Where tourism leads property investment tends to follow. And thanks to annual visitor numbers of over one million tourists from just Britain and Ireland alone during 2006 property in Lanzarote is something of a hot ticket currently.
Indeed, the island has become so popular with visitors from Eire that it is estimated that one person in every ten from the Republic visited the Island of Fire last year. Making it the most popular destination in Spain with Irish tourists.
Much of Lanzarote´s popularity with overseas investors lies in the fact that the island enjoys year round temperatures of 21c plus. Creating a year round rental calendar. Add relatively low mortgage rates, stir in annual capital growth rates of 9% and you have the perfect recipe for decent returns.
Over recent years the resort of Playa Blanca in the south of the island has been grabbing most of the attention. As developers here have offered villas with pools from prices as low as €250,000. An entry level for investors that cannot be rivaled elsewhere on the island.
But anecdotal evidence is starting to suggest that development has been, well, overdeveloped. And that over supply has made the holiday rentals market in Playa Blanca extremely competitive. Gone are the days, for example, that local property management companies would offer guaranteed rental contracts.
So many overseas investors are now turning their attention to other resorts on the island. Along up the coast from Playa Blanca and the islands main resort of Puerto del Carmen lies Costa Teguise. When Playa Blanca was still genuinely just a small fishing village back in the 1980´s Costa Teguise was Lanzarote´s boomtown.
Regarded as the most up-market resort on the island, it boasted new hotels and apartment complexes that attracted moneyed German visitors, as well as the British, in droves.
Much of this initial development of the resort was made under the aegis of the island born artist and architect Cesar Manrique, who envisaged creating 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.
For a time the resort blossomed – but the downturn in the German economy in the 1990´s and the introduction of all-inclusive packages within many of the resorts hotels, plus the entry of more exotic destinations into the holiday market, all took their toll.
And whilst still a popular and attractive holiday destination today, Costa Teguise lags far behind both Puerto del Carmen and Playa Blanca in terms of visitor numbers.
There have been no new hotel or apartment developments here for many years. Residential development has been relatively small scale and controlled too – focusing almost exclusively on the construction of duplexes.
The resort itself appears to lack a central focus. Local authorities have even floated the idea of renaming it the Costa d’Amore in the hope of breathing more life into tourism here.
So you wont find many observers who would disagree with the assertion that Costa Teguise is tired and in need of some form of rejuvenation.
Interestingly however this renaissance looks set to be fuelled by growing demand for residential property. As opposed to a resurgence in tourism.
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“Costa Teguise is basically starting to evolve into a suburb of Arrecife – Lanzarote´s capital city”, asserts Gaby Critchley of Costa Teguise based estate agents Location. “Property prices here have shown good growth over the last five years, in line with the rest of the island. And demand remains strong. But increasingly this is coming from local Spanish buyers. Not people looking for a holiday home.”
Even the briefest tour of the resort is revealing – and supportive of this theory.
As once popular tourist complexes, such as Las Coronas and Playa Rocas are now shedding their former skins and being sold off as residential units.
Elsewhere in the resort, new builds offering reasonably priced and well built residential units, such as El Palmeral, have sold quickly too. And there’s a lot more to come – as a major new development from Algol, one of Spain’s major construction companies, is only just gathering momentum.
Algol´s Teguise Greens development offers a mixture of terraced duplexes and semi-detached villas and will essentially extend Costa Teguise up the hill towards the golf course, making it virtually inseparable from Tahiche – already regarded, incidentally, as a popular outer suburb of Arrecife.
A further major Algol development is also planned elsewhere within Costa Teguise. But where will the demand come from?
Gaby Critchley from Location Estate Agents thinks she knows: “The bulk of demand for these new build properties is going to come from local Spanish buyers – often professionals - many of whom are already working in Arrecife”.
“Costa Teguise is just five minutes drive from the islands capital. Local transport links are good too. And Arrecife remains the main business hub of the island.
For example, wherever you buy your property on Lanzarote you´ll still end up going into Arrecife to complete the transaction – as this is where all of the lawyers, notaries and related ancillary professions are based.”
“Costa Teguise also retains all of the basic attributes that made it a booming tourist development in the first place, i.e. great beaches, relaxed feel, proximity to all of the islands main cultural attractions and it still boasts the only golf course on the island”.
“Combined with a choice of good schools covering all educational levels in close proximity it offers a very attractive lifestyle option for anyone who works in Arrecife. Or indeed elsewhere on the island.”
On closer inspection, the renewed development of Costa Teguise appears to be part of a broader overall strategy on the behalf of the Ayuntamiento. As the basic infrastructure of roads and streets for these new units has been in place for many years.
This staged development – allowing construction in one area whilst holding back in others - certainly ensures against a whole glut of new build properties ending up on the market all at the same time right across the island.
More cynically perhaps, this could also be perceived as a way of ensuring that development on the island appears to be relatively restrained. Unfettered and simultaneous construction in a number of resorts at once would, no doubt, attract a great deal of criticism on environmental grounds and possibly even impact negatively on tourism. As local authorities make great play of Lanzarote´s eco-friendly credentials and status as a UNESCO protected biosphere.
Either way, there can be no doubting that Costa Teguise appears to be on the verge of a new development boom. Creating opportunities for many different types of property investment. And possibly even establishing it as Lanzarote´s latest property hot spot.