Whilst other sectors of the Lanzarote property market remain relatively buoyant, the island’s third largest resort of Costa Teguise is showing distinct signs of a downturn. A number of new developments are sitting unoccupied, and estate agent closures are mounting according to our sources at the Lanzarote Guide Book.
Back in the 1980s Costa Teguise was the hot new destination on the Spanish island of Lanzarote, it was created as a sister coastal resort to the old island capital of Teguise which is around 5km inland. The project was guided by the island born artist and architect Cesar Manrique, and was anchored by the Sol Hotel Group’s flagship hotel, the five star Gran Melia – which is still widely regarded as one of the best hotels in Lanzarote.
Initially this new, man-made resort blossomed as an upmarket alternative to Puerto del Carmen along the coastline. It attracted well-heeled visitors from across Northern Europe as well as investors from mainland Spain. Indeed, such was the prestige of the development that the King of Spain even established his own residence on the outskirts of Costa Teguise. But today there’s a property squeeze going on in Spain’s Costa Teguise!
Where tourism leads, property market investment tends to follow – particularly when examining property in Spain – and during the 1990s the resort became a real investment hot spot with hundreds of overseas buyers snapping up apartments and holiday villas.
Today this picture of prosperity has faded though. Even before the realisation of the current credit crisis, the property market in Costa Teguise was undergoing a significant transformation thanks to the arrival of a new resort rival, namely Playa Blanca in the south of the island. This began draining visitor numbers and investment away from Costa Teguise.
As a result, many former holiday complexes in the resort such as Playa Rocas for example, were already in the process of remodelling and remarketing themselves as residential accommodation in a bid to tap growing demand from local buyers – who were starting to view Costa Teguise as more of a residential suburb of the nearby capital city of Arrecife.
Today however, domestic demand has all but drained away as local banks have tightened their mortgage lending criteria, whilst overseas investors have turned their attentions to property in Playa Blanca or Puerto del Carmen instead. In these resorts tourist numbers remain relatively buoyant, and so investment into buying fly to let holiday rentals is still viable. All of this is leaving estate agents and developers in Costa Tegusie high and dry of course.
The impact of this deepening crisis is evident across the entire resort. Residential Las Maretas for example, one of Costa Teguise´s highest profile property developments, has benefitted from expensive marketing campaigns and repeated price reductions, yet the development’s seafront villas remain unoccupied. In the meantime, a number of the best known estate agents in the resort have already closed their doors for business altogether.
Elsewhere on the Spanish island of Lanzarote the picture is a little less gloomy. Puerto del Carmen, the island’s oldest resort is undergoing a real rejuvenation as island authorities press ahead with plans to transform the Old Town harbour area into a new marina, whilst the superior micro-climate and fantastic hotels in Playa Blanca continue to draw decent visitor numbers.
The outlook for Costa Teguise currently looks a lot less sunny than it once did, with many local observers agreeing that the resort is facing its most challenging year since its creation in the 1980s.