CANARY ISLANDS RECOVERY

The Canary Islands have been seeing a welcome economic recovery this summer, fuelled by the growth in tourist numbers. Official statistics are supported by further evidence from businesses who report a surge in sales. Increased sales are likely to lead to a recovery in the commercial real estate market and a rise in prices of businesses for sale in the Canary Islands.

Total numbers of tourists increased by 5.8% in July compared with the same month last year according to occupancy statistics from the Canarian Government. Visitors from the most important source countries, the UK and Germany, both saw a growth in numbers. With British tourists declining for the last two years, the 1% rise this year was a welcome reversal for many businesses focused at this sub-market.

Figures released by the airports authority, AENA, indicate that Tenerife proved to be one of the biggest winners with a rise of 13.9%, mainly driven by a 38% surge in passengers from the UK.

Occupancy levels in the islands’ hotels and tourist apartments also rose this July, reaching an average of 70.2%. After the Balaeric islands, this represented the highest occupancy in the country during July. Hotel room prices rose an average of 5.6% compared to 2009.

Local businesses in Tenerife confirm the official statistics. Anecdotal reports suggest that nearly all businesses focused at tourist markets have increased their turnover. Those focused at the British market are heaving a sigh of relief after two consecutive years of decline in tourists from the UK.

As businesses in the Canary Islands recover from the recession and sales rise, prices of businesses are also set to rise through the Autumn. Traditionally, most businesses are bought and sold in the Canaries during these months however this year the growth in enquiries for businesses for sale has already started before the summer has even ended.

Rising demand combined with healthier balance sheets will ensure that most of the bargains businesses for sale, still with recession price tags, will disappear entirely. Buyers are urged to tie vendors into contracts as soon as possible in order to fix prices and avoid potential gazumping.