Good Time for Foreigners to Invest in Lanzarote

The formerly red-hot property market on the island of Lanzarote appears to be cooling somewhat. This may indicate a slight downturn in the island's economy. It may also mean that now is a good time for foreigners to invest in Lanzarote property.

Tourism officials and economists have certainly not written the island paradise off in terms of its real estate potential. The number of tourists visiting it has actually increased by 8.7 percent over 2007. This is despite reports from Spain's National Institute of Statistics of a drop in mortgage approvals.

It appears that the increasing number of visitors is offsetting the economical hit coming from a softer real estate market. Lanzarote continues to thrive in its tourism sector. Hotels, bars, restaurants, clubs and other businesses haven't reported any major downturns in business. Business owners on Lanzarote continue to keep a watchful eye on the real estate market though. They wonder when, or if, they will be hit by the cool market.

Just a few short years ago properties on the Spanish island sold almost as quickly as they were listed. Bidding wars were not uncommon. Investment properties made up a large percentage of its real estate market. Many homes, villas and apartments were purchased as vacation homes. They would be rented out to tourists when not being used by the owners themselves. Others were second homes to wealthy Europeans and Brits who were less inclined to invest in Lanzarote property for business reasons. They merely wanted guaranteed residence at peak tourism times.

Today, properties are languishing a little bit longer on the island. However, the market is still in a fairly healthy position, even though properties are moving slower. It's likely that the cooling market is resulting from a widespread tightening on lending criteria for mortgages. Brits used to invest in Lanzarote property because of the area's notoriously low interest rates. Today they are finding it harder to secure mortgages.

Lanzarote property is still a sound investment for those who can pass the rigorous lending tests. Short-term investments may not necessarily be advisable during this time. Long-term Lanzarote property investments will probably be able to withstand the small downturn. The market is best left for investors who won't be anxious to unload their purchases in the next 10 years or so. The tourism industry doesn't appear to be taking a dive, so rental property holdings are still worthwhile.

The island is famous with tourists for its volcanic origin. Foreign tourists make up the bulk of the island's visitors. They come for the spectacular scenery and the balmy weather. Its temperature remains fairly constant year-round. While other parts of Spain can get uncomfortably hot, Lanzarote's average temperature is around 22 degrees. This makes it ideal for tourists who enjoy abundant activity rather than just sitting around on the beach. The climate is conducive to all kinds of sports, including biking, horseback riding, water skiing, hiking and climbing. The island is especially popular with golfers. It's home to several world-class golf courses. Visitors can enjoy mild weather and incredible mountain and ocean views while exploring the greens.

How long the Lanzarote property market will stay cool remains to be seen. It's definitely a buyer's market. Those who have every wanted to own a piece of paradise may find no better time to invest in Lanzarote property than now.