After a miserable year for overseas property owners on Lanzarote there are some signs that a corner may just have been turned in terms of the popularity of the island as a holiday destination. And as we all know, where the tourists lead, the property market eventually follows!
The rate of decline in terms of visitor numbers to the island fell dramatically last month according to the latest arrival figures just released by the Spanish airport operators AENA. This is a small sign of positivity, but could it herald brighter skies for Lanzarote property and tourism economies?
The Spanish Canary Island has year round sunshine and a very long history as a popular destination, particularly with European travellers, so if it can just reach a point of stability in terms of visitor numbers, perhaps this could bode well over the short to medium term for the property market as well. Owners of homes on the island certainly hope so because property prices in Lanzarote are just so low at the moment – of course this means that there are rich pickings for bargain hunters!
More good news for Lanzarote comes in the form of news that visitor numbers from Germany – which is the island’s second largest tourism target market – actually rose last month – so the first signs of positive growth during 2009 have been seen in the Canary Islands which is bringing a great deal of hope back to a destination that has really suffered over the past couple of years.
To date it had been a torrid year for Lanzarote´s tourist industry though, as much like across the rest of Spain the island has endured monthly double-digit drops in visitor numbers with occupancy levels in Lanzarote apartments, villas and hotels falling to all time record lows during May and June.
However the darkest days of ‘El Crisis’ may now just be over as AENA´s statistics for October reveal that foreign tourist arrivals fell by ‘just’ 8.17% versus 2008 figures - nearly half the rate of decline recorded in previous months - whilst as stated, the number of arrivals from Germany actually increased. The number of tourists landing on the island from Germany was 20,418 passengers – up from 19,912 German arrivals in October 2008. This is the first positive growth in any of Lanzarote´s major tourist markets this year.
Lanzarote is far from out of the woods yet though as the island relies heavily on the UK for visitors: in 2008 UK arrivals accounted for over 50% of all foreign tourists to the island. However, as the UK has been hit doubly hard by the combined impact of the weakness of sterling against the Euro and the effects of the credit crunch, this has resulted in fewer Brits going abroad for holidays and Lanzarote alone has seen an effective shortfall in terms of British visitor numbers of close to 20%.
If you want to put a positive spin on this though, even this rate of decline in visitor numbers showed signs of slowing down last month, with the island’s tourist and property markets further cheered by the recent addition of a whole raft of new cheap flights to Lanzarote from Great Britain. Thanks to AENA´s initiative to waiver airport taxes and charges until the end of 2010 - a move specifically designed to help revive Spain´s flagging tourist sector – this immediately caught the attention of low cost operators Ryanair, which launched no fewer than 16 new services to Lanzarote alone last month!
At the same time, property prices have fallen to their lowest levels in eight years with price reductions more than compensating for the current weakness of sterling against euro, and offering those with liquidity the opportunity to snap up genuine bargains in a year round, evergreen holiday destination.
An example of a real bargain that we’ve found on the island is a four bedroom villa with private pool, located in the popular resort of Playa Blanca in the south of the island. It is set in a plot of 990m2 and is on the market for just €212,000. An enormous reduction on a property that is ideal for a holiday rental program and which would command upwards of £600 per week in regular rental income.
Whilst newer holiday destinations and investment hot spots such as the Black Sea resorts in Bulgaria may take much longer to recover from the collapse of the property investment bubble, the fundamentals on which Lanzarote’s popularity are based remain solid. Proof of this fact is that even during the course of this last year when everywhere in the world has been suffering a decline in tourism numbers, the island still expects to have welcomed well over 1.2 million foreign tourists. You see, the sun continues to shine all year round on Lanzarote which makes it undeniably attractive for a holidaymaker – and if you’re a property investor, this translates to a full twelve-month rental calendar!
