Introduction
At Hola! Hosts, there are two things we do great. The main one is that we help current Canary Islands' holiday home owners take their vacation rental management to the next (income) level. The second great thing we do is to help individuals and investors identify properties in the market with high-return vacation rental potential. How do we do that? We have innovated the service like no other company in the island, by adding local vacation rental data to the decision-making process. This is beneficial in two ways. First, it lowers the risk of need up investing in a property that cannot deliver the expected return, and second, helps discover opportunities in areas of the islands where the competition could be less tough. Our aim is not only to help in finding a profitable and risk-free investment, but to find one tailored for the buyer's financial, location, and property's preferences.
Approach to Results
Averages Are Just an Indication
Although the income levels by municipality do bring some light into what are the most profitable municipalities to invest in, the figures below are averages. These averages are a combination of the income of all property segments within that municipality, from the cheapest to the most expensive. Also within those municipalities there are more profitable and less profitable areas, so for a realistic analysis, each case has to be handled individually.
Income Is Not Return
Averages by themselves are just part of the truth. The other half are property prices since those mark the investment levels. Even if a certain municipalities average is great, if the property prices are high, the return could just be average. On the other hand, a municipality with a medium average income could be a better option if the holiday homes prices in that are low. This has to be analysed case by case, and that's what Canary Home Invest, our sister company, does for individuals and investor's interested in investing in holiday homes in the Canary Islands.
Data Sources and Validity
We are using the data from a top industry leader in the analysis of vacation rental, AirDNA.co. The data is collected from the top three platforms in Europe. These are AirBnB, VRBO, and Booking.com. The data is from March 2023. Notice that even though the data fluctuates as new data comes in, these fluctuations are not big swings, therefore the data can be trusted at least for the next 12 months.
Islands Analyzed
For this analysis, we focused on the most touristic municipalities in the top five touristic islands. These are La Palma, Tenerife, Gran Canaria, Fuerteventura, and Lanzarote.
Results of the Analysis
The indicators shared are (1) average daily rate (ADR), (2) average occupancy rate (OCC), and (3) average revenue (ARE). All of these are per year, and are based on the data from the previous 12 months of rental activity of all holiday homes in each municipality, listed on rental platforms.
Results by Island
La Palma
Santa Cruz: ADR €71, OCC 79%, ARE €1105
Fuencaliente: ADR €64, OCC 70%, ARE €868
El Paso: ADR €79, OCC 74%, ARE €1126
Tijarafe: ADR €93, OCC 78%, ARE €1314
Puntagorda: ADR €90, OCC 82%, ARE €1474
Tenerife
Adeje: ADR €107, OCC 79%, ARE €1447
Arona: ADR €91, OCC 79%, ARE €1235
Granadilla de Abona: ADR €83, OCC 77%, ARE €1056
San Miguel de Abona: ADR €98, OCC 74%, ARE €1277
Puerto de La Cruz: ADR €67, OCC 77%, ARE €899
La Orotava: ADR €97, OCC 77%, ARE €1395
Santa Cruz: ADR €78, OCC 81%, ARE €1223
Gran Canaria
San Bartolome de Tirajana: ADR €105, OCC 71%, ARE €1391
Mogan: ADR €103, OCC 68%, ARE €1247
Las Palmas: ADR €82, OCC 79%, ARE €1119
Agaete: ADR €95, OCC 74%, ARE €1394
Valleseco: ADR €110, OCC 53%, ARE €1507
Santa Brigida: ADR €118, OCC 67%, ARE €1558
Fuerteventura
La Oliva: ADR €87, OCC 79%, ARE €1284
Antigua: ADR €82, OCC 75%, ARE €1138
Tuineje: ADR €71, OCC 70%, ARE €1033
Pajara: ADR €85, OCC 76%, ARE €1188
Lanzarote
Yaiza: ADR €149, OCC 82%, ARE €2125
Tias: ADR €91, OCC 86%, ARE €1549
Teguise: ADR €85, OCC 83%, ARE €1394
Haria: ADR €84, OCC 77%, ARE €1332
Top Municipalities per Island
La Palma: Puntagorda: ADR €90, OCC 82%, ARE €1474
Tenerife: Adeje: ADR €107, OCC 79%, ARE €1447
Gran Canaria: Santa Brigida: ADR €118, OCC 67%, ARE €1558
Fuertenventura: La Oliva: ADR €87, OCC 79%, ARE €1284
Lanzarote: Yaiza: ADR €149, OCC 82%, ARE €2125
Top 5 Municipalities
Lanzarote - Yaiza: ADR €149, OCC 82%, ARE €2125
Gran Canaria - Santa Brigida: ADR €118, OCC 67%, ARE €1558
Lanzarote - Tias: ADR €91, OCC 86%, ARE €1549
La Palma: Puntagorda: ADR €90, OCC 82%, ARE €1474
Tenerife: Adeje: ADR €107, OCC 79%, ARE €1447
Analysis of Results
Results by Island
La Palma
The results are mostly what was expected but Puntagorda, coming in 1st, was a surprise, especially having the highest occupancy rate in the whole island.
Tenerife
In Tenerife it was no surprise to see the top touristic municipalities. The surprise came in in number two, with la Orotava, a not typical tourism destination. This municipality though has some of the best views, food, and nearby wild beaches in Tenerife.
Gran Canaria
The results follow the trend in Tenerife but go even further, with three non-typical tourism destinations (Agaete, Valleseco, Santa Brigida), two of them mostly rural, generating higher AREs than the touristy counterparts.
Fuerteventura
Here there are no surprises. The ranking follows the order of most to less touristy municipalities within Fuerteventura.
Lanzarote
Lanzarote is by far the most profitable island for investing in a holiday home for vacation rentals and the municipality of Yaiza beats by far any other in the Canary Islands. Here there were no surprises in the ranking.
Top Municipalities per Island
When it comes to which municipality tops each island, again, there were no surprises, apart from Gran Canaria, where the real municipality of Santa Brigida beat all tourism destinations in the island. Definitely an area to keep the attention on and promote to new investors.
Top 5 Municipalities
When it comes to the top five independently of the island, it was no surprise that Lanzarote would have two in the first five. The surprises came in 2nd place, with Santa Brigida being the most profitable area for vacation rentals and shortlist in Gran Canaria, and with the exceptionally high OCC of Puntagorda in La Palma, making it to 4th place.
Conclusion
Despite the results just being averages of the different towns within a municipality, they still provide useful insights for the foreign investor coming to invest on a holiday home for vacation rentals in the Canary Islands. For those interested to look in closer, we have the tolls to do so and we will personalize the results based on your preferences regarding investment level, location, and property type. That type of analysis, supported by in-depth return scenarios, will be the perfect combo to support investors in making the best investment decision based on the results they want to obtain.
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Why would you hire us to manage your vacation rental property in the Canary Islands? Here are eight reasons why your holiday home is best managed by Hola! Hosts. Read the post.
Want to understand the Canary Islands' vacation rental industry a bit better? Here is our most current market analysis.
Ready to get in touch? We are glad to evaluate your property or help you find investment opportunities in the market. We make use of local industry data to identify the properties being sold that have the highest vacation rental potential. Contact us now!