At the end of 2019, before the world realised how dangerous the Coronavirus was, I wrote a Gran Canaria property guide for 2020. I predicted a slight drop in property prices on the island.
The market showed signs of a slowdown with February sales figures across Spain down 6% year-on-year.
However, all bets and predictions were off once the Coronavirus pandemic took hold. We are now in uncharted territory and won’t know the full effect on Gran Canaria property for some time.
In the short term, the Gran Canaria property market is frozen
The Spanish government announced a national State of Alarm on March 13 that continues in force until at least May 10. It effectively stopped both daily life and economic activity in Spain and the Canary Islands. Even stricter rules on non-essential work applied from March 28-April 12.
However, as of Monday April 13, some non-essential workers such as lawyers returned to work. Work on finalising sales agreed pre-alarm started again (although progress is slow due to work-at-home rules).
Property visits are still not allowed and estate agencies and most bank offices remain closed so little else can be done.
The State of Alarm is likely to be relaxed gradually during May.
Gran Canaria property prices in 2020
Making predictions at this time is impossible but we do know some things about the post-lock down property market.
Private sellers and estate agencies have dropped prices on properties listed before the pandemic. Initial drops are of between 10% and 20%. However, many reductions are on properties that were priced optimistically in the first place.
We also know that there will be people who choose or need to sell once the lock down ends. Many will price their properties attractively in order to get a sale.
Buyers with funding in place will be waiting to snap up opportunities so there is a window to make sales. Owners who want to sell should get their property on the market before this first wave of buyers makes their purchases.
Light at the end of the tunnel? 2021 and beyond…
The Spanish real estate industry predicts a sharp fall in property prices followed by a quick recovery. A short-term blip before tourism comes back on-stream and we return to normal.
It’s an optimistic prediction based on the best-case scenario of a fast track vaccine followed by the immediate recovery of international travel.
More cautious heads warn that it could be 2021 before international tourists return in significant numbers. And tourism accounts for 35% of the Canary Islands’ GDP, along with 350,000 jobs; 40.4% of total employment.
With the entire industry mothballed, expect downward pressure on property demand and prices.
However, there are positives as well.
The banks will still lend as they have not suffered a 2008-style liquidity crisis. In fact, the Spanish state will likely encourage lending to stimulate the economy.
With the whole island and most foreign owners in confinement, expect people to emerge with new priorities, ambitions and, unfortunately, changes in personal circumstances. This translates into people buying and selling homes.
I expect an increased focus on property with outside space (new-build architects take note) and also more interest in rural property or homes with gardens. This is already showing up in property portal searches.
The local effects in Gran Canaria
Property prices in Gran Canaria depend on local factors so the effects of Covid-19 vary by zone.
For example, Las Palmas property prices are less dependent on tourism than in the island’s resorts. The main buyers and sellers are locals and civil servants and many others continue to earn. The port, for example, is largely independent of tourism.
Despite new build properties there is still a lack of good quality property in Las Palmas especially in high demand areas such as close to Las Canteras. This lack of supply puts a floor under the value of property.
In south Gran Canaria, will a travel hiatus persuade owners of holiday properties to sell or will they just sit it out? And if prices drop, will it encourage a whole new generation of foreign buyers to buy a holiday property?
Rental prices in Gran Canaria will fall
Residential rental prices will fall in Gran Canaria as holiday rental owners put their properties back into the residential market. Many may even opt to sell, bringing high quality property in excellent locations onto the market.
In south Gran Canaria, many non-resident property owners will simply opt to sit out the disruption at home. However, with most tenants on reduced incomes, rental prices are likely to fall.
Selling a Gran Canaria property remotely
Until at least mid-May, work life in Spain is restricted due to the Coronavirus. However, the Canary Islands government has announced that it plans to get the local economy back up and running as soon as possible.
Almost the entire process of selling a Gran Canaria property can be done remotely. As a seller, you don’t even have to be on the island if you work with a professional agency. All paperwork can be ordered online, reservation contracts can be signed digitally and the actual sale carried out by a lawyer or trusted representative with power of attorney.
For more information about the process, see my detailed guide onto selling a Gran Canaria property remotely (link coming soon).
IMPORTANT: This article is an opinion piece based on my professional experience in the Gran Canaria property market. It should not be used as a definitive guide to price trends. If you’re considering buying or selling a Gran Canaria property, please contact me for a detailed chat about the best options for you.