Reductions in business property rentals

Due to the significant impact of the crisis in the Canaries, a large percentage of tenants of business properties are asking for a reduction in the rent they pay to their landlords. The continuous closing of businesses allows tenants to have stronger negotiation power. While this is a global phenomenon, it is very marked in the Canaries, especially in tourist areas, where all-inclusive rates are available in nearly all tourist resorts, so tourists are neither eating nor drinking outside their resorts. A decrease in consumption has caused a remarkable reduction in rent in business properties. In the tourist areas of Lanzarote, this reduction is quite noticeable. In Lanzarote, this situation is maybe more relevant in the area of Costa Teguise, in the capital Arrecife and in Puerto del Carmen and Playa Blanca. Beach front business properties have suffered a remarkable reduction in activity, but in less busy areas, the problems are even worse. Because of this, landlords have become more flexible and have started reducing rent, especially when faced with the possibility of losing their tenants.

Sales and Rental of houses

According to Infocasa, in the province of Las Palmas, the average price per square meter in September 2009 was 1,851 €, and has decreased 10,6% in the last year. In the province of Tenerife, the average price for the same period was 1,824 €, although last year the price reduction was 6.6%

The province of Las Palmas is one of the places in Spain where the prices of houses have fallen the most.

The most expensive cities in Spain are San Sebastian (5,497 €/m2); Barcelona (4,154 €/m2); Bilbao (3,892 €/m2) and Madrid (3,711 €/m2)

Generally speaking, housing prices fell 10.9% in Spain last year. The housing price has been decreasing for 20 months now. The average price of second-hand houses in August 2009 in Spain was 2,386 €/m2. The maximum historic average price, reached in April 2007, was 2,952 €/m2. From its maximum value until now it has fallen 19.2 %. This is due to the great decrease in sales and because of the great difficulties in being granted a mortgage. Before the crisis, it was easy to get a mortgage and you could even get it for 100%. Now the banks have turned off the faucet and are asking for many warranties before giving a mortgage, which will only be for 80% of the assessed value. Regarding rentals, the average monthly rent for houses in July 2009 in Spain was 8.93 Euros per square meter. In the province of Las Palmas, it was 7.18 €/m2. In the province of Tenerife the average Price in July 2009 was 6.97 €/m2

The reduction of rent is due to the increase of unoccupied houses and also because many immigrants have returned to their countries. People in the Canaries, according to a survey made by the real estate agency pisos.com, are looking for houses basically not exceeding 150,000 Euros, with three bedrooms and a size of 80 square meters, on average.

Regarding the prices, in the province of Santa Cruz de Tenerife, buyers are willing to pay a higher price than their neighbours: between 165,000 and 180,000 Euros. However, in Las Palmas, the most wanted price for a house is between 135,000 and 150,000 Euros, which is the average figure for the Canaries and similar to the national average.

Regarding the rental situation in the Canaries, an 80 square meter, three bedroom flat is the most sought after, according to some surveys made by pisos.com, above the national average, whose average demand consists of a 2 bedroom apartment with a surface of 70 m².

The average rent that future tenants are willing to pay in the Canaries ranges between 400 and 500 Euros. In Spain, the average rent is between 500 and 600 Euros.

The last Euribor data (1.23 %) is a good break for Spanish families, which are seeing how thei mortgage revision reduces their monthly payment and opens new purchase options for people who are looking for a house at this moment.

When thinking about buying a house, there is always the doubt which is the better choice, buying or renting. The difference between monthly payments for these modalities may help to decide. If we consider that the average rent in Spain for a 70 m2 house is 540 € per month and we compare it to the average mortgage payment in Spain, which is 862 €/month, we notice that renting is 37.4% cheaper than buying a house. Because of this, the best option would be to pay rent instead of a mortgage.