Tourism Numbers and Property Prices Fall in Lanzarote

British visitor numbers arriving in Lanzarote fell back dramatically in the last month of 2008, according to figures just released by the Spanish airports operator AENA.  This suggests that the double whammy of the credit crunch and the recent fall in the value of the pound against the euro has started to bite deep into Lanzarote´s all important tourism industry.

The UK has long been the number one marketplace for Lanzarote tourism, traditionally accounting for well over 50% of all visits made to the island by non-Spanish nationals, but the latest AENA figures reveal that British tourist numbers fell to 55,024 visits in December 2008.  These numbers were down from 74,167 in December 2007 revealing a decline of over 25%. 

But it’s not just tourism numbers falling, property prices are also falling in Lanzarote…this may be bad news for vendors and those in business on the island, but it is good news for anyone interested in a holiday home or investment property in this fabulous location…

Whilst the decline in British visitors accounted for the bulk of the fall that Lanzarote experienced in December, reduced numbers were also recorded from other key markets.  Visitor numbers from Germany, (Lanzarote´s second largest source of tourists), declined by 12%, and visitors from Ireland, (the third largest source of tourists for the island), dropped by 17% in December versus 2007 figures.  Clearly we are all feeling the pinch at the moment, and this is having an immediate knock on effect on popular tourism destinations globally.

Overall, the total foreign visitor numbers to the island declined by only 1.91% across the course of last year, but clearly these annualised figures mask the scale of the falls in December when the reality of the world’s economic situation became only too apparent for many consumers. 

There is some good news however, the fact that Lanzarote has been impacted along the lines of all other tourism destinations means that sentiment has not changed, the island is still as popular as it ever was – the only thing that has changed for the short-term is people’s affordability!  Proving that the island is still so popular, there has been a significant growth in visitor interest recorded from the Scandinavian markets where the island is really only now being promoted heavily.  Visitor numbers from Norway were up by 11.69% last year, followed by Sweden where numbers were up 9%, and Finland which supplied an increase of 7.26% in visitor numbers.

For a property investor, all of these figures and statistics are vitally important.  They make it clear that for the short-term there are no huge profits to made in Lanzarote, but that there is sustainable and even improving demand for tourism based accommodation over the longer-term.  Additionally, as stated, the fall in visitor numbers and the overall lessening of interest in eurozone property thanks to the weakness of the pound has resulted in Spanish property prices falling across the board, and even on popular tourism islands like Lanzarote.  So, an investor who times an entry well can buy at rock bottom prices and be in the market and well positioned ready for when the tourism numbers climb back up again.

Some local companies are reporting that there is still buoyant demand for apartments and holiday villas in Lanzarote from British and Irish consumers during the busy booking month of January, but it is not possible to predict whether this trend will be maintained across the course of 2009.  Personally we doubt it, we think that 2009 will be a tough market for tourism and a tough market for real estate – but as with all these things, such a situation is cyclical, and tourism and property will return to favour in time. 

The latest AENA figures certainly suggest that there will be little respite for the Lanzarote property market in the near future as demand and transactions fell away sharply in the latter part of 2008.  The situation was driven by waning consumer confidence and the difficulty of securing mortgage credit – as local banks followed the international lead and tightened their lending criteria too.

Property prices on the island are now softening – as more local estate agents report an influx of reduced price properties and bank repossessions are starting to appear on the market.  One local agent is currently marketing a three bedroom villa with pool in the Rubicon Marina development that was once valued at €348,273 in 2006 for €210,000, proving just how much room for movement there is in the market.  A cash buyer can make their entry into the Lanzarote property market today for far less than they could just a year ago, and be confident that their real estate asset will rise in value when the world’s economic situation improves.