Top 5 Locations in Tenerife With the Highest Rental ROI

Location matters more for returns than finish quality

Every month we talk to clients who ask: "where in Tenerife should I buy so the apartment actually earns money?" The answer isn't "the closer to the ocean, the better" — that's a big oversimplification. Return on investment (ROI) depends on several factors at once: availability of a short-term rental licence (Vivienda Vacacional, VV), the profile of tourists visiting a given resort, seasonality, and management and community costs.

Below we've put together five locations on the south of Tenerife that have consistently generated some of the highest yields for years — both for short-term rentals and long-term "winter" stays for guests from northern Europe. The percentage ranges given are indicative, as of today — the actual result always depends on the specific property, its standard, and the quality of management.

What actually drives ROI in Tenerife?

Before we get to the ranking, two caveats we raise with every client before showing a listing:

• A VV licence isn't automatic. It depends on the bylaws of a specific community of owners (Comunidad de Propietarios), not on the town itself. The same complex may have it while the one next door doesn't. We always verify this before booking a viewing.
• Rental income is taxed in Spain, whether or not you're a resident. Non-residents declare it through Modelo 210 — worth building into your ROI budget from the start, not after the fact.

With that out of the way, here are the five locations we regularly point income-focused clients toward.

1. Los Cristianos — stability and year-round occupancy

Los Cristianos was once a fishing village and today offers one of the most stable returns on the island — not always the highest on paper, but the most predictable. The key is the guest profile: families and retirees from the UK, Germany, and Scandinavia who come for longer "winter" stays (4–8 weeks), which significantly lowers the risk of empty weeks outside peak season.

• Entry price: usually the lowest of the five — 1-bedroom apartments in complexes with a pool are available at a clearly lower level than in Costa Adeje.
• Tenant type: long-term "winter" tourists plus classic holiday rentals in July–August.
• Risk: older buildings sometimes mean higher community (Comunidad) fees — worth checking the building's condition before buying.

For more on the differences between this resort and neighbouring Las Américas, see our separate location comparison.

2. Playa de las Américas — the highest nightly rates

If you're aiming for the maximum nightly rate rather than the lowest risk, Playa de las Américas usually wins. It's the most cosmopolitan and "night-life" part of the south — restaurants, beach clubs, the Golden Mile (Milla de Oro), and proximity to entertainment venues attract tourists willing to pay a premium for a location close to a vibrant centre.

• Entry price: medium — clearly lower than the prestige zones of Costa Adeje, but higher than the older part of Los Cristianos.
• Tenant type: short-term holiday tourists, typically younger and without children.
• Risk: seasonality is more pronounced here than in Los Cristianos — peak season delivers very strong rates, but February–May tends to be quieter.

3. Costa Adeje (Playa Paraíso and Fañabé) — premium, but with real demand

Costa Adeje is synonymous with luxury in Tenerife, but from an ROI perspective the most interesting picks aren't the most expensive zones (El Duque, La Caleta) but the mid-tier belt around Playa Paraíso and Fañabé. The standard is still high and the beach and pools are close by, but the price per square metre is noticeably lower than right by Plaza del Duque, which improves the rent-to-purchase-price ratio.

• Entry price: higher than Los Cristianos and Las Américas, but well below the ultra-premium zones of the same resort.
• Tenant type: wealthier European tourists willing to pay more for a heated pool, air conditioning, and high-end finishes.
• Risk: strong competition among listings — without good photos, description, and management, an apartment can easily get lost among similar offers.

You'll find a full breakdown of this area, including sub-locations, in our Costa Adeje investment guide.

4. Golf del Sur and San Blas — an underrated alternative

This is a location we regularly recommend to clients looking for a higher ROI measured by the rent-to-purchase-price ratio (yield), not just the nightly rate. Golf del Sur and neighbouring San Blas are a quieter, more residential part of the south, popular with golfers and families, with lower entry prices than Costa Adeje for a similar standard of pool complex.

• Entry price: clearly lower than Costa Adeje, comparable to or slightly higher than Los Cristianos.
• Tenant type: golfers, families, longer stays outside peak season.
• Risk: a smaller base of restaurants and attractions within walking distance than Las Américas — this needs to be communicated clearly in the rental listing.

5. Palm-Mar — a small market with growing interest

Palm-Mar is the smallest of the five locations on this list, but that's exactly why it can be the most interesting in terms of the price-to-growth-potential ratio. This intimate, quiet town with good sports infrastructure (tennis courts, an oceanfront promenade) is attracting a growing number of guests looking for an alternative to crowded Las Américas, while staying close to Reina Sofía airport.

• Entry price: similar to or slightly lower than Golf del Sur.
• Tenant type: a growing group of tourists "discovering" the location, increasingly also long-term remote-working tenants.
• Risk: a smaller market means fewer comparable transactions — worth spending extra time analysing a specific listing before buying.

Quick comparison

Location	Entry price	Tenant type	ROI strength
Los Cristianos	lowest	winter + holiday	stable, year-round occupancy
Playa de las Américas	medium	short-term holiday	highest nightly rates in season
Costa Adeje (Paraíso/Fañabé)	medium-high	premium European	strong demand, high standard
Golf del Sur / San Blas	low-medium	golfers, families	favourable rent-to-price ratio
Palm-Mar	low-medium	growing, mixed	value growth potential

What to keep in mind before you run the numbers on paper

1. Check the VV licence before you buy, not after. Without it, legal short-term rental isn't possible, and that's usually the largest share of the planned income.
2. Factor in management costs. Cleaning, key handover, guest support — this is typically a double-digit percentage of rental income if you use a management company. We cover this in more detail in our article on buying an apartment for rental.
3. Include community fees and IBI. Older complexes in attractive locations can be cheaper to buy but more expensive to maintain — this lowers the real, not just the paper, ROI.
4. Don't buy on "hearsay". Return figures from listing portals can be inflated. It's always worth asking for the actual occupancy history of a comparable property in the same complex.

Summary

The highest rental ROI in Tenerife rarely comes from one "magic" location — it's always a combination of place, licence, standard, and management quality. Los Cristianos and Golf del Sur offer stability at a lower entry price, Playa de las Américas and Costa Adeje offer higher rates with higher competition, and Palm-Mar is a bet on growing popularity in the coming years.

Wondering which of these locations fits your budget and investment goal? Get in touch — we'll show you specific listings and real occupancy data before you make a decision.