Property Investment in Costa Teguise, Lanzarote

Author: Nick Ball, editor of Lanzarote tourist information guide, Lanzarote Guidebook.

Property investment and tourism tend to go hand in hand. As overseas investors seek to capitalize on the sort of regular rental returns and capital appreciation that can be enjoyed in reliable holiday hot spots.

And thanks to a year round temperatures of 21c plus and annual visitor numbers of over one million British and Irish tourists property in Lanzarote remains something of a hot ticket.

Unlike some of the newer emerging markets in Eastern Europe, Lanzarote enjoys a long-standing and popular pedigree.  As a result, British expatriates are now the largest group of non-Spanish nationals on the island.  Comprising around 6% of the total population of just over 127,000 people.  As some of the 850,000 plus British tourists who visit every year choose to either retire or relocate to Lanzarote for good.

And the island has also witnessed an incredible upsurge in visitor numbers from Eire over the last few years.  Attracting around 200,000 tourists from the Republic in 2006 – an incredible one in every twenty of all citizens there. So establishing Lanzarote as the most popular holiday destination for Irish tourists in the whole of Spain.

Until recently, the southern resort of Playa Blanca had been grabbing most of the attention.  As investors have been able to pick up villas with pools here for as little as €250,000.

But the level of development has, inevitably, started to increase the number of holiday villas in Playa Blanca on the rental market.  A situation that is great for tourists – who are able to enjoy wider range of choice and lower prices.  But less so for investors – who are finding the rentals market in the resort increasingly competitive.  With both occupancy levels and returns falling.  Gone are the days, for example, that local property management companies would offer guaranteed rental contracts.

As a result, attention is turning to other parts of the island and other types of investment.  With the northern most resort of Costa Teguise returning to prominence on the property investment radar.

Costa Teguise was once Lanzarote´s boomtown.  Back in the 1980´s it was
regarded as the most up-market resort on the island.  Boasting new hotels and apartment complexes that had Northern Europeans flocking to this small Canary Island.

Much of this initial development was made under the aegis of the island born artist and architect Cesar Manrique, who planned to create a stylish coastal retreat around the main cornerstones of the 5 Star Gran Melia Salinas Hotel and the Pueblo Marinero – now probably best known as the venue for Costa Teguise´s weekly market.

The resort blossomed for a decade or so – but then the German economy went into freefall after reunification and more exotic and novel destinations started appearing in the holiday brochures.

Today, Costa Teguise lags far behind Playa Blanca and the island´s other main resort, Puerto del Carmen, in terms of visitor numbers.  So the property market here has morphed – and is now driven by demand for residential, rather than holiday rental property.

As a result, numerous tourist complexes have thrown in the towel and remodeled themselves as private residential zones. A strategy that is meeting with a good deal of success thanks to Costa Teguise´s close proximity to the island capital of Arrecife.

This geographical advantage is making the resort a desirable location to live for young professionals working in the capital.  As whilst the office is just five minutes way they can still enjoy all of the attributes that made Costa Teguise a popular holiday destination in the first place.  Such as great beaches, the islands only golf course, a water park and hundreds of good quality restaurants.

Rental returns run at around €700 for a basic one bed apartment per month.  Rising to €1200 plus for a decent sized villa with pool.  Figures that are of course lower than holiday rental rates – but which are offset by guaranteed year round occupancy.  And whilst the property market in the UK appears to be on the verge of stagnation prices in Costa Teguise have been rising steadily at around 9% per annum.

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