The luxury real estate market in Spain is witnessing increasingly higher prices, with the Canary Islands emerging as the region with the most significant growth. According to data from the specialized portal Idealista, in April 2024, luxury properties in Santa Cruz de Tenerife saw a 16.6% increase, while in Las Palmas, prices rose by 12.3%. These figures confirm a consistently rising trend, with demand continuing to outstrip available supply.
As previously mentioned, the rise in prices is not limited to the Canary Islands. Across Spain, 28 provinces have seen a significant increase in luxury property prices per square meter. After Santa Cruz de Tenerife, Madrid has experienced the second-highest increase at 13.7%, followed by Murcia at 11.5%, and both Granada and Alicante at 9.3%., while Málaga has seen a more modest rise of 7.3%.
Comparison with the Broader Market
The increase in luxury property prices often surpasses the growth observed in the general real estate market. For instance, in Madrid, while the general market grew by 7.4%, luxury properties saw a 13.7% increase. Similarly, in provinces such as Lleida and Girona, luxury home prices have nearly doubled compared to the general market.
Variations in Growth
According to a report presented by the real estate platform Idealista, not all provinces are following this trend. In Barcelona, although the luxury segment grew by 2.6%, the overall market declined by 0.1%. Additionally, the provinces of Salamanca, Zamora, and Ourense have experienced decreases in luxury property prices, with drops of 1.9%, 1.5%, and 0.8%, respectively.
What Drives the Increase in Luxury Property Prices?
The primary factor contributing to the rise in prices is the scarcity of supply relative to high demand.
The Canary Islands face significant market pressure as they account for only 3% of luxury homes in Spain, with approximately 37% of potential buyers in Las Palmas de Gran Canaria and 50% in Tenerife willing to invest in such properties. While the current real estate stock is insufficient, new projects are being promoted to attract investors from Germany, the UK, France, and Belgium.
Future Outlook
The upward trend in the luxury real estate market prices is expected to continue in the coming months across the peninsula, but more so in the Canary Islands, due to their appeal as a luxury residential destination.
Investments in infrastructure, the development of urban policies emphasizing environmental protection, and the stability and quality of life offered by the islands continue to attract high-net-worth buyers. In this context, the ability of the local property developer to adapt to the demands of the luxury segment will be central to sustaining this growth.
