, I write a guide to the current state of the Las Palmas de Gran Canaria property market and give my predictions for the next 12 months. Here’s the Las Palmas property 2020 report.
It’s a tricky job this year because there are so many factors that could affect property prices. Mostly, it has to be said, in a negative way.
On a local scale we have a deflating touristic bubble in Gran Canaria, the collapse of Thomas Cook, a decline in holiday rental investment and a big increase in new-build property.
Further afield Brexit, the uncertain global economic outlook, and uncertainty surrounding the Spanish political scene could all affect Las Palmas property prices.
On the positive side, several years of economic growth and increasing employment have breathed life into the Las Palmas and Gran Canaria property market. Mortgage interest rates remain low and Las Palmas’ economy is not solely dependent on tourism.
Las Palmas Property market evolution in 2019-20
Average house prices across Spain increased at a steady rate during 2019. Areas popular with foreign buyers (the Canary Islands, Balearics and Costas) led the way along with big cities like Madrid and Barcelona. That said, average prices in Las Palmas are still below 1500 euros per square metre. This compares to 3000 euros per metre in the main Spanish cities like Madrid and Barcelona.
Prices in Las Palmas, and Gran Canaria as a whole, rose steadily in 2019 with a 6.5% rise by the end of the third quarter. Average prices are still 27.5% below peak prices in 2006. Price rises were focused in high-demand areas.
In November, the Canarian Tax Authority announced that earnings in 2019 from IPT and AJD taxes (associated with property purchases) are down almost 1% from 2018. Properties in Las Palmas are take longer to sell than at the beginning of the year and buyers are negotiating harder.
Three main local factors are a drag on property prices:
- Tourist numbers were declining even before the demise of Thomas Cook (10-12% of the island’s tourists stay in the capital these days). Less tourists visiting Gran Canaria means less revenue for the island and more caution amongst local buyers.
- Investment in holiday rental property in Las Palmas slowed down during 2019, especially for the smaller one-bedroom apartments popular in previous years. This is likely due to declining yields after a big increase in holiday let supply. However it also has to do with a rule change that prevents resident businessmen reinvesting their profits in holiday lets.
- There is a lot of residential building in Las Palmas and many local buyers are opt for off-plan property.
Gran Canaria may be an island but property prices here are still sensitive to global events.
Brexit and the resulting weak pound have reduced the number of inquiries from British buyers in Las Palmas. General uncertainty surrounding the global economy and Spanish politics also make buyers more cautious.
In conclusion, I think that Las Palmas property prices are likely to flatten out or even decline slightly in 2020. However, it’s a tough call.
What if the Millennial generation starts to buy property rather than rent or live with their parents? What kind of property would they buy?
IMPORTANT: This article is an opinion piece based on my experience in the Las Palmas property market. It should not be used as a definitive guide to price trends. If you’re considering buying a Las Palmas property, please contact me for a detailed chat about the best options for you.
Las Palmas property prices: Zone by zone
Average property prices in Las Palmas de Gran Canaria vary considerably. From under 1000 euros per square metre in the higher parts of the city to 5000 euros per metre on the beachfront.
Prices in the areas of northern La Isleta barrio closest to Las Canteras beach rose. The zone is still the most affordable area of the lower part of Las Palmas. There are still bargains in the area back from the beachfront.
Prices in the Puerto district between La Puntilla and Mesa y Lopez have are amongst the highest per square metre. The glut of small tourist rentals has affected demand for one-bedroom apartments and especially those with no outside space. Areas such as Mesa y Lopez are currently disrupted by building work but will benefit from pedestrianisation.
Beachfront prices, always the highest in Las Palmas, are currently just under 5000 euros per square metre for a property in good condition with balcony or small terrace. Sale prices of properties in need of a thorough refurbishment are lower (a reasonable refurbishment costs around 500 euros per square metre and this should be factored into the sale price).
The southern beach neighbourhood of Guanarteme, most popular with local buyers, is in a construction boom with many buyers opting for a deposit on an off-plan rather than second-hand property. So far, prices haven’t been affected but apartments take longer to sell.
In Alcaravaneras, just south of Mesa y Lopez, prices have risen and almost caught up with the rest of the Port neighbourhoods.
In Arenales, Triana and Vegueta, there are bargains, especially if you refurbish an older property. Prices vary considerably depending on condition and exact location. The difference can be over 1000 euros per square metre just over a single road; for example between Triana and San Jose.
Las Palmas mortgages and interest rates in 2020
There is still no indication that the EU plans to raise the EURIBOR above historical lows so mortgage rates in Spain remain excellent. Resident buyers can now borrow 90% of the price of a first or second property (but also need another 10% to pay taxes and fees).
Non-residents require a 20-30% deposit plus 10% for taxes and fees. Spanish banks still expect residents to have lived and worked in Gran Canaria for a year before offering a mortgage.
It is always best to apply for a mortgage with several banks. You stand a better chance of getting the best rate. You also avoid the rare but real possibility of ‘computer saying no’ at the last minute.
Read all about getting a mortgage in Gran Canaria in 2020.
Las Palmas rental prices in 2020
After several years of rising rental prices in Las Palmas de Gran Canaria, rents have flattened out at the end of 2019. This is likely due to holiday rental owners returning their properties to the residential property market. The local press is already reporting drops in rental prices of up to 10%.
I think this trend will continue in 2020 as holiday let returns continue to drop and people move into new-builds and rent out their original property.
Holiday let property in the capital
The number of locals buying Las Palmas property as tourist rentals dropped during 2019. Holiday let returns have dropped due to the rise in supply. If tourist numbers don’t recover, I expect this trend to continue.
If you are a foreign buyer planning to use your property for holidays, tourist rental is still an excellent option. However, full-time tourist rental investment needs careful planning these days. A holiday let in Las Palmas needs outside space or excellent view to earn a decent return after taxes and expenses. Or real character and thoughtful interior design.
The days of holiday let investors buying any flat close to the beach, decorating it at IKEA and making 15% on Airbnb are over.
New builds in Las Palmas
Barely a week goes by in Las Palmas without an old building coming down and the constructors moving in. So far, the market has absorbed all the new builds coming onto the market but demand isn’t endless. At some point, promoters are going to saturate the market with new apartments (typically sold at a slight premium to equivalent second-hand property).
If you’re interested in a new build property in Las Palmas de Gran Canaria, get good guidance and make sure that the constructor or promoter is following the (strict) Spanish rules.
Buying a Las Palmas Property in 2020
I expect buyers to have a little more leeway in 2020 thanks to a slowdown in the market. However, there won’t be much opportunity for cheeky offers way below the market value. It’s important to work with an experienced local agent who can tell you exactly what a property is worth rather than relying on listing prices. Minor factors can make a big difference to property valuations in Las Palmas.
We could well see a rise in the number of one-bedroom apartments on sale as holiday let owners cash out.
Even in a calmer market, good property sells fast and preparation puts you at the front of the queue. It’s still important to have mortgage paperwork (NIE, work contracts, banks statements, marriage certificates, etc) prepared. A 10% deposit ready in a local bank account also helps speed things up. Getting an unofficial pre-approved mortgage agreement with a couple of banks is a good idea.
Selling a Las Palmas property
If you plan to sell a Las Palmas apartment in 2020, please contact me for a free valuation and market study. I was one of the top-selling estate agents in the Canary Islands in 2018 and 2019 and one of the top ten selling RE/MAX agents in Spain (out of over 3000).
These days, only thing that pops up faster in Las Palmas than new builds is new estate agencies. Mainland Spanish franchises are moving in and new local agencies are opening. Many, even national brands, have limited experience of the Las Palmas and Gran Canaria property markets.
I’m Laura and I’m Las Palmas resident estate agent. I’m one of the best-selling RE/MAX estate agents in Gran Canaria and help dozens of buyers and sellers every year.