As I finish my seemingly more regular lunch of a cheese sandwich and a couple of glasses of red wine, I’m thinking that this will have to stop when we get back to normal, my doctor certainly wouldn’t approve at all…but the question of normality stuck in my mind…what will normal be when we get over this pandemic?
Like a lot of people, I’ve had a fair amount of time on my hands since the enforced lockdown here in Spain and although I’m pleased that I’ve managed to keep up some sort of daily routine – yes, lunch included – I’ve been thinking about things and how Tenerife as a tourist destination and its real estate industry will be affected after this pandemic is over and done with.
My first thoughts are, from a tourism point of view, there’s no way that people will totally ignore Tenerife as a place to come on holiday.
Yes, we might have been one of the first islands in the Canaries to have had a breakout, thanks to the Italian doctor who stayed at the H10 Costa Adeje Palace and with Spain having been one of the hardest hit countries with just over 112,000 confirmed cases as of 3rd April 2020, but seriously, once this is over and people are able to travel, I can’t see Tenerife and the Canary Islands being in any way different destinations than they were before the pandemic.
In fact, thinking about it now, I’m wondering if the crisis might even prove to be a bit of boost to the Canary Islands in the long term.
I’m thinking about it this way, over the last 6 to 8 months, there was a massive defection of tourists, changing from their regular Canary Island holiday to other destinations such as Egypt and Turkey.
With their borders having been opened again and the promise of no terrorism, airlines, hotels and tourism companies offered spectacular deals in order to attract the tourists back…at that time Tenerife, and I imagine the other islands, seemed to be sitting back on its laurels and keeping prices at a premium.
The airlines appeared to be continually charging premium prices as well, seemingly forgetting that other, less expensive and just as desirable destinations existed.
Although this crisis will hit many people’s pockets and livelihoods, thinking in a positive way, this kick in the teeth to tourism may move the airlines, hoteliers and tourism businesses to consider dropping their prices and offer some great deals to get the ball rolling here again in Tenerife.
Are we going to go into a recession?
The property market will probably take more time to get back to some sort of normality.
It’s not going to be a simple case of just offering some good prices, like the tourism industry will be able to do…people are still going to be a bit concerned about their savings and may think twice about spending a large lump of money on a second home.
Over the last 2 to 3 years prices have been rising and in some cases, to a ridiculous level.
Every day…yes, seriously, every day, I’d receive an email, a WhatsApp message or see something on a Facebook group or property portal that would make me laugh out loud…
Maybe this crisis will be a kick in the teeth for the property market as well.
We probably needed something like this to happen…maybe this is it.
There was a video recently launched from a professor at the University of Madrid who said that this could cause a dip in the economy, more like the shock to the world of 9/11.
I see her point but I think this crisis is more than that.
When that happened back in 2001, of course people were in shock and wondered what could be the next target, maybe even thinking that it could lead to a world war…but I don’t remember that many companies closing their doors…least of all in other countries that had very little connection with the US.
Maybe I’m wrong and perhaps people did lose their jobs, but I doubt that as many people were affected with the 9/11 event in comparison to the amount of people directly affected by COVID-19…this is a worldwide crisis, there have already been many people who have lost their jobs and who’s businesses will fail…and there’ll be more in the future.
So, with that said, I think there’ll be more of an effect on the property market than 9/11 had, but I don’t think it’ll be to such an extent as the 2008 crisis…there were too many things in play at that time, banks had lent too much money – mainly to the wrong people, interest rates were on the increase and the saving of too many banks which should’ve been left to flounder all led to the Great Recession.
People will be affected, certainly here in Tenerife, there are people being laid off, although hopefully temporarily, but big businesses won’t be affected to such an extent as they were in 2008.
How is this going to affect the property market here in Tenerife then?
After a month to six weeks locked up at home – maybe even longer and who knows how long without being allowed to travel, people will very likely come to Tenerife on holiday but with their minds on a bit of R&R…probably not immediately thinking about buying a property however, there are going to be willing and able buyers who were probably in the process of buying or about to buy before this outbreak and they’ll be sitting on the sidelines with their funds at the ready.
Potential buyers are likely to hang back a bit before they choose to buy because they might feel that they’ll be better off waiting to see what happens to property prices…it’s too early in the process to tell exactly what people’s feelings are going to be.
As tourism is going to be slow to build up again, we’re effectively starting from zero, there are going to be property owners who rely on tourism income to pay their mortgage, this is the type of property that will probably fall in price reasonably quickly, as any owner in that position will want to make their property attractive to any potential buyer in the hopes of selling before they miss any mortgage payments.
The owners with no mortgage and with no real rush to sell might hang out for their existing ticket price but will likely need to reduce if there’s going to be any chance of them selling in what could be a market favouring buyers in the short term.
Tenerife will still be the dream island of many future property buyers…COVID-19 certainly won’t be the end of tourism or the property market for Tenerife and although we’re probably not going to have a long line of buyers waiting at the Tenerife South airport to buy property as soon as the doors open again, it’s not going to be as hard hitting as the 2008 Financial Crisis, so I feel property prices will likely have a bit of a correction over the next 6 to 12 months, with keener sellers wanting to take advantage of capable and willing buyers in the short term.