Investing in the Canary Islands 2024
The Canary Islands end 2023 with nearly a million more foreign tourists than before the pandemic.
The Canary Islands received a total of 14.1 million foreign tourists in 2023, confirming their tourism record, according to figures released yesterday by the Canary Islands government and based on Aena passenger figures.
The figure represents the closing of the fiscal year with nearly one million more visitors than in the pre-covid period in 2019. In percentage terms, the increase is 6.9 percent
The island of Gran Canaria, for its part, received 80,000 more people than in 2019.
With the 2023 figures, the British market emerges as the bastion of Canarian tourism, with about 5.7 million people arriving in 2023, meaning that roughly 4 out of every 10 foreigners landing in the islands are British.
Despite the complicated economic times facing most of the planet, people still consider travel a fundamental pillar of their lives and, according to hotel industry sources, prioritize it over other material goods, such as buying a new car.
This new mindset, coupled with the archipelago’s weather conditions, which have been even warmer this past year; the diversion of tourists who normally go to countries such as Egypt, Turkey or Tunisia because of the conflicts in the Middle East have allowed the Canary Islands to continue to be one of Europe’s tourism powerhouses.
Enaire, the national air navigation operator, recorded an all-time record for flight handling in 2023 with about 2.2 million flights statewide, a 10 percent increase over 2022. Of this total, 8.1 percent was handled by the Canary control center, with 380,004 flights. Of these, 180,482 flights were international, an increase of 7 percent; 159,464 were domestic, an increase of 7.7 percent; and 40,058 were overflights, an increase of 16.2 percent. It continues to be one of Europe’s tourism powerhouses.
Statistics show that the new season could bring even more tourists, further cementing the Canary Islands’ reputation as a top destination.
This steady growth in tourism creates a growing demand for accommodations, both short and long term. Investors can take advantage of this demand by purchasing properties to rent to tourists, thus ensuring a stable and profitable revenue stream. In particular, vacation homes (Viviendas Vacacionales) saw a 50 percent increase in bookings over previous years, demonstrating a robust and growing demand for this type of accommodation.
Growing Real Estate Market
That said, the Canary Islands, have been emerging for several years now as an increasingly attractive destination for international real estate investors, especially Italians. This interest is fueled by a number of significant economic advantages that the Canary Islands offer over Italy, making them a preferred choice for those seeking to diversify their real estate portfolio. Italian investors find opportunities in the Canary Islands particularly attractive due to cultural and linguistic familiarity, as well as favorable economic conditions.
Lower Costs of Real Estate Investment in the Canary Islands than in Italy
Climate and Lifestyle
In addition to the financial aspects, the Canary Islands offer a year-round temperate climate and a spectacular natural environment, making it a desirable destination not only for investment but also for those looking for a second home or a place to retire. These factors help keep the Canary real estate market dynamic and attractive to a wide range of buyers.
Purchase Costs and Taxes
One of the main advantages of the Canary Islands over Italy is lower acquisition costs and a more favorable tax burden for investors. In Italy, real estate investments are often burdened with high costs, including purchase taxes and other legal fees. The Canary Islands, on the other hand, has a more favorable tax regime, with generally lower purchase taxes than many Italian regions. In addition, property taxes and real estate income taxes can be less onerous, offering investors the opportunity to maximize net returns.
When comparing the costs of buying a home in the Canaries with those in Italy, significant differences emerge that make the Canaries a more advantageous option for many investors.
Italy: In Italy, property purchase taxes can be high and vary depending on the nature of the purchase (first home, second home, investment). The registration tax, mortgage tax and cadastral tax can add up to 10-12% of the declared purchase price.
Canary Islands: In the Canary Islands, purchase taxes are generally lower than in Italy. The property transfer tax (ITP), which corresponds to the registration tax in Italy, is usually lower and can range between 6 percent and 8 percent depending on the value of the property. In addition, the Canary Islands offer tax exemptions for first-time homebuyers and other concessions that can further reduce the tax burden.
Notary and Legal Costs
Italy: Notary and legal costs in Italy are traditionally higher than in other jurisdictions. Italian notaries charge fixed fees that can be proportional to the purchase price of the property, adding a significant cost to the overall transaction.
Canary Islands: Although notary and legal costs in the Canary Islands can vary, they tend to be lower than in Italy. This can be attributed to lower notary fees and a legal structure that can be less complex than the Italian system.
Property and Maintenance Taxes
Italy: Annual property taxes in Italy (IMU) can be significant, and must be considered as ongoing costs in addition to the initial purchase. In addition, property maintenance and management in Italy can incur higher costs due to local regulations and legislation.
Canary Islands: Annual property taxes in the Canary Islands (Impuesto sobre Bienes Inmuebles – IBI) tend to be less onerous than the Italian IMU. Property maintenance and management costs can also be lower due to the mild climate and weather conditions that require less maintenance than in more continental regions.
The quick resale of the property
Investors who purchase property on the island often see an increase in property value within a few years, allowing them to realize a significant ROI. Unlike the Italian real estate market, where sales times can be longer and price trends more stable, Gran Canaria offers a more dynamic environment that adapts quickly to global market fluctuations. Investors who choose to buy here not only enjoy potential long-term capital growth, but also the ability to resell their properties relatively quickly and with a positive financial return
Conclusions
Investing in real estate in the Canary Islands can offer a number of significant economic advantages over buying in Italy. From lower purchase costs and less burdensome taxes to lower notary and legal fees, the Canary Islands have become an attractive choice for Italian investors seeking to expand their real estate portfolio abroad. These advantages combined with a growing market and favorable environment make the Canaries a promising destination for anyone interested in international real estate investment.
Daniele Piccoli
Maspalomas July 15, 2024
