Investment Opportunities in the Canary Islands: Exploring the Financial Markets
Over 12 million tourists visit the Canary Islands every year. First of all, this is due to the mild climatic conditions without sudden fluctuations in air temperature, which ranges from 19 °C in winter to over 30 °C in summer, constant sea water temperature and low humidity. These factors create ideal travel and living conditions. Clean sea air and a mild climate increase local life expectancy, which averages 83 years, the highest in Europe.
But the Canary Islands are not only attractive because of the good weather. The local tax system also favors the development of the economy. Instead of Value Added Tax (or IVA), which is 21% in Spain, the state applies IGIC (Impuesto General Indirecto Canario) at 7%. Therefore, buying food, clothing, fuel and real estate in the Canary Islands is cheaper than in Europe. The combination of these advantages creates diverse investment opportunities.
Types of investments in the Canary Islands.
There are several ways to invest in Spain. Both the continental part and the Canary Islands have their own peculiarities related to the adopted legislation and taxation, which are directly related to investments of foreign capital and determine the most suitable and profitable investment opportunities. So, in order to successfully invest money, we examine the most profitable local financial markets.
Property under construction.
Equity participation in construction is one of the profitable investment opportunities in the Canary Islands. The average construction time is two years. During this time, the price of a property increases by around 30-40%, depending on the project and location.
When drafting the contract between the construction company and the buyer, the selected property can be reserved for at least 6,000 euros. Then you have to pay another 30% of the cost during the construction process. Upon completion of construction, the company will draw up a purchase agreement on your behalf. For the balance (70% of the cost of housing), you can apply for a mortgage loan with a term of up to 25 years.
So if you only pay 30% of the accommodation costs within two years, you will become the owner of a property in Spain after the construction work is completed. Then you can rent it out and make a profit.
existing property.
The most common investment opportunity in the Canary Islands is to buy an existing property. Due to the high demand for local rental housing, you should consider such housing as a permanent source of income.
Just like co-building, when you buy a ready-to-move-in home, you can take out a mortgage for 70% of the total price. Property in the rest of Spain is subject to higher tax rates and the cost of buying and maintaining property in the Canary Islands is about a third lower than on the continent. At the same time, the annual property tax (IBI) is very low and is between 150 and 600 euros depending on the property value.
The benefits of investing in the Canary Islands are advantages in obtaining residency, the right to reside in Spain for 90 days per semester and the opportunity to earn income from renting out apartments. Apartments with two or three bedrooms are particularly in demand. Therefore, this form of housing is the most profitable in terms of a possible subsequent sale or rental.
travel industry.
The Canary Islands offer travelers plenty of options. For example, you can rent a car in Gran Canaria to move freely around the island or stay in a luxury spa hotel to improve your health. However, from an economic point of view, both housing and car rental in Spain generate income.
In fact, the travel industry is an important contributor to the economy of the Canary Islands. According to calculations, tourism revenue accounts for about 30% of the local gross domestic product (GDP). This means that if you invest properly in this segment, you are guaranteed to make a profit.
So invest in buying or building a hotel, resort or car rental. Favorable economic and climatic conditions promise high incomes for companies in the local travel industry.
commercial real estate.
Another way to generate income from investments is to buy commercial real estate, such as retail space, restaurants or bars. The profitability of investments in commercial real estate largely determines the high demand for rental properties in the Canary Islands, where the tourist season lasts all year round.
In addition to short-term investments, also think about long-term ones. For example, invest in the construction of commercial real estate. Experts point to the lack of retail space, especially in southern Tenerife and Gran Canaria, where the flow of tourists and the need for new commercial centers is increasing every year.
So, the Canary Islands offer unlimited investment opportunities and most of them allow you to have a steady income. Furthermore, besides buying real estate and investing in the travel industry, you can also invest in some promising technology innovation projects in the fields of renewable energy, waste recycling or sustainable transport.
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