Villas in Lanzarote - Is Now the Right Time to Buy?

Despite the 20% devaluation of Sterling against the Euro over the past year, Lanzarote, along with Tenerife and mainland Spain, seems as popular as ever with holidaymakers. More than 2 million Brits took to the air this Easter weekend in search of warmer climates, according to ABTA, with members reporting an upsurge in bookings over the past month, both for Easter and the summer holiday season.

Figures just released suggest that holiday bookings this month from the UK will be 20% up on April 2008 - not bad for a country that is apparently in the grip of the worst recession since the 1930s.

Villas in Lanzarote have been the accommodation of choice for many holidaying on the island for many years now. Holidaymakers from the UK and Ireland seem to value the freedom of self catering in a stylish villa with its own pool, and this has been a driving factor behind the growth of the holiday villa industry on Lanzarote.

Oddly enough, the onset of the recession might even have worked in favour of villa holidays, as families can choose to cook themselves and save money, rather than paying out for restaurant and hotel meals.

In terms of the property market on Lanzarote, the increasing popularity of villa and apartment holidays led to a sharp increase in the prices of property in Lanzarote in the years running up to 2005, as people saw the value and returns that they could achieve from buy to let holiday villas, whilst having access to easy mortgage credit. This also fuelled a big expansion in the building of villas, especially in and around Playa Blanca and Costa Teguise.

With the credit crunch, however, mortgage funds are now less available, bank repossessions have increased, and property prices have fallen back - in some cases, quite sharply. As a result, there are now some very good property bargains to be had, compared with a year or two ago. This element, combined with the fact that the holiday rentals market has remained strong, should improve the rental and investment yields of holiday villas.

For those with the cash to invest in villas on Lanzarote, these yields could prove highly attractive compared to the negligible returns on cash deposits, bonds and other alternative forms of investment that are currently available.