This week we are bringing you a guest posting from Nick at Lanzarote Guidebook. You can check-out their site at http://www.lanzaroteguidebook.com/
The Spanish owned holiday island of Lanzarote has long been a hot favourite with overseas investors. Thanks to a stable tourist industry and a clement year round climate. Which has, until recently, ensured a full 12 month rental calendar and a steady stream of income for thousands of holiday property owners.
But just like elsewhere in Spain the property and tourism sectors appear to be slowly grinding to a halt. As visitor numbers fall away and mortgage finance vanishes.
The latest arrival figures from AENA, the Spanish airport operators, certainly make grim reading for the many thousands of owners of apartments and villas in Lanzarote. As visitor numbers slumped once again last month, by over 24%. Whilst the island has now welcomed 18% fewer tourists during the first six months of this year than in the same period in 2008.
Traditionally the UK has been the engine room of both the island’s property and tourist markets for well over 20 years. Last year for example British tourists accounted for over 50% of the 1.5 million foreign holidaymakers who visited Lanzarote. Whilst British buyers have been, by some distance, the largest group of overseas property investors by nationality.
However arrivals from the UK have slumped alarmingly this year. Falling by nearly 27% last month and by just over 20% for the year to date. As 85,508 fewer British tourists touched down on the island during the first six months of 2009. Thanks to the depreciation of sterling against the euro combining with the impact of the credit crunch to erode consumer spending on European holidays.
The weak pound has also contributed to a decline in property transactions and enquires from UK buyers. As any gain made from falling property prices on the island has been more than offset and undermined by the exchange rate.
Local estate agents all report a growing number of reduced price properties on their books. But with few buyers around to take advantage. With many pointing the finger at local banks – which have tightened lending criteria to such a degree that it has become extremely difficult for overseas investors to secure finance.
As a result, the Lanzarote property market is now largely becalmed. Whilst the island’s tourist industry struggles to adjust to a sharp reduction in arrivals and occupancy levels.