The Inside Story of Lanzarote’s Property Market

There are few places in the whole of Spain that have seen their population grow quite so rapidly and by so much as the island of Lanzarote. In the last twenty years, the island's population has more than doubled, from 65,000 to 141,000 residents.

This has had all kinds of implications for the local infrastructure and economy, not least in relation to providing enough housing for the influx of immigrants. Many of those choosing to come and live on the island are former residents of northern Europe, attracted by the amazing climate in the Canary Islands.

With this level of population growth, many would expect the island to have changed its appearance dramatically in the last two decades. But thanks to very strict building controls, Lanzarote has not been buried under tall apartment blocks.

Instead the model for most development has been in the construction of private residential homes, with a few social housing projects normally restricted to the capital of Arrecife. The effect on the Lanzarote property for sale market has been to keep demand for housing relatively high.

For those who have been able to purchase property during this period of growth, there is the added security of a large market of people looking for long term rentals on Lanzarote. Especially since the effects of the credit crunch have made buying a property more difficult in Spain as elsewhere.

And when this is combined with the year round presence of thousands of tourists, many of whom prefer to rent private villas than stay in a hotel, it is easy to see how the property market has been protected from the bigger falls in demand experienced in other Spanish regions.

In the southernmost town of Playa Blanca, for instance, many of the villas built over the last ten years are now rented out by the week to holidaymakers. In fact property in Playa Blanca went through something of a boom, as the town more than tripled its size in a few short years.

At present, there is little new housing being added to the market, as most construction businesses bide their time until there is a notable upswing in demand. But this inactivity has not dampened the price of resale properties by much, as only a small percentage have been forced to sell in the meantime.

Instead, many property owners are using their villas to earn some income until the recovery is well underway.