Lanzarote, the eastern most of the Spanish owned Canary Islands, is located just 80 miles away from the coast of West Africa and has been a hot favorite with overseas property investors for decades. Thanks in part to an extremely clement climate which delivers year-round rental returns – as well as offering a blissfully relaxing environment for anyone seeking a holiday home or retirement property for their own use.
Lanzarote Property Prices
The price of property for sale in Lanzarote has been rising steadily since the 2008 economic crisis and as yet show little sign of being impacted by the current Covid 19 pandemic. The cost of an entry level studio or one bed apartment in one of the main resorts such as Puerto del Carmen has increased by as much as 60% over the last decade alone – and now stands at around the €100,000 mark. Whilst larger properties such as villas with private swimming pools have also benefitted from similar levels of capital appreciation over the same period. With entry level prices here starting at around £250,000.
Year–Round Rental Returns
Whilst these capital appreciation figures are reasonably impressive it is rental returns that are the real draw for investors here. As Lanzarote, along with the other Canary Islands, is the only part of the European Union which has a year–round holiday season. Which means that holiday homeowners here enjoy a full 12 months–worth of income every year – as opposed to say six or seven months on the Spanish mainland.
The rental returns are substantial too. A standard one bedroom apartment in one of the main resorts can successfully rent out for as much as £600 per week across the course of the year – sometimes even more if it is located on a holiday complex with good quality facilities or close to a beach.
Whilst holiday villas with private pools command rentals in excess of £1,000 per week – rising sharply during periods of peak demand such as summer and the Christmas holidays.
Tourist demand has been very buoyant too, as a growing number of holidaymakers opt for a holiday rental over a hotel. Many owners enjoy upwards of 70% occupancy – although it is also worth noting that competition in the holiday rental sector also continues to increase as more and more investors enter the market.
Licensing is also a potential issue for buyers. As officially, properties require a Vivienda Vacacional license from the tourist authorities to enable legal letting. However, this provision has been largely overlooked and unenforced by the authorities for decades and they have as yet been unable to accommodate the rise of ‘sharing economy’ web platforms such as AirBnB and Booking.com within their legislative framework. Creating something of a grey area.
Growing Tourist Market
Lanzarote has enjoyed a dramatic increase in tourist visitor numbers over the last 20 years, fuelled largely by the growth in availability of cheaper flights to the island with budget operators such as Ryanair and easyJet.
Indeed, only last week, the Hungarian carrier Wizzair also unveiled their new plans to operate regular services to the island from London Luton airport – so there is little sign of any cut back in services to Lanzarote over the longer term despite the current pandemic.
This increased seat capacity has helped to double the number of arrivals in 20 years to over 3 million visitors in 2019 – with around 50% of these holidaymakers arriving from the UK.
Which Are The Best Areas To Buy In?
The majority of overseas investors tend to focus their search on the three main island resorts of Puerto del Carmen, Costa Teguise and Playa Blanca – all of which offer a decent diversity of investment options from small holiday apartments through to luxury villas.
Along with reliable rental returns – as all are very popular destinations.
As a result, these markets are also competitive too – each boasting thousands of rental options for holidaymakers. Which means that owners will require some marketing savvy or the services of a decent lettings agent to secure their slice of the rental pie here.
Rural tourism has also been growing in popularity – and little wonder as Lanzarote has some amazing scenery and unique attractions away from the main resorts.
Property prices out in the countryside also tend to be a little cheaper – which means investors can pick up large older properties and historic fincas in need of renovation from around £150,000. Many of which are then transformed into attractive, boutique rural rentals and small hotels.
The North of Lanzarote is widely regarded as the real heart and soul of the island as here there has been little in the way of the sort of tourist overd evelopment that is evident on other islands in the Canaries and across the Spanish Costas.
Villages such as Tabayesco, Mala, Guatiza and Punta Mujeres are all within a short radius from the popular beach at Arrieta – which is a firm favourite with tourists. Whilst Famara on the North West coast of the island is also in demand amongst investors.