Last Updated on 14th October 2024
Deciding between buying a home in Spain or the Canary Islands is a tricky choice. Both destinations are popular with second homeowners, real estate investors, expatriates and retirees – but with some distinct variations in terms of lifestyle, living costs and the types of property available to purchase.
While the rules for international buyers are consistent throughout Spain, the autonomous taxation authorities in the Canaries set their own tax rates. This factor may influence your decision-making, especially if you are buying a permanent home.
The seven islands within the Canaries enjoy a milder climate, being towards the southern tip of Europe. However, they may also be less desirable for business owners who are keen to purchase a property close to the major commercial districts—typically Madrid, Barcelona, Malaga, Zaragoza, and Murcia.
Let’s take a look at the pros, cons and contrasts between the mainland and the islands to help you review the best options based on your property ownership objectives.
Understanding the Differences Between the Canary Islands and Mainland Spain as a Foreign National Buyer
We’ve mentioned the climate, and given that the island archipelago is close to the coast of Morocco, it’s naturally hotter than some regions within Spain, particularly those towards the north of the country. Weather aside, the Canaries are one of the highest-demand areas in Spain for international buyers – topped only by the Balearics.
Part of the appeal is the lifestyle, which is a little slower-paced and more relaxed than that in the mainland cities, albeit with significant increases in the local population during the peak tourism periods, when roughly 14 million tourists flock to the islands.
There are also differences in the language, with people speaking Canarian Spanish rather than Castilian Spanish – although this is unlikely to prove a stumbling block for expats and investors with a good grasp of the language.
Types of Properties Available to Buy in Mainland Spain and the Canaries
From a real estate perspective, there is a diverse array of property types to choose from. The Canary Islands have an affordable but stable real estate market, with an average price of €2,400 per square metre.
Buyers can purchase houses, villas, sea-view apartments, beachfront homes, and townhouses in Tenerife, Gran Canaria, and Las Palmas. In the current market, standalone homes range from €220,000 to €3 million and above.
The Spanish property market offers a wider amount of choice, with villas in resorts and coastal towns, apartments and townhouses in the cities, and farmhouses and generous villas in more rural areas.
Average property prices throughout the Canaries compare favourably to the average cost of €3,550 per square metre on the mainland, although this is slightly skewed due to the higher property prices in specific locations, such as the capital.
Madrid, Barcelona, Malaga, and Marbella are among the many sought-after destinations in Spain and benefit from international airports – each also has property prices above the national average.
As an indication, we have collated comparable data to show how the national average property prices compare alongside the cost per square metre of buying a home in several cities and towns in Spain and the Canaries.

Las Palmas is considered one of the most affordable cities in the Canaries, while affluent areas like Playa de las Américas and Costa Adeje have a greater proportion of luxury homes for wealthy buyers and investors.
As with mainland Spain, the busiest cities and resorts with larger populations and more amenities carry higher average real estate prices. However, quieter regions away from these tourism hubs remain significantly more affordable than elsewhere.
Rental Yields in the Canary Islands and Other Spanish Tourist Destinations
Foreign nationals buying a Spanish investment or rental property will need to know how the cost of purchasing real estate in either location will impact the rental returns they can expect to generate against their investment.
As a rough indication, rental properties in Tenerife produce an annual rental yield of around 7.5%, outperforming Barcelona, Valencia and Seville, but lower than the average rental returns achieved on properties in Murcia. This is owing to a combination of lower property purchase prices and thriving tourism numbers alongside ample local renters.
More accurate rental income calculations should be available through your selected estate agent, allowing you to assess the location where your investment will prove most profitable.
Differences in Taxation Between the Canaries and Mainland Spain
Aside from preferences around locations, cities, and lifestyle, one aspect that differentiates popular cities and resort towns in the Canary Islands from the cities and metropolitan areas in Spain is taxation, as we’ve indicated.
While the Canary Islands remain part of Spain, there are variations in taxes, including VAT, which makes locally produced goods and products more affordable. The lower tax rate can also impact the cost of furnishing a Spanish residence or holiday home.
Currently, the sales tax rate in the Canaries is 7% compared to 21% in mainland Spain, one of the drivers behind a consumer tourism market where people travel to the islands to purchase products at a lower price than they may be available locally.
The property transfer tax rate in Spain is fixed at 10% of the agreed selling price, whereas this reduces to 6.5% in the Canaries. This means that the overall cost of purchasing a home may be cheaper or that your budget can stretch a little further due to the lower additional costs to factor into your plans.
Owing to municipal autonomy over some elements of the tax system, the Canary Islands also offer one of the lowest corporation tax rates in Europe, at just 4%, which is a key parameter that incentivises investors to the region over the mainland, provided location and proximity to some of the larger mainland cities isn’t a consideration.
Of course, for many international property buyers, the taxation and costs of buying an overseas home may be secondary to the lifestyle, culture, travel connections and quality amenities on offer, but understanding all of these variables should help you make a confident, informed decision about the right location to purchase your ideal Spanish property.
For further support and guidance contact the knowledgeable Chase Buchanan Wealth Management financial advisory teams in Javea, Marbella, and Tenerife.
*Information correct as at September 2024