The Media Production masters degree involved writing assignments and acquiring some basic technical skills. I passed at Distinction level and was asked back the following year to run one of the modules I'd been a student on. Higher Education was nothing new for me having been Course Leader of a Business and Finance HND in Music Industry Management for four years in the 1990's, and Broadcast Journalism tutor at the WOLF FM online community radio project several years later.
In academic writing arguments have to be presented and then backed up by references with sources then listed and indexed. I have significant experience of this within academia and additionally provided research for dozens of local and networked television and radio programmes and countless newspaper and magazine articles. I enjoy working on academic projects and can provide the input of a professional with major experience writing assignments, undertaking research and marking student work.
Following are three of my Masters degree assignments which were graded Distinction or Credit. The first, for the 'Sound' module, gave me the opportunity to look at the work of legendary film sound designer Walter Murch. The second and third, for the 'Media Marketing' and 'New Venture Creation' modules are centred around the wonderful holiday island of Lanzarote. The first is a marketing plan for a Lanzarote based English TV channel. The second is an in-depth assessment of the Lanzarote property market. Information was current at the time of writing and I have added current updates to both.
NGOMA: THE RHYTHM OF THE DJEMBE
(Fellow student and researcher) Jackie Scollen and I decided to produce a short film about the West African djembe drum as our Location Sound Project.
A sound exercise centred around music would fulfil the assessment criteria by
giving us the opportunity to demonstrate soundtrack construction, track laying
and dubbing techniques. It would also demonstrate how music can manipulate
and influence mood. Our differing backgrounds (Jackie in community video, me
in mainstream television) would also provide an interesting diversity of
approach where we would use a standard interview format but could also
construct atmospheric, rhythmic and descriptive pieces using acquired material
and footage shot by us. The pounding djembe percussion itself would provide a
vibrant, dramatic, musical soundtrack.
World Music has been popular for many years, of course, with the World of
Music, Arts and Dance (WOMAD) festivals regularly attracting tens of
thousands of people on a worldwide basis. 2006 sees WOMAD festivals in
Australia, New Zealand, Singapore and Holland. Rock performers like Peter
Gabriel, Paul Simon and David Byrne have integrated African music in
particular into some of their records to great critical and commercial acclaim.
The djembe has been growing in western popularity since the 1940's, with the
world tours of Los Ballets Africains and the ongoing adaptations of African
dance and drumming events to European stages.
Closer to home, Newcastle College have an on-going djembe tuition programme
which attracts around eighty students a year.
Jackie has access to Alec Fox, the college's djembe teacher who is also a
member of the Manding Kaira ensemble. The group had a lot of footage shot in
Guinea that they were prepared to loan us. This would add depth and colour to
our piece. The sound was variable but after watching and listening to the tapes,
we decided that there was easily enough well-recorded material for our
purposes. This footage would help us put the djembe into its' true context as an
instrument of participation where there is no performer/audience divide;
everyone joins in, singing, dancing or playing in a day-long celebration of spirit
and community that is as much social as it is musical.
Included in the tapes was footage of Nancady Keita making a djembe, talking
about what he was doing and then leading a group of other young Guinea
musicians.
Nancady spends a lot of time in the UK as a member of Manding Kaira, an
otherwise all-white djembi group based in the North East and Scotland. In
addition to performing, the group conduct workshops in schools, colleges and
music centres like The Sage, Gateshead.
The group currently have no usable promotional material, as the African
footage is too long and unstructured. A slightly extended version of our film
could serve as a concise introduction to djembe, which could be shown to head
teachers, music advisers and promoters who might be interested in booking
workshops or performances.
As I know from making corporate and pop videos, it's important to keep
promotional films short and sharp. Bookers don't have the time or inclination to
watch 45 minute programmes! At just under four minutes Ngoma; Rhythm of
the Djembe is easily digestible! Hopefully it's informative and interesting and
catches the flavour of what djembe playing is about.
As it stands our film could fit into Channel 4's Three Minute Wonder strand,
probably the only television slot that would actually pay to use it! There are
many other potential outlets on Sky's multi-channel platform. The Performance
and Artsworld channels might take it as a short filler. You TV, Info TV,
Propeller and The Community Channel show student and short films on a daily
basis. There are three Afro-Caribean channels (BEN, OBE and Passion TV)
which feature regular musical programmes and short items. We could
undoubtedly get our film shown on one or more of these channels.
In preparation for our film, Jackie and I looked through about about three hours
worth of Gambian footage. Jackie then spoke to Geraldine from Manding Kaira,
to determine whether they'd be interested in participating. At the hint of them
possibly wanting payment, Jackie turned the negotiating over to me. Unlike
Jackie, I'm not on the same "circuit" as the group and as an "unknown quantity"
that (hopefully!) knew what he was talking about might be more able to get
them to work with us, based on the promise of getting a good promotional video
at the end of it. My broadcast television background would also carry
weight.
As it turned out, my "persuasive charms" were unnecessary and the group were
very co-operative! Because some of the musicians are based in Scotland, they
often rehearse at Smaleholme Village Hall in Kelso. Jackie went up to one of
these rehearsals, shot some footage and a short interview with group leader Nancady.
Unfortunately most of the interview was unusable. The members of the group
often communicate with Nancady in French as his English is limited. He was
very nervous and this came across quite strongly.
The backbone of Ngoma is the interview with Alec Fox. Using our newly-
acquired three-point lighting "skills" we shot a twenty minute interview with Alec
in Jackie's living room, using a 3 lamp lighting kit, DSR 300 camera and a Sony
Stereo mixer and boom mike.
We then edited the material we shot, along with the acquired Gambian material
and some additional sound material on Jackie's laptop, using a Final Cut Pro
software package.
The finished piece works well as an introduction to djembe. Alec Fox is a fluent
interviewee, able to explain and demonstrate in a friendly yet authoritive sort of
way. The West African footage puts Alec's comments into a wider context and
adds flavour and colour. We may well extend the film slightly at a later date, to
include short extracts of performances and workshops by Manding Kaira. Jackie
did shoot some rehearsal footage in Kelso which we discarded because of poor sound quality.
For the purposes of this assignment, I've chosen to compare and contrast our
work with the work of Walter Murch, possibly the most influential Sound
Designer from the breed of 1960's cinema buffs who went on to work in and
subsequently revolutionise the film industry. His Oscar-winning sound work on
Apocalypse Now in 1979 changed the way that sound was used in feature films
and he holds the distinction of being the only person to win Oscars for Best
Sound and Film Editing on the same film, as he did with 1996's The English
Patient.
Murch went to the Cinema School of the University of Southern California in the
mid 1960's, where he met writer/producer George Lucas. Lucas began working
with Francis Ford Coppola and brought Murch in as re-recording mixer on The
Rain People in 1969.
Shortly after, Murch, Lucas and Coppola all re-located to San Franciso and
formed American Zoetrope. In the 35 years following, Murch's credits have also
included picture editing, re-recording mixing, directing, writing and camera, in
addition to sound design and editing.
Many films these days carry a "sound designer" credit, which seems to be able to
cover almost anything to do with the manipulation of sound. The term "sound
designer" was coined by Murch to describe his work on Apocalypse Now, the
Coppola-directed blockbuster;
"I was trying to come up with what I had actually done on the film. Because
Francis had wanted to do the film in this quadrophonic format, which had never
been done before, that seemed to require from me an analysis of the design of
the film in a three-dimensional space of the sound. I thought, "Well, if an
interior designer can go into an architectural space and decorate it interestingly,
that's sort of what I am doing in the theatre. I'm taking the three dimensional
space of the theatre and decorating it with sound". I had to come up with an
approach, specifically for Apocalypse Now that would make that work
coherently. In my case, that was where "sound designer" came from".
(Jarrett, p11-12)
For Jackie and I, our "sound design" was centred around trying to provide an
even, unified soundtrack where the differences in sound sources wouldn't be
obvious or jarring. The Kelso interview with Nancady was stilted and hesitant
and the sound low in volume. The piece shot in Guinea where he is describing
how he makes his drums is more confident and recorded at good volume. We
took a small part of the Kelso soundtrack, where Nancady introduces himself
and joined it together with the acquired material where he is describing how he
makes his djembe. To keep the sound levels consistent, we had to turn up the
sound of the sticks and turn down the sound of the drum. After we had done that,
we laid some bird noise atmos (from another section of the Guinea tape) over
the completed section. This "cheat" smooths the transition from one environment
(Kelso) to another (Guinea) very effectively.
This construct sets up its' own reality. Walter Murch, of course, does this sort of
exercise all the time. He is conscious of not "overloading" the aural senses of his
audiences, even though contemporary digital technology would allow for any
number of sound tracks to be happening simultaneously.
"There's a rule of thumb I use which is never to give the audience more than
two-and-a-half things to think about aurally at any one moment. Now, those
moments can shift very quickly, but if you take a five second section of sound
and feed the audience more than two-and-a-half conceptual lines at the same
time, they can't really separate them out. There's no way to do it and everything
becomes self-cancelling".
(Kenny, p 10)
In our film we have a section where Alec is explaining the three note djembe
scale, in a very articulate, precise, teacherly manner. We then mix this with the
Kelso soundtrack of Nancady actually singing the sounds the djembe makes. The
juxtaposition of the scholarly and the instinctive is a powerful moment, made
possible by the manipulation of sound as we crossfade from Alec to Nancady
and back again.
Sound manipulation can make or break any film project, as Walter Murch
explains:
"Never before in history have people possessed the ability to manipulate sound
the way they manipulated colour or shapes. We were limited to manipulating
sound in music, which is a highly abstract medium. But with recorded material
you can manipulate sound effects-the sound of the world-to great effect. In the
same way that painting, or looking at paintings, makes you see the world in a
different way, listening to interestingly arranged sounds makes you hear
differently".
(Jarrett, p 2)
Jackie and I used what sound material was available to us and manipulated it to
create a soundtrack that was appropriate to the visuals in a manner that Walter
Murch, terms "re-association of image and sound". This is, Murch asserts, "the
fundamental pillar upon which the creative use of sound rests and without which
it would collapse". He continues;
"Sometimes it's done simply for convenience (walking on cornstarch, for
instance, happens to record as a better footstep-in-snow than snow itself) or for
necessity (the window that Gary Cooper broke in High Noon was made not of
real glass but of crystalised sheeted sugar) or for reasons of morality (crushing a
watermelon is ethically preferable to crushing a human head)".
(Murch, p 7)
While Murch was mixing The English Patient in 1996 he used a lot of acquired
and specially recorded material to paint a picture in sound. Included were;
"The sound of the planes, the sandstorm, many occasional sounds-footsteps,
sounds that objects make, the sounds of jeeps, machine-gun fire, campfires and
the whole atmosphere of the desert. In reality, the desert was absolutely quiet,
which made for great dialog recording, but if you simply played it the way it
was, it would sound artificial. It's a paradox where reality sounds artificial. So we
had to develop a signature of the desert, what you might call an active silence
that had elements that fit in with the desert; a sound that didn't raise any
suspicions and that seemed quieter than if we had had absolute silence. Of the
total sound of the film-including the dialogue, music and sound effects probably
eighty percent was added at a later date".
(Jarrett, p13-14)
Jackie and I start Ngoma with a shot of a lone djembe that pulls out. Over this
we laid a stereo mix of djembes being played by Manding Kaira, recorded at
The Smalehome Village Hall, with one mike over the musicians and another at
the back of the hall. This was then put through the mixing desk. As we only had
three or four minutes running time to play with, we felt it essential to introduce
the djembe and its' sound as quickly as possible.
When we recorded the interview with Alec Fox in Jackie's living room, the
sound was a little echoey. We tried adding reverb and varying room sound. This
sounded false so it was removed and we returned to using the natural room
sound. On listening back, it's possible to hear the odd bit of traffic noise from
outside. Unavoidable when your location is next to a busy road and not sound
proofed!
Murch, with his experience, expertise and a full bank of equipment would
undoubtedly have been able to solve both problems. Perhaps surprisingly, even
with all his knowledge he still operates in an instinctive sort of way;
"Right now we do it by taste and trial and error. We think, "Well, this room is
kind of like a bathroom but it's got some fabric, so lets start with a bathroom and
reduce the high-frequency reverberation.Let's emphasise a peak at around 200
cycles, let's slightly reduce the delay time because of the fabric but add some
metallic spike somewhere because of the ceiling and the porcelain
fixtures".Then you just twiddle dials until something feels right!"
(Kenny p 11-12)
Maybe Jackie and I have more in common with Walter Murch than we realised!
BIBLIOGRAPHY
Kenny, Tom. "Walter Murch-The Search for Order in Sound & Picture"
URL: http//www.filmsound. org/murch/waltermurch.htm
Jarrett, Michael. "Sound Doctrine: An Interview with Walter Murch"
URL: htp://www2.yk.psu.edu/-jmj3/murchfq.htm
General Information about djembe provided by Alec Fox and also taken from
Wikipedia ;URL; http://en,wikipedia.org/wiki/Djembi
Walter Murch Filmography (Sound Credits only)
The Godfather Trilogy (2004) Soundtrack Re-Mastering
Touch of Evil (1998) Restoration Sound and Sound Montage
The English Patient (1996) Sound Editor, Re-recording Mixer
First Knight (1995) Re-recording Mixer
Crumb (1994) Re-recording Mixer
Romeo is Bleeding (1993) Sound Re-recordist
House of Cards (1992) Re-recording Mixer
Ghost (1990) Re-recording Mixer
The Godfather, Part 3 (1990) Re-recording Mixer
Dragonslayer (1981) Re-recording Mixer
Apocalypse Now (1979) Sound Designer
The Conversation (1974) Sound Montage, Sound Re-recordist
The Godfather; Part 2 (1974) Sound
American Graffiti (1973) Sound
The Godfather (1972) Supervising Sound Editor
THX 1138 (1970) Sound Montage, Re-recording mixer
The Rain People (1969) Sound
Ian Penman June 2007
Ian Ravendale North East freelance journalist ian ravendale Newcastle freelance journalist Ian Ravendale Sunderland freelance journalist Ian Ravendale Tyne and Wear journalist northern freelance journalist Ian Ravendale long established freelance journalist Ian Ravendale Well known journalist Ian Ravendale veteran freelancejournalist Ian Ravendale Quick witted journalist Ian Ravendale Knowledgeable journalist Ian Ravendale freelance journalist Ian Ravendale long-established north east journalist Ian Ravendale respected freelance journalist Ian Ravendale busy Wearside journalist Ian Ravendale recognised freelance journalist Ian Ravendale respected journalist Ian Ravendale versatile freelance journalist Ian Ravendale
The following is a research and marketing paper that combined my knowledge and enthusiasm for the tropical Canary Island of Lanzarote with my extensive experience in and passion for television production. The information herein was current as of winter 2007. Updated conclusions are at the end!
Lanzarote UKTV
Marketing a new media enterprise
EXECUTIVE SUMMARY
I plan to launch an English television channel in Lanzarote, servicing both the
large ex-pat community and the tourist industry
Between 40% and 50% of all foreign properties purchased by the British are in Spain.
or the Canary Islands. By the end of 2003, 620,000 Brits owned property in
Spain or the Canaries, an increase of 50,000 on the previous year. (Source;
Spanish Property Insight website, April 2006 (2)).
Most British owners of Spanish property own holiday homes or investment
property and are not resident. There is, however, a move towards living in Spain
on a permanent or semi-permanent basis. With a flying time from the UK of
around four hours, Lanzarote has a population of 120,000, of which half are
probably British or Irish. The other 50% are Spanish, Canarian, Dutch, German,
French or Scandinavian, a third of the which are fluent in English.
I've owned property in Lanzarote since 1999 and am very familiar
with the island and it's infrastructure.
Lanzarote is the fourth largest of the Canaries. The turn-over of British tourists alone increased from 43,000 in 1982 to nearly three-quarters of a million by the turn of the century and now stands at
around 1.5 million. Indeed, the number of tourists on the island often exceeds
the number of indigenous inhabitants. Tourism (including the ever-growing
construction industry) is the island's biggest employer and it's estimated that 90%
of the working population are involved in tourism in some sort of way. ((3))
The number of English or Irish residents on Lanzarote is harder to calculate as they can be often working 'unofficially' or if retired or on extended holiday have decided not to bother with the notoriously bureaucratic Spanish system. 'Residencia' brings with it advantages like cut- price entry into exhibitions and tourist attractions and reduced inter-Canary Islands travel but also draws participants into the tax and social security net that many would prefer not to get involved with and also necessitates having 1,500 euros in a Spanish bank. Consequently the official figures of around 8,000 ex-pats living in Lanzarote is almost certainly grossly inaccurate and the true number of British or Irish people resident on the island is likely to be actually three or four times bigger.
(Source; Lanzarote Travel Guide, Rowland Mead p26 ((3))
English people like to watch television in English. There is a thriving satellite
television installation industry in Lanzarote (and most of the rest of Europe)
which has gone to great lengths to "poach" signals broadcast by Sky television
that are beamed primarily at the UK, two thousand miles away. There are
around 20 Spanish television channels freely available in Lanzarote with a small
aerial. Several of these directly serve the Canary Islands, but none are in
English. Lanzarote's small but buoyant English media sector supports several
magazines and radio stations, all completely financed by advertising.
As the globe's prime advertising medium, commercial television is a proven
platform that could very easily be targeted towards Lanzarote's English
residents, tourists and businesses.
The key strategies for success are; Establish a cost-effective reliable
transmission system, that can be picked up throughout the island without the
need on the viewers behalf of any extra equipment, obtain cheap/free local
content, promote the service to all of the islands main hotels and complexes and
establish an on-going supply of advertisers.
The content would be a mixture of local entertainment, travel and tourism tips,
news, events and advertising. This would be on a daily two hour loop. All content
would be locally based, offering an alternative to the Spanish channels and the
British programming from Sky that can be picked up in Lanzarote.
Situation Analysis/ Opportunity
Many of the British and Irish people living in Lanzarote speak very little
Spanish. Virtually none of the million and a half British tourists who visit the
island every year are fluent in Spanish. What both sets of people want is English
television-hence the popularity of Sky and, to a lesser extent, BBC Prime.
Getting Sky in Lanzarote is a much more involved (and expensive!) business
than it is in the UK. Due predominantly to the rights for feature films and major
sporting fixtures, Sky only have a licence to broadcast within the UK.
Broadcasting from the Astra satellite the northern beam footprint covers only
England, Scotland, Wales and Northern Ireland. This is the signal that can be
picked up by the familiar egg-shaped 50 cms dish that was an important part in
the success of Sky Digital.
With a larger dish, however, transmissions from Astra can be picked up
significantly further than the UK and an industry of satellite installation has
grown up all over Europe. In Lanzarote a 1.2 metre dish will pick up all the
transmissions that Sky broadcasts on it's Southern Beam-about two-thirds of total
programming. A 3 metre dish will also pick up transmissions from the Northern
Beam, giving almost all of the programming available on Sky.
This dish is too large for most private residences and is usually used by bars or
complexes, where the hefty concrete base and an installation tariff of between
2,500-5,000 euros is more acceptable.
All viewers of Sky in Lanzarote are "poaching" the signal and can't take
advantage of the subsidised installation and equipment offer that Sky use in the
UK to build their customer base. A standard installation in Lanzarote, with 1.2 m
dish and set top box ("digi-box") will be around the 500-600 euro mark. Also, Sky
can't be officially subscribed to outside of the UK and all Sky viewers in
Lanzarote who want a viewing card and more than the basic "free to air"
package need to go through a fairly involved (and, in it's strictest terms, illegal)
procedure that involves having their subscription officially registered at a UK
address and money taken out of a UK bank or credit card account.
With something like a dozen English and Irish satellite installers operating on
the island and offering Sky and other satellite packages, there is very definitely
a market for a television channel that broadcasts in English in Lanzarote. There
are four English radio station, UKAway, Buzz FM, Holiday FM and Power FM,
all of which combine music with what's on's and local information. All are totally
supported by advertising.
As the number of English-speaking people visiting or living in Lanzarote grows,
so will the market opportunity for English television.
Revenue Sources
Advertising
The long-established Lanzarote Gazette is read avidly by residents and tourists
alike. Buzz has recently up-graded it's format and is more widely available (as
the Gazette only gives distribution copies to advertisers); Buzz gives out copies
to every outlet that will take them. Both magazines are free, and financed solely
by advertising. A flip through the September 2006 edition of the Gazette reveals
109 pages of paid advertising out of a total of 172 pages. The September Buzz
has 40 pages out of 72.
Advertising in both magazines comes from estate agents (there are 110 on
Lanazarote-all chasing the same clients!) bars, cafes, restaurants, trades people,
satellite installers etc.
Advertising Features
These would be promotional programmes totally paid for and promoting a new
launch or development in Lanzarote. For example, the Inursed property group
are just completing a development of 55 villas in Costa Teguise that will sell
from 555,000 to 700,000 euros each. They have the showhouse completed,
making an extended featurette very easy to present. Ikea recently opened it's
first store in Lanzarote, which would also have been perfect for a paid
presentation.
This, of course, is an old idea. The early days of ITV featured many "advertising
magazines", that were really just extended adverts. Tyne Tees Television ran
Ned's Shed for several years. "Ned" would sit in his (yup) shed and demonstrate
the latest bits of DIY or gardening gear he'd purchased this week, and then tell
us how much and where he bought them.
The recent An Italian In Mexico series on the UKTV Food satellite channel is
an updated version of this concept, as Steve Hemsley explained in a recent
edition of Media Week.
"Apparently sales of Mexican food have been held back in the UK by a
perception among the public that it is too hot and spicy and difficult to prepare.
In an attempt to challenge this view Universal McCann's vice president and
head of programming Phil Cresswell persuaded client Old El Paso to back a
television programme to raise awareness of the culinary delights of Mexico."
(Hemsley p4) (4)
The six episodes of An Italian In Mexico followed Gian D'Campo as he visited
food markets, talking to chefs and explaining recipes, with the purpose of
making Mexican food more accessible to the British audience. The programme
has been distributed to 51 countries and Old El Paso are keen to commission a
second series of 13 programmes. Hemsley quotes Phil Cresswell;
"Old El Paso is the market leader and knows that if it invests in anything that
raises awareness of Mexican food it will benefit. The aim of the show was to
demonstrate how Mexican food can be prepared in a relaxed way and is tasty
and colourful".
(Hemsley p4) (4)
The show's content will play a significant part in Old El Paso's future marketing
strategy and will be used across other platforms, particularly DVD's and books.
Hemsley quotes Claire Heys, head of commercial partnerships at UKTV as
saying that working with multi-channel broadcasters is a cost effective option for
advertisers looking to enter the branded content market. "These can be difficult
projects to get off the ground because brands want to be on terrestrial prime
time and they get disappointed when they see how much that would cost.
Working with someone like us and supporting a programme with PR and other
marketing can deliver an excellent return on investment".
(Hemsley p 4) (4)
As Lanzarote businesses are constantly chasing the tourist, property speculator, holiday home
owner or retiree's euro, everything moves very quickly and needs to be speedily
promoted and publicised, which is what Lanzarote UKTV would be able to do.
With our daily turnaround we would have the upper hand on the Gazette and
Buzz which only come out once a month. Also, as we would have our output on a
loop, advertisers would be getting their programming or advertising seen twelve
or eight times a day!
Sponsorship
Different programme strands could be sponsored by relevant concerns.
Entertainment strands could be sponsored by Romantica or Lanzarte, the island's
two major entertainment agencies, or by one of the major venues. An
Eating-Out series could be sponsored by the Ola's chain of restaurants, a Water
Sports Section by the Puerto Calero Marina and so on.
British mainstream television is moving more towards branded content by
incorporating the brands into programming. In his Media Week article Steve
Hemsley goes on to describe a campaign initiated by Claire Heys for Cow
& Gate;
"The 10 part show, presented by Patsy Palmer, involved a sponsored website
and branded events around the country, while a DVD covermount appears on
the latest edition of Emap's Mother &Baby magazine.
"Says Heys; "We would probably turn down a deal that was just about
programming. We want to work with advertisers that have a broader marketing
strategy to link any editorial content with their commercial aims" ".
(Steve Hemsley, Media Week 6 December 2005) (4)
Lanzarote isn't as sophisticated a media opportunity as the UK. It's obvious,
however, that the lines between branding and programming will continue to blur.
All opportunities must be explored, particularly in relation to major ongoing
business ventures, like new building developments.
Hotels and Complexes
We would promote Lanzarote UKTV to hotels and complexes. The service
being piped round could be personalised using a company logo to make it more
relevant to the hotel or complex concerned. These would generally be in the
main tourist areas of Puerto del Carmen, Costa Teguise and Playa Blanca.
Advertising package deals would also be offered on a "partnership" basis.
Sale of DVD's and videos
Footage shot for Lanzarote UKTV would be offered in an extended, re-edited
form as either promotional or souvenir videos and sold via mail-order (over the
internet) or in outlets in Lanzarote, including from the studios and various
English book and gift shops, including the Book Swap chain, Panda's Gallery and
Wilson's Books and DVD's.
Sale of Footage to Television Channels
Sky television now has two channels dedicated specifically to buying overseas
property and living abroad. Real Estate TV (channel 279) and Overseas
Property TV (channel 287) regularly showcase destinations, locations, holiday
home and investment opportunities popular with the British. There would be a
good possibility of selling these stations Lanzarote footage. This would be very
cost effective for them, would bring us income and should also promote LUKTV
within Lanzarote, as Overseas Property TV can be received on the Sky satellite.
Market Research Summary
Lanzarote is a small, finite market. Judging by the on-going success of the
Lanzarote Gazette (based on the ever-increasing number of pages of
advertising) and the upward path of Buzz, media advertising is thriving. There
are, it would seem, more and more businesses and organisations who need to get
their message out and see advertising as the way to do it. Advertising page rates
are relatively cheap; Buzz are 400 euros for a full page, the Gazette 600 euros.
Radio is similarly inexpensive, with Buzz FM charging 300 euros (plus 150
euros commercial production fee) for 100 plays of 30 seconds duration each.
So, there's not a fortune to be made but the media advertising market is thriving
Keep costs down and you'll sell space or airtime would seem to be the message.
Market Research
1) Data Sources
Market Research is based on existing media ventures within Lanzarote,
primarily in print, radio and the internet. Plus focus groups of consumers,
advertisers and residents and my own in-depth knowledge of Lanzarote and the
different communities there.
It would be very important and relevant to talk to long-standing advertisers of
the Lanzarote Gazette, The Buzz, UKAway, Buzz FM, Holiday FM and Power
FM about the service and response they get from their advertising, what they
feel they are currently not getting from these media and, ideally, what they
would want from an additional advertising source. Most importantly; how do they
think a local English TV channel would be accepted in Lanzarote and would
they support it with advertising?
The Gazette is the most established English advertising media on the island and
would be the main competition for LUKTV. Any advertiser in the Gazette is a
potential television advertiser and a very good start for any tele-sales campaign.
The Gazette would also supply a template for content, with additional emphasis
being put on items and features that would work better with moving pictures and
sound, like tourism, resort reports and entertainment.
There are various Lanzarote-based websites and notice boards, including
Holiday Truths and the Buzz and Gazette sites which are also a good source of
research into what people are currently feeling.
There are interest groups throughout the island, like LAD's (Lanzarote Amateur
Dramatics) and Ladies Who Lunch and lots more who may be interested in
helping us in the form of focus groups. Questionnaires (with or without someone
to ask the questions!) could also be placed in shops (like the Bookswap) that
attract both tourists and residents on a regular basis.
2) Market Demographics
Lanzarote has a permanent population of approximately 120,000 people. Of
this, probably half are either English or Irish or speak English fluently. Many live on the island either part time or 'unofficially'-ie aren't on the 'residencia' radar for tax purposes- and don't show up on the goverment survey, as the graph below shows!
This 50-60,000 people cover a wide demographic, as follows;
1) The over 60's (A-C) who have retired to the island. They are comfortably off and have probably
sold their UK house to buy something in Lanzarote. They own their
property and car and don't need to work. They probably live in areas like Tias,
Playa Honda, Matagorda or the residential parts of the Puerto del Carmen,
Playa Blanca or Costa Teguise resorts. Their children are grown up and
probably still live in the UK but come across to visit on a regular basis.
2) The student/young traveller(A-C) who fancies having some time out before
settling down back in the UK with career and responsibilities. They will probably
work casually in bars, restaurants and nightclubs and live in rented
accommodation, often in the resort areas.
3) The professionals (vets, dentists, doctors etc)(A-B) who want to carry on their
careers but in the sunshine. They will live in residential or possibly rural areas
and own their own property.
4) The tradesmen/service industry providers (C) who have sold up in the UK
and moved to Lanzarote, generally with their familiy , to start a new life.
They will own their own property and (generally) a one or two person business.
5) The entrepreneur/property developer/estate agent (A-C) who is able to
exploit the British thirst for that place in the sun and everything that goes with it.
They will work for themselves and own at least one property.
6) The hippies (C-D) who avoid the tourist areas and conventional employment
and live off the land or from arts and crafts in less commercialised regions like
Famara and Los Cocoteros (above) They may live in trailers, tents, or buildings they've (illegally!) put up themselves. This is the group that would be of least interest to
LUKTV and of them to it.
7) The tourist (A-D). With around 1.5 million UK visitors a year to Lanzarote
there is always between 10-40,000 English speaking tourists a week in residence,
probably favouring the 20-40 age group. They'll be interested in quick
information about where to go, what to see, the best bars and restaurants etc.
With the exception of 6) all of the above have money (to varying extents) that
they are willing to spend and will base this spend on information received and
local intelligence. LUKTV will aim to become the prime source of that
information.
3) Market Needs
English people want to watch television in English. LUKTV would be an easily
digestible mixture of news, views, entertainment, features, competitions and
advertising. Like the Gazette, the station would aim to be of interest to both
resident and visitor.
We would broadcast 24 hours a day on a repeating loop. Initially there would be
an hour a day of programming, (repeated 23 times) rising to two hours a day
(repeated 11 times) within three months and to 3 hours a day (repeated 7 times)
within six months This would be six days a week. Sunday would feature the
previous six days programming, running continuously.
4) Market Trends
There is far more English media of all sorts around now in Lanzarote than when
I first started visiting the island ten years ago. Certain sectors are perhaps close to
being over-subscribed (print and radio); others (television) are an opportunity
waiting for exploitation!
5) Market Growth
Both the Gazette and Buzz have doubled in size in the last 18 months. The
UKAway radio station began four years ago and has been joined in the last two
by three competitors (Power FM, Holiday FM and the newly launched Buzz FM).
The market for targeted English language media in Lanzarote is buoyant and
ready for an television station.
Target Market
(Viewers); All English speaking people on Lanzarote, either full time or tourist.
Plus, anyone with an interest in the island, via the World Wide Web.
(Advertisers); All businesses with any form of interest in Lanzarote. Or, putting
it another way; Anyone who is advertising in the Gazette, Buzz, the resort listings
magazines or Estohay, Revista Inmobilia, Freedom 4 Sale or any other Lanzarote
magazine or radio station.
Market Positioning/Brand Opportunities
The market is already established via print and radio. LUKTV would be number
one in a field of one! There would be the opportunity to extend the brand to
cover the other Canary Islands that have English residents and tourists in
sufficient quantities-Tenerife, Gran Canaria and Fuerteventura. Islas Canarias
TV, Blue TV Tenerife, Tenerife TV and Gran Canaria TV are already
established but completely in Spanish, serving the native Spanish and Canarian
population.
This is also the audience for Lancelot Television the totally Spanish station that
broadcasts from the island.
If things, went very well, the brand could be extended further to print and radio,
although these markets are already very well served. Home DVD and video
sales are more realistic opportunities.
SWOT Summary
(My) Strengths
Good, wide knowledge of Lanzarote
Lots of contacts on the island, particularly among ex-pats
I own property on the island and (therefore!) have somewhere to stay
Am confident and able to get on with most people
Literate, articulate
Good writing skills
Am an experienced presenter, interviewer, voice-over and scriptwriter, with 12
years radio presentation experience
Very experienced television producer/director/researcher/writer
Have run an independent television production company
Am knowledgeable about the television systems currently in use in Lanzarote
Know most of the island's satellite installers
Know some of the Gazette's advertising reps. Also know the editor!
Basic camera, sound and editing skills
Know lots of UK based technicians, some of whom might fancy a working
holiday!
Basic Spanish
(My) Weaknesses
Sometimes overly cautious
Can get discouraged if results are slow in coming
Not a technician
The Venture's Weaknesses
Speculative
Unproven
Difficult to accurately forecast results
Technology can sometimes go wrong!
Lanzarote already well-served by advertising media
Not linked to any other on-going, already established Lanzarote venture. Holiday
FM was started by the Gazette, Buzz FM by (yes...) Buzz. Therefore package
deals for advertising were offered, resources, personnel and premises were
shared. The fledgling ventures piggy-backed on the coat-tails of the
established one. LUKTV won't have that advantage.
Opportunities
The combination of my knowledge, circumstances, experience and contacts
should make LUKTV the right opportunity at the right time. The British thirst
for the Spanish experience in a language they can understand and the appetite
for television provides an opportunity to get in at the start of a new venture that
has the potential to expand throughout the Canary Islands.
Threats
The Lanzarote Gazette guards its' position very carefully! If LUKTV was
successful, they (or somebody else!) would try to do something similar!
If particular aspects of the venture were successful, the other media would
probably do print or radio versions of those.
The biggest threat to the Lanzarote economy in recent years has been the rise of
the "all-inclusive" package holiday, where all meals, drinks and entertainment
are included in the cost of the holiday. This has resulted in many holidaymakers
spending almost all their holiday within the hotel environs, harming the many
bars, restaurants and attractions which rely on the tourist euro for most of their
income. The Lanzarote local government are apparently taking steps to ban
all-inclusives but whether this actually happens remains to be seen. This
downturn in tourist revenue could affect the amount of money available for
advertising on LUKTV. It doesn't seem to have done so for the Gazette or Buzz,
so maybe when things are slow, businesses actually advertise more!
The Canaries falling out of favour with tourists and re-locators as cheaper
markets like Bulgaria, Croatia, Romania and Morroco open up.
The BBC channels, ITV and (Channel) 5 becoming generally available in
Lanzarote on Sky again, as they were until three years ago. Their removal,
leaving just Channel 4, left a gap in the market which hasn't yet been filled but
did see a large increase in households on the island taking paid Sky
subscriptions. While these major channels remain unavailable, any new (good
quality!) English language channel would be welcomed with open arms.
Particularly one that was free, which Sky, largely, isn't.
Competition/USP
There are approximately twenty Spanish channels freely available without
subscription in Lanzarote, with the main ones being TVE1, TVE2, Antennae 3
Islas Canarias TV and Canal 5. Of more significance to us is Lancelot Television, the
island's local Spanish station. A lot of what they do is studio based, only coming
out when there's a major event like the island-wide Ironman Triathalon where
Lancelot TV will hire a helicopter and cover the various races from the air. Generally
not very highly regarded (and completely in Spanish anyway) Lancelot
won't provide LUKTV with much in the way of competition. There are three or
four Spanish language free magazines (including Estohay and Revista
Inmobilia) which haven't harmed the Gazette or Buzz.
Some of the lesser channels on Sky can also be picked up without a viewing card
with a digi-box and a 1.2 metre dish. BBC Prime is available in English for a
subscription on the (otherwise generally Spanish and French) Hotbird satellite.
The Digitale Plus satellite offers a dual language facility on some feature films.
Some installers like Easy Sat and Free Sat are offering systems that will pick up
English language programming (mainly feature films) from some of the Arabic
channels-fine if you don't mind the constant Arabic subtitles across the bottom of
the screen. And an installation and equipment tariff edging towards a thousands euros.
All of these systems require specialist equipment-generally a set-top box and a
dish. As LUKTV would be transmitted from Lanzarote itself the channel would be
available via the standard television aerial without the need for any extra
equipment. Some complexes and communities have rules against the erection of
satellite dishes, preferring a communal aerial, which will receive terrestrial
transmissions only. This is to our advantage!
The magazines and radio stations (all of which are free) are probably the most
significant competition. We'd all the chasing the same advertising revenue!
LUKTV's Unique Selling Point would be being the island's very own local
English television channel, unique to the island! The radio stations play music
and give dedications ("A big shout-out to the Playa Blanca Boys!") but don't do
much to convey the distinctive flavor of the island. The magazines do it better
but wouldn't compare to moving pictures and sound, updated once a day. We
would bring the joy of Lanzarote direct to living rooms and balconies!
Critical Issues
There are three main critical issues with this venture
1) Reception. For LUKTV to be successful, viewers have to be able to receive
it! Broadcast would be in three ways;
(A) Via the in-house cable networks that many of the island's hotels and
complexes have in the same way that CNN, Canal Plus, Sky News and others
take advantage of.
(B) Using a standard television aerial. All of the island's satellite installers
would be invited to a technical presentation and demonstration of how to tune in
televisions to receive it.
(C) As streaming video over the internet. Broadband is available on Lanzarote
and there is a community project to bring it to the island's more remote areas. ((See Appendix))
2) Establishing an on-going advertising base. Using the Lanzarote Gazette as a
model of a successful Lanzarote-based media operation, the same businesses
advertise in every issue, maintaining their profile. The Gazette have a print run
of (apparently) 10,000, which would give a readership of double that. 20,000
viewers a week for LUKTV should realistically be achievable within the first
year, giving a good platform for advertising sales.
Financial break-even would be based on these advertising sales. Any income
from DVD and footage sales would be additional income that could be
re-invested into the station or paid as a bonus to investors.
3) Programming. With a personal track record within many aspects of broadcast
television, including running an independent production company
I feel confident that I would be able to generate the necessary programming.
Taking the community radio stations I've worked for (including Wear FM) as a
model I'd use a mixture of volunteers and paid staff to facilitate the project and would operate
training schemes. I'd also bring UK program makers and technicians across
from time to time.
Financial Objectives
The station will need to be self-financing within a year and making a profit
within two years. Projections as follows;
Advertising Revenue
Year 1 200,000 euros
Year 2 250,000 euros
Year 3 325,000 euros
This is based on the income currently generated by Buzz the second most successful English advertising medium after the Lanzarote Gazette. Buzz currently sells
40 pages of advertising an issue at 400 euros for a full page and 295 euros for
a half page. This makes an approximate advertising revenue of 18,000 euros
per issue. Or, over 12 issues 216,000 euros. The magazine and the Gazette have
both experienced something like a 40% growth over the last year. I've budgeting
for a 25% growth in our second year and slightly less for our third.
DVD sales
Selling 20 units a week would give us 1000 in a year. These could be sold at 12
euros each. Some would be sold directly from LUKTV's offices or over the
internet, via the website. Others would be sold via retail outlets, with the retailer
taking 4 euros from the sale price. Programme costs would be close to nil as the
footage would be pre-existing. We would add titles as time went on, with each
title having a potential shelf-life of three years. Duplication/printing/cases
would come to 3 euros a unit. Deducting these costs and balancing direct and
retail sales equally would give us 500 units at 9 euros plus 500 units at 5 euros,
giving us a profit in Year 1 of 7,000 euros.
In Year 2 I would hope for a 50% growth on that, making 10,500 euros.
Year 3 (by which time we would have an-ongoing library of titles) 100% growth
21,000 euros.
Sales to other TV platforms is less predictable as channels come and go from
the Sky platform with great regularity. However, a conservative estimate of
television sales would be;
Year 1 5,000 euros
Year 2 7,500 euros
Year 3 9, 000 euros
TOTAL INCOME
Year 1 232,00 euros
Year 2 268,000 euros
Year 3 355, 000 euros
Promotional Strategies/Brand Awareness
1) Media Launch at one of the major hotels in Puerto del Carmen or Costa
Teguise, inviting all of the island's media, British and Spanish. Most would come
out of curiosity, but there's no guarantee they'd print or broadcast anything as
LUKTV would be direct competition for the English ones!
We'd show some sample programmes and give out provisional schedules. All
attendee's would receive a Press Kit and those that didn't come, including
relevant UK based concerns, would be e-mailed an Electronic Press Kit.
2) Trade Launch for all of the island's satellite installers and technical
supervisors of the major hotels and complexes.
3) PR campaign. "PR" in Lanzarote means something different to what it does in
the UK. If you work in PR on the island you stand on the street, talking to
passers-by, giving them flyers and trying to get them to visit your pub or club.
Hoardings and billboards aren't permitted in Lanzarote but we could probably get away with a sandwich-board man walking around the busy resort areas. I've done this in the UK when
promoting rock concerts in theatres and it always gets a big response from both
public and media which usually converted into ticket sales!
We would also give away posters and stickers and take out advertisements in
whatever of the English media would accept them-probably about half.
4) Viral Marketing Campaign. We would take advantage of all the emerging
media and new media platforms. Viral marketing has achieved much publicity,
thanks at least in part to the success of The Arctic Monkeys. A recent article by
Todd Wasserman in Media Week, however, says that a new report by Jupiter
Research has discovered that only a small amount of consumers consider viral,
blogs and public forums trustworthy;
"Only 21% of consumers trust product information within social media when
mulling over a product purchase. Consumers are twice as likely to trust
information on a corporate web site or on a professional review site such as
Edmunds.com, the research found".
Despite this, around 20% of advertisers still intend to use viral marketing next
year, mostly for branding purposes. Wasserman also quotes Jupiter's findings
that there is a split between long-standing practitioners and novices when it
comes to spending;
"One half of all experienced viral marketers spend more than 40% of their total
ad budgets online. That's twice the percentage that those with no viral
experience".
(Todd Wasserman, Media Week 1 August 2006) (5)
Many organisations have laid claim to having "invented" viral marketing. One of
these is the Draper, Fisher, Juvetson marketing company, as they explain on
their website;
"In 1997 when DFJ first coined the term in the Netscape newsletter, we used
several examples to illustrate the phenomenon, without defining it more
precisely than "network-enhanced word of mouth". It's original inspiration came
from the pattern of adoption of Hotmail beginning with it's launch in 1996. Tim
Draper persuaded the company to include a a promotional pitch for it's
web-based email with a clickable URL in every outbound message sent by a
Hotmail user. Therein lay one of the critical elements of viral marketing; every
customer becomes an involuntary salesperson simply by using the product".
( Steve Jurvetson 1 May 2000, Draper Fisher Jurvetson website) (6)
This view is expanded on by Brady Brewer on the Incisive Interactive Marketing
website;
"These campaigns, which encouraged recipients of promotional emails to
forward the messages to their friends, have garnered both positive and negative
reviews from consumers, private advocates and industry pundits.
"At the heart of the issue are concerns over sending unsolicited email, but by
using viral marketing tactics carefully, marketers may avoid negative reactions
and gain an excellent return on investment (ROI) as they increase the reach of a
marketing message to a targeted group far beyond their original audience".
Brewer goes on to detail when he calls "the five insights" that will help execute
an effective viral marketing campaign;
1) Offer an incentive-say 20% off referrers' next purchase if they forward the
message to five friends.
2) Don't consider the referral an opt-in. Material should be included in the
referral e-mail asking if the individual would like to receive future mailings,
allowing them to opt in if they wish.
3) Personalise the referral email. Response rates increase dramatically when
users can see that a message is coming from a friend. The subject line is the key
component in viral marketing as it can immediately identify the email as
friendly. "IE Joe Bloggs thought you might like 20% off at HMV".
4) Track and analyse the results
5) Continually promote friendly referrals. Every email from LUKTV about any topic should also
include an offer.
Brewer concludes by saying;
"Viral marketing makes for a great one-time campaign, but it can also be a very
effective tool for continuing to broaden the reach of your marketing messages
over time".
(Brady Brewer; Tips for Optimising Viral Marketing Campaigns) (7)
Jurvetson re-enforces the persuasion power of viral marketing stating that (it's)
"more powerful than third-party advertising because it conveys an implied
endorsement from a friend-much like the efficacy of radio commercial read by
your favorite DJ. The recipients learn that the product works and that their
friend is a user. A key element of consumer branding is usage affiliation; do I
want to be a member of the group-in this case my friends-that uses the product".
(Jurvetson, p1) (6)
This approach has been used on television for many years, of course, sometimes
controversially so. The recent series of advertisements for Firstplus Loans' debt
consolidation package by Carol Vorderman has brought the subject very
forcibly to the fore. An on-line petition against Vorderman's role in Firstplus's
campaign by "Money Saving Expert" Martin Lewis on his website has attracted
eighty-eight thousand signatures. In contrast, a similar debt consolidation advert
by former cricketer Phil Tuffnell has attracted almost no controversy.
As Firstplus are very well aware (and will be paying big bucks to secure) Carol
Vorderman has a brainy, numbers-literate public persona and many people will
believe her when she's says it's a great deal and the way to sort out your debts.
Tuffnell is a likeable character but hasn't anything like the "making-the-numbers
add-up" credibility of Vorderman.
DFJ's "invention" of viral marking nine years ago certainly paid off, as Jurvetson
describes;
"Hotmail grew it's subscriber base from zero to 12 million users in 18, months,
more rapidly than any company in any media in the history of the world. Fair
enough, this is the internet, after all. But it did so with an advertising budget of
$50,000-enough for some college newspaper ads and a billboard. Non viral
competitors like Juno spent $20 million on traditional marketing with less effect.
What's more, Hotmail became the largest email provider in several countries
like Sweden and India where it had done no marketing whatsoever".
(Jurvetson. p1) (6)
Our approach would be utilise any and all distribution and promotional
strategies, going from the oldest ( a sandwichboard man) to the latest viral
techniques, using Brewer's "Five Insights" as a solid starting point and then
personalising it to LUKTV's specific requirements. Virtually all advertising in
Lanzarote's print and radio media is by Lanzarote based concerns and aimed at
Lanzarote-based consumers, including those temporary ones who come across
from the UK on their holidays.
This makes the market much more finite and reachable and ripe for a viral
campaign. Other people on a world-wide basis will, of course, be interested in
the programming but (generally) these are not the potential clients that most
advertisers will want to reach-with the possible exception of the estate agents.
Marketing Schedule/Media Timing
January
Initial casual mentions on noticeboards and websites of the possibility of an
English language television station for Lanzarote.
February
Setting up of website. No streaming video at this point. Poster campaign around
major locations-It's coming! Are you ready for LUKTV? etc. We wouldn't
explain what the initials actually stood for at this point, although it wouldn't be
difficult to work out!
March
Similar campaign in the classifieds of whichever of the Lanzarote print media
would take them. A hand-out of flyers in resorts. Viral campaign starts.
April
Test transmissions on both broadcast and streaming video on the internet site.
Sales team visit all major hotels and complexes and demonstrate the channel.
Put forward "partnership" deals, which could be used as an incentive for viral
referrals (Two nights for the price of one, 10% off in the restaurant, free first
drink etc). Full name of the channel "revealed" in the print media classifieds.
May
Sales team visit/ring every potential trade advertiser of any significance-using
the Gazette and Buzz as source material. We would have made several "pilot"
commercials which the sales team could show. Stepping up of test transmissions
and viral campaigns.
June Pre-Launch Month!
Week 1
Full page adverts/30 second slots in whichever of the English media will take
them, in preparation for a launch on July 1.
Week 2
Press and trade launch in Las Maretas studios, Costa Teguise. All of the island's
print media come out in the first week of the month, with copy deadlines around
the 20th. By having the launch around the 9 or 10th of the month they would
have plenty of time to prepare articles for next month's issue. Generally feature
copy on commercial ventures is forthcoming if advertising has been paid for.
Also invited, all of the satellite installers, TV retailers, complex and hotel
managers etc. Electronic press kits to relevant UK based media-those dealing
with living, working and buying property abroad.
Week 3
Poster/flyer campaign stepped up and joined by sandwichboard men in major
resorts. Sales team (in Lanzarote UKTV branded cars) very visibly out and
about. Viral marketing (phase 3). Blog
Week 4
A Lanzarote UKTV banner flown backwards and forwards across the island via
light airplane or helicopter. Radio campaign.
1 July - Launch Day!
Competitions, give aways. A general public launch in one of the major hotels.
Flyers/ brochures with programming, advertising and contact information
August
Consolidation. Further visits by sales team, who would flag up the forthcoming
DVD series to retail outlets. Approach Real Estate TV and Overseas Property
TV about potential link-ups, sale of footage.
September-December
Extend contacts and develop programming and establish library of feature
material.
Licensing/Distribution Strategies
Implementation; Broadcast
Primary; Lanzarote, via terrestrial
Secondary; Will also probably be picked up in northern Fuerteventura
Sales; We would employ a Head of Sales, preferably someone who'd already
worked in media sales on the island and had the necessary contacts. This person
could also source outlets for the DVD's. Somebody who works/has worked for
the Gazette would be a very good choice. Like, for example, Paul Johnson, their
sales director or one of the sales representatives looking for promotion.
Satellite; Via possible usage of footage on Real Estate TV and Overseas
Property TV, both on the Sky platform. Overseas Property TV can be picked up
free to air in Lanzarote but it's unlikely that the channel would want to show full
programmes; rather they'd be more inclined to dip in and out, using whatever
suited their purposes.
Cable; Via relay systems within major complexes and hotels in Lanzarote. Nick
Chester of Lanzarote Satellite Systems is a personal friend who is experienced
in this field. Most hotels already have these systems but Nick would be able to
supply and fit cable systems for any hotel that didn't but wanted to get involved
(at their cost, of course) The merits of adding LUKTV to their already existing
packages would be explained, along with (possibly) some initially free
advertising as a sweetener
Most hotels and complexes would probably go for this offer. Generally, the
television channels that are relayed are those that are free to air ( the Spanish
ones (TVE1, TVE2, Antennae 3, Canal 5) the local ones (Islas Canaraias, TV
Lanzarote) and CNN, Sky News, QVC etc) rather than anything they have to
pay or negotiate rights for.
Our income would be derived from the advertising within the programming.
We would also broadcast streaming video on the internet.
The local channels are beamed from two transmitters on Lanzarote, one at
Femes in analogue and the other at Montana Mina, near San Bartolome in
digital terrestrial. Radio and television channels are transmitted from both sites.
Lanzarote UKTV Forecasted sales-Best Case (all in euros)
Jan Feb Mar Apr May
Receipts (A)
12,000 12,000 14,000 16,000 20,000
Payments
Capital Exp 15,000
Premises 800 800 800 800 800
Council Tax 80 80 80 80 80
Transmission 800 800 800 800 800
Web Design 200 200 200 200 200
Streaming Vid 1000 1000 1000 1000 1000
Utilities 200 200 200 200 200
Staffing 2000 2000 2000 2000 2000
Stock 400 400 400 400 400
Motor 400 400 400 400 400
Teleph/Intnet 400 400 400 400 400
Advertising 1000 1000 1000 1000 1000
DVD prod 250 250 250 250 250
TOTAL(B) 22,930 7,930 7,930 7,930 7, 930
Net Cash Flow -10,930 4,070 6,070 8,070 12, 070
(A-B)
Balance c/f -10,930 -6,850 -880 7, 190 19,260
Lanzarote UKTV Forecasted sales-Worst Case (all in euros)
Jan Feb Mar Apr May
Receipts (A)
6,000 6,000 7,000 8,000 10,000
Payments
Capital Exp 15,000
Premises 800 800 800 800 800
Council Tax 80 80 80 80 80
Transmission 800 800 800 800 800
Web Design 200 200 200 200 200
Streaming Vid 1000 1000 1000 1000 1000
Utilities 200 200 200 200 200
Staffing 2000 2000 2000 2000 2000
Stock 400 400 400 400 400
Motor 400 400 400 400 400
Teleph/Intnet 400 400 400 400 400
Advertising 1000 1000 1000 1000 1000
DVD prod 250 250 250 250 250
TOTAL(B) 22,930 7,930 7,930 7,930 7, 930
Net Cash Flow -16,930 -1,930 -930 70 2, 070
(A-B)Ian Penman February 2007
UPDATE May 2012
Most business and marketing plans have out of necessity a fair amount of
guesswork in them. The trick is to make the guesswork as convincing as possible,
based on sound, reasoned arguments and comprehensive research.
Re-reading my Lanzarote UKTV plan five years after I wrote it I quickly
concluded that while I'd done that several unforeseen but crucial
events occurred that undoubtedly would have adversely effected the viability of
the plan.
Way better minds than me failed to predict the worldwide economic downturn
which has had a major effect on Lanzarote and many other holiday destinations.
With Spanish unemployment at record levels, the Lanzarote economy has hit
hard times.
Many of the businesses that could have been significant providers of the advertising revenue
needed to finance the venture have either disappeared completely or now have
slashed their advertising budgets. The Spanish property crash of 2008
has seen many of Lanzarote's estate agents, developers and speculators go out
of business.
From the media ventures comparable to LUKTV, Buzz and all of the smaller
resort magazines have gone. Estahay, Freedom For Sale and the Lanzarote
Gazette still struggle on, albeit with less pages and much less advertising. Buzz
FM is no more and UKAway has discontinued all advertising, stopped paying
presenters and is pursuing funding from educational and training sources.
In late 2007 the pound was worth 1.50 euros. In 2008 it fell to 1.03 euros. This
'unofficial' devaluing of sterling by Prime Minister Gordon Brown was aimed at
making British goods more competitive internationally. It didn't; the main
competition is China and India where most workers are on £1 a day. Brown, of course,
would know that but plowed ahead with the devaluation anyway, presumably hoping to gain some
minimal political purchase from a blip in the international trade figures.
Instantaneously everything was around 30 or 40% more expensive for the British
holidaymaker, property owner, prospective property owner and retiree living
off their UK pension. Result; difficult times for many and Lanzarote's once
buoyant economy barely scraping along.
Additionally, Lanzarote small businesses have also been badly hit by the greedy
travel companies responding to the downturn by going heavily into All
Inclusive package deals. This has kept many holidaymakers in their hotels and
complexes all day rather than going out spending money in local bars, cafes and
restaurants. The likelihood of LUKTV being able to do some tie up with the
travel companies would have been slim as Thomsons and the rest spend their
advertising budgets within the UK, not in the resorts.
The mount of money needed in a Spanish bank account to qualify for Residencia has recently been raised from 1,500 euros to 4,000 euros-a move guaranteed to dissuade even more ex-pats from joining the system.
Just goes to show; Leave forecasting to the weathermen. Or perhaps not....
Ian Penman 3 September 2013
References;
1) http://www.shelteroffshore.co
2) http://www.spanishpropertyinsight.com/
3) Lanzarote Travel Guide; Rowland Mead (Connaught 2003)
4) "How Brands Make Their Own Content Work For Them"; Steve Hemsley,
Media Week, 6 December 2005
5)"Jupiter; Advertisers Flock to Viral Marketing": Todd Wasserman, Media
Week, 31 August 2006
6) "What Is Viral Marketing", Steve Jurvetson, 1 May 2000, Draper Fisher
Jurvetson website; http//www.djf.com/cgi-bin/artman/publish/steve_may00.shtml
7) "Tips for Optimizing Viral Marketing Campaigns" by Brady Brewer, 22
February 2001;
http://www.clickz.com/showPage.html?page=clickz_print&id=837511
8) "How To Entertain A Target Audience"; David Fickling, Media Week 22
August 2006
9) "YourKindaTV signs First Ad Deal"; Robin Parker, Media Week, 14
September 2006
10) "3 Begins Live Mobile TV Trial in Ireland"; Robin Parker, Media Week 25
September 2006
Other information gathered from a variety of sources, including the Lanzarote
Gazette and Buzz. Thanks to Nick Chester (Lanzarote Satellites) and Trevor
Sewell (Made To Measure Music) for advice about transmission systems and
streaming video.
Any research institute, university, college or student who needs help with this sort of academic research project from a professional writer with experience across all genres of media over a 35 year period please contact;
ian.penman1@btinternet.com
***
Ian Ravendale North East freelance journalist ian ravendale Newcastle freelance journalist Ian Ravendale Sunderland freelance journalist Ian Ravendale Tyne and Wear journalist northern freelance journalist Ian Ravendale long established freelance journalist Ian Ravendale Well known journalist Ian Ravendale veteran freelancejournalist Ian Ravendale Quick witted journalist Ian Ravendale Knowledgeable journalist Ian Ravendale freelance journalist Ian Ravendale long-established north east journalist Ian Ravendale respected freelance journalist Ian Ravendale busy Wearside journalist Ian Ravendale recognised freelance journalist Ian Ravendale respected journalist Ian Ravendale versatile freelance journalist tLanzarote expert Ian Ravendale Lanzarote proiperty and media expert Ian Ravendale Lanzartote journalist Ian Ravendale Lanzarote journalist Ian Ravendale Lanzarote expert Ian Ravendale Lanzarote property owner Ian Ravendale Lanzarote property owner and journalist Ian Ravendale Lanzarote property owner and broadcaster Ian Ravendale Lanzarote academic and researcher Ian Ravendale Lanzarote writer Ian Ravendale Costa Teguise writer Ian Ravendale Canary Islands journalist Ian Ravendale Lecuter and Lanzarote property owner Ian Ravendale
The course I studied was Sunderland University's Master of Arts in Media Production (Film and Television). Part of the funding the university received came from the European Social Fund and was conditional on there being a 'business' element to the course. This took the form of a module called New Venture Creation, which, unlike the rest of the programme, was run by Sunderland University's Business School. I've been self-employed for many years, taught a Business and Finance Music Management HND for four and was a Music Industry Consultant for the New Deal For Musicians scheme for five, all of which made approaching business from an academic, formulaic viewpoint an interesting challenge. As a professional writer and journalist the part I enjoyed most was coming up with and then writing the lengthy business plan assignment that concluded the course.
A good rule of thumb for any business is 'Go With What You Know'. So, as with the preceding Media Marketing assignment, I decided to base my idea in Lanzarote. I'd bought and sold several properties there. know many of the island's estate agents and am familiar with the Lanzarote property market. Hence, Lanzarote Lifeline. Bear in mind this business plan was written in 2006 and the world of foreign property sales has radically changed since then! An update follows at the end.
'LANZAROTE LIFELINE'
Business Plan
Ian Penman,
(Address)
e-mail; ian.penman1@btinternet.com
NI number; xxxxxxxxxxxxxxxxx
CONTENTS
1) Power Point Presentation script
2) Map of Lanzarote
3)Executive Summary
4) Strategic Elements
i) Vision and Mission Statements
ii) Industry Environment Analysis
iii) Critical Success Factors and Key Constraints
iv) Environment and Market Analysis
v) Primary Market Research
vi) Secondary Market Research
vii Macro Environmental Analysis
viii) Micro Environmental Analysis
ix) SWOT Analysis
5) Marketing Strategy
i) Objectives
ii) Constraints
iii) Options
iv) Target Markets
v) Marketing Mix
vi) Product
vii) Place
viii Price
ix) Promotion
6) Legal Framework
7) Financial Plan
i) Forecasted Sales/12 month Profit Statement
ii) Sensitivity Analysis/12 month Profit Statement 50% increase in sales
iii) Sensitivity Analysis/12 month Profit Statement 50% reduction in sales
iv) Cash Flow Forecast formulas
8)Appendix
i) Bibliography
ii) Ian Penman CV (not included)
iii) Average Property Prices 2004/2005 published by the Spanish
Government (not included)
iv) Lanzarote Estate Agents listing (not included)
v) Pilot Property Promotional DVD (not included)
Script for Power Point Presentation. (In a 'real' situation this would have been delivered in person, with images via Power Point and the business plan left for scrutiny. Some information from the presentation would, of course be duplicated in the plan and I've left it like that. I haven't included the images that would have been used in the presentation, preferring to include them in the body of the Business Plan.)
According to the Daily Mail 92% of the population would like to retire abroad if
they could!
There are dozens of magazines dedicated to living or holidaying abroad,
including Holiday Villas, Exclusive Holidays, Private Villas, Holiday Directory,
and Living In Spain. Television programmes like A Place In The Sun, Get A
New Life and House Hunters In The Sun and digital television channels like
Real Estate TV, The Travel Channel, Discovery Travel, Sky Travel and Sky
Travel Extra re-enforce Britons ongoing desire to own holiday, retirement or
investment homes abroad.
The Canary Islands is one of the UK's the most popular holiday destinations
because of its' year-round sunshine and laid-back lifestyle.
Britons who have homes in the Canaries. One of these is me! I've owned
property in Lanzarote since 1999 and am very familiar with the real estate
market there.
Lanzarote is generally regarded as the most up-market of the Canaries. There's
an ever-growing supply of both new-builds and established properties for sale.
Suprisingly there's very little information or sales material available in the UK
relating to the Lanzarote property market, unlike for Tenerife or mainland
Spain.
The April-May issue of Holiday Villas magazine lists the average selling price
of a one bedroom apartment in the Canaries as £88,177. Lanzarote still has
many properties which are significantly less than this! For example;
Tuscan Apartments, Costa Teguise (£60,000 up)
Agana Alta, Arrecife (£57,000 up)
San Franciso Apartments, Puerto del Carmen (£65, 000 up)
There are 104 estate agents (or inmobiliaria agencias) in Lanzarote. With a
permanent population of around 110,000 this translates to one estate agency per
1000 of the population! All the estate agents are in competition with each other
and often sellers will have their properties for sale with up to a dozen different
agents. The conventional market is slow at the moment and Lanzarote Lifeline,
my "New Venture" would offer a select group of Lanzarote estate agents a
promotional tool that could potentially increase their sales by 100% or more.
A large percentage of property sales are to non-residents as holiday, retirement
or investment homes. These are mainly British and Irish, followed by Germans,
French, Scandinavians and mainland Spanish.
With the exception of one Re-Max office in the capital of Arrecife, Lanzarote
estate agents are small one or two person businesses. Getting to the decision
makers is very easy as they're in their offices every day!
An essential aspect of all businesses is to put buyers in touch with sellers.
With Lanzarote Lifeline I would source potential UK buyers, introduce them to
properties they may be interested in and then bring them together with the
relevant Lanzarote estate agents. If a sale was forthcoming from this
introduction, the 5% commission that all the agents charge would be split
between us-probably 2% to me, 3% to the estate agent.
As sellers often have their property with multiple agencies, to avoid confusion I
would only take each specific property from one agent. I would anticipate
working with five or six agencies, and would probably start by taking one or two
properties from each.
I would advertise in the UK holiday magazines, like Daltons Weekly and
Private Villas. Potential buyers would get information packs about the
properties and, if they express "serious" interest in a particular property, a short
DVD/video shot by me.
The business would initially be run solely by me, working from home. I have 25
years media experience, have bought and sold property in Lanzarote and have
good relationships with many of the islands' estate agents. I would shoot on my
personal 8 mm video camera (light, small and portable) and edit on my home
computer, using a free Avid download. Digital and 35 mm photos would be also
taken, using my HP Photosmart and Olympus stills cameras.
I'd shoot the footage when I'm over in Lanzarote administering my properties.
Sync sound wouldn't be needed and I would work on my own. My only Capital
outlay would be a DVD recorder and additional player (£150). If the business
took off I'd engage other editors/cameramen (and put them up in my
apartment!). The main Revenue outlay would be the advertising, but this could
be done in stages. A small classified advert in Daltons Weekly would cost £12
per week.
How do I know this will work? I recently put one of my apartments in
Lanzarote up for sale. I placed it with half a dozen Lanzarote estate agents and
also advertised it myself in Daltons Weekly. A month's worth of adverts
brought something like 20 enquiries. These initially received a pack which
contained an information sheet and five photos. Those who expressed further
interest received a five minute DVD which I shot showing the
complex and the apartment.
Four or five of the recipients of the DVD expressed a serious interest and a
couple actually went out to Lanzarote to view the property. Before any offers were made,
however, I got an offer via one of the estate agents and went with that.
I see Lanzarote Lifeline as a perfect low-cost, low risk business venture which
draws on my specialist strengths, knowledge and circumstances. I'm happy to take any questions you might have.
(Presentation ends. What follows next is the actual Business Plan.)
EXECUTIVE SUMMARY
I plan to represent Lanzarote estate agents in the UK. I would locate potential property buyers and share the commission with the estate agent is a sale was forthcoming.
1.38 million Britons own property abroad. According to a survey carried out by
the Daily Mail, 92% of the population would like to retire abroad if they could.
By 2008 the number of Britons with foreign property is expected to rise to 3.12
million (Source;the Shelter Offshore.com website) (1)
Between 40% and 50% of all properties purchased by the British are in Spain.
or the Canary Islands. By the end of 2003, 620,000 Brits owned property in
Spain or the Canaries, an increase of 50,000 on the previous year. (Source;
Spanish Property Insight website, April 2006 (2)).
Most British owners of Spanish property own holiday homes or investment
property and are not resident. There is, however, a move towards living in Spain
on a permanent or semi-permanent basis. With a flying time from the UK of
around four hours, Lanzarote has a population of 140,000, of which a third are
probably British or Irish. The other 66% are Spanish, Canarian, Dutch, German,
French or Scandanavian, a third of which will be fluent in English
Politically and administratively Spanish, while remaining autonomous, the
Canary Islands are one of the UK's most popular holiday destinations because of
the year-round sunshine and laid-back lifestyle. Many of these holiday makers
would like to join the ever-growing numbers of Britons who live full-time in the
Canaries. I've owned property in Lanzarote since 1999 and am very familiar
with the island and its' infrastructure.
Generally regarded as the most up-market of the Canaries Lanzarote is the fourth largest island.The number of British tourists alone increased from 43,000 in 1982 to nearly three-quarters of a million by the turn of the century and now stands at around 1.5 million. Indeed, the number of
tourists on the island often exceeds the number of indigenous inhabitants.
Tourism (including the ever-growing construction industry) is the island's biggest
employer and it's estimated that 90% of the working population are involved in tourism in some
sort of way. (Source; Lanzarote Travel Guide, Rowland Mead p26 (3))
There's an ever-growing supply of both new-builds and established properties for sale. Surprisingly, there's
very little information or sales material directly available in the UK relating to the Lanzarote
property market, unlike for Tenerife or mainland Spain.
There are 103 estate agents (or 'inmobiliarias') in Lanzarote -around one agency for every 1100 of the population. All of the agents are in competition with each other and sellers will often have their property for sale ('se vende') with up to a dozen different agents. The conventional market is slow at the moment and my New Venture would offer a select group of Lanzarote estate agents a promotional tool to potentially increase their sales. I would locate prospects within the UK, give them promotional and illustrative material (video and stills) and if a serious interest was expressed, would put them in touch with the relevant Lanzarote agency. If a sale was forthcoming I'd share the commission with the agent.
The ultimate goal would be to make the business a sufficient success so that someone would be willing to buy it off me!
My only Capital outlay would be a DVD/video recorder and additional player
(£150) so I could run off copies of the 5 minute promotional DVD's /videos I'll
shoot. I already have a video camera and would edit on my home computer,
using a free Avid download. Digital and 35 mm photos would be taken using my
HP Photosmart and Olympus stills cameras.
I'd shoot the footage when I'm over in Lanzarote administrating my properties
and therefore wouldn't incur costs for flights or accommodation. I always hire a
car while in Lanzarote and have a very good discount deal with the hire
company I use. Sync sound wouldn't be needed and I'd work on my own. The
main Revenue outlay would be the advertising I'd need to do within the UK
Anticipated first year profits would be in the region of £18,000.
STRATEGIC ELEMENTS
Vision and Mission Statements
The reasoning behind Lanzarote Lifeline is to tap into the ever-increasing
demand by Britons to have "A Place In The Sun" to escape to, both short (family
holidays) and long term (emigration or retirement). And also to offer me a
perfect low-cost business venture which would draw on my specialist strengths,
knowledge and circumstances.
I would strive to offer my clients a service that satisfies them, fulfills their needs
and makes me a profit. I would operate in an ethical, straight-forward way,
giving realistic, honest advice to potential buyers and estate agents, helping both
achieve their aims of finding that dream property and making a sale,
respectively.
The venture is driven by the huge interest of Britons in overseas property and
the availability of money to fund this interest; the rise in the UK housing market
has given many people the finance necessary to buy second homes. Also, the
post-war "Baby Boomers" are now retiring and more than ever before, looking at
retirement as a positive opportunity, rather than winding down in preparation
for the undertaker! Fun in the sun, against vegetating in the UK! 60 is the new
40!
My mission statement is; Your Home In The Sun; We Make The Dream A Reality!
Industry Environment Analysis
Market entry would be by speaking to a select group of Lanzarote Estate Agents
and seeing which were interested in me working with them. There are too many
agents on the island, and they are all in competition with each other. I would be
offering access to a new set of buyers with no financial risk to the agents, giving
them an advantage over the agents that I wasn't working with.
With the exception of two or three chains, including a Re-Max in the capital of
Arrecife, most of the Lanzarote estate agents are one-or-two-man businesses. It's
very easy to get to see the decision-makers as they're in their offices every day!
By viewing the four or five minute videos/DVD's I would shoot of each property,
potential UK buyers would be able to decide how interested they were in each
one, without going to the trouble and expense of going to Lanzarote. No one
would buy, of course, just based on a video but it would enable the prospective
buyer to determine the amount of interest they had in a property. It would be
their very own edition of the A Place In The Sun programme! I can advise on
location, rental (holiday and long-let) potential, the procedures of buying and
ways of funding the purchase.
A DVD shot to promote one of my Lanzarote properties I was selling was included
with my Power Point presentation assignment.
Around 60 % of all Spanish property sales are new builds (Source; Spanish
Property Insight website April 06 (2)) Estate Agents often do deals with
developers, for the sale of new builds. These carry a higher commission rate and
the agent has the advantage of having (say) one hundred close-to-identical properties
which can all can be promoted for not much more than the price of a single property..
Developers usually do deals with banks who are able to offer prospective buyers
terms that are generally more favourable than with re-sales. With a hundred properties
to shift the Lanzarote agents would probably welcome my assistance! The same
would be true for the sale of properties on (former) holiday complexes, as with
Los Naranjas and Playa Roca in Costa Teguise.
Critical Success Factors and Key Constraints
Critical success factors relate to providing enough actual buyers to make the
venture viable. The estate agent business is based on selling property. If you're
not selling you're not making money! Key constraints; Buying a house is the
biggest purchase most of us will ever make, and not one to consider lightly.
People are even more cautious about buying property abroad, in case there's
some sort of "catch" or scam going on and they lose their money. This is a major
obstacle to overcome, but not insurmountable; the 1 million-plus Britons who
already own foreign property did!
ENVIRONMENT AND MARKET ANALYSIS
My initial approaches would be to the agents I already know personally, via my
own property purchases and sales. I would want to keep to a small group
initially-probably five or six. These would be;
Inmo-Estates, Costa Teguise
Lanzarote Property Options, Costa Teguise
Asor Estates, Costa Teguise
Location , Costa Teguise
Inversiones Timanfaya, Puerto
Costa Teguise
Like many other businesses, personal contact is key. As I'm in Lanzarote once
every couple of months, and often drop in to see the agents anyway, this would
be very easy to achieve.
Prospective UK property buyers would be located via advertising specific
properties in some of the magazines dedicated to overseas property and
holidays. I would draw from my own knowledge and experience as to where and
how to advertise. Customer retention would be achieved by bringing an
on-going supply of prospective buyers to the agents! I would advertise on a
continuing basis to attract new potential buyers.
Primary Market Research
As someone who has bought and sold property in Lanzarote I am very familiar
with the process. I know which areas/locations are more likely to attract buyers
and what sort of properties are currently selling and at what prices. I also know
that the market has slowed down over the past year.
The 103 estate agents in Lanzarote are broken down via location as follows;
Costa Teguise (17)
Puerto del Carmen (22)
Arrecife (31)
Tias (3)
Playa Blanca (18)
Others (12)
Of these, probably half are British or Irish. The others are predominantly
Spanish, with a minority of other nationalities like French, Norwegian and
German. Invariably there's at least one person in every office who speaks very
good English. The only exception to this is some of the Arrecife based agents
who deal less with the tourist market.
Most agents primarily sell domestic properties. Only a handful, as above, sell business or
commercial premises. As this is a specialist area, aimed at a far more limited
group (many of whom will be Spanish, and less inclined to deal with non-Spanish
people) I'll put this sector aside for now and concentrate on house and
apartment sales. I may come back to commercial at a later date.
The April/May 05 issue of Holiday Villas magazine (3) lists the average selling
price of a one-bedroom apartment in the Canaries as £88,177. Lanzarote still
has many properties which are significantly less than this.
For example;
Tuscan Apartments, Costa Teguise (£58,000 up)
Los Molinos, Costa Teguise (£60,000 up)
San Franciso Apartments, Puerto del Carmen (£60,000 up)
Argana Alta, Arrecife (£57,000 up)
Santa Coloma, Arrecife (£55,000)
Altavista, Arrecife (£65,000
San Francisco Javier, Arrecife (£65,000).
Arrecife Central new build studio apartments (£52,000 up)
(Source; Lanzarote magazines (4))
The property purchasers I'll be targeting will be exclusively British and Irish.
They'll be relatively easy to reach and there won't be language problems. As
I've discovered, people tend to want to do business with someone they can freely
converse with! With between 50,000-70,000 sales of property in Spain and the
Canaries last year to this group, (Source; Spanish Property Insight, April 06(2))
the market is big enough. Being based in the UK, but being in Lanzarote every
couple of months will be my Unique Selling Point that will enable me to
communicate in person with the agents but also to locate UK buyers.
Properties range from studio apartments on complexes to multi-roomed villas
with swimming pools. Prices start at £50,000 and go up to several million.
Britons want property almost exclusively in the tourist areas like Costa Teguise,
Puerto del Carmen and Playa Blanca or in residential areas like Tias and Playa
Honda which have large British contingents. Even though property there
overall is cheaper, Britons generally aren't interested in the industrial capital of
Arrecife. It's crowded, congested, difficult to get round and very Spanish, with
many shop, cafe, restaurant and bar staff speaking no English (unlike in the
tourist areas where everybody does) The 'Spanishness' of Arrecife appeals to me
but probably not to most UK buyers!
I would, therefore, not take on any Arrecife property. These days, so one of my Spanish estate agent friends tells me, not even the Spanish want to live there! Costa Teguise is only a ten minute drive away,
and an increasing number of residents are working in Arrecife but living in Costa Teguise.
Coastal resorts are the most popular locations for UK buyers. Puerto del Carmen
is the biggest and liveliest resort on the island and property there is generally around 10%
more expensive than elsewhere.
I
In recent years Costa Teguise has been replaced as Lanzarote's number two resort by Playa Blanca and is quickly heading towards becoming largely residential. Developments like Las Piteras and Teguise Greens have been aimed at buyers who will live on the island all the year round and not just pop over every now and again for holidays.
Tias is a five minute drive away from Puerto and doesn't enjoy sea views but has
a thriving British community who have bought into property at probably 10%
less than they'd pay in the resort. Available land has been plentiful around Tias
and nearby Guime and there are some exceptionally lavish villas and mansions
(selling for between £300,000-£1,000,000) that, based on a metre-for-metre basis
are actually cheaper per capita than some of the resort-based apartments!
Space is at a premium in Puerto, with less new builds. Some former tourist
complexes are up for sale, but buyers need to be aware of possible renovation
work that might need doing and also problems with the local government about
change of usage from tourism to residential. Many of these complexes, like the San Franciso Apartments
are in the heart of tourist town and convenience needs to be weighed up against the noise generated by nearby bars that stay open until the early hours. Puerto Del Carmen is, after all, Lanz's busiest resort.
Playa Blanca is the fastest growing resort on the island, with new builds
everywhere, some up to four miles away from the coast and many new hotels
catering for the all-inclusive holiday maker. This glut of new property has
negatively affected both the long and short term rental and resale markets in the resort.
Puerto Calero caters for the yachting set with its' wonderful Marina and equally
wonderful prices. Playa Quemada is a fishing village close to Carmen and
Calero with a unique, unspoiled charm. Buyers need to beware as a lot of the
properties there don't have planning permission and could, in theory, be pulled
down if the Cabildo (island government) decided to flex their muscles.
Generally, agents represent property for sale within their geographical area. As
Lanzarote is only 37 miles long, this is not absolute and sometimes the Costa
Teguise agents have some Puerto del Carmen properties for sale and
vice-versa. As Playa Blanca is right at the south of the island, and fairly
self-contained the agents there tend to sell only local property, particularly new
builds. I don't actually know any of the Playa Blanca agents, but this could be
easily remedied; estate agents are very easy to get to see!
I'm in Lanzarote every two months and always check on the property market.
With the agents I know personally I drop by for a chat, and pick up their latest
lists. With the others, I look in their windows (and pick up their lists!)
I also read all of the local magazines, including the Spanish ones. These include the Lanzarote
Gazette, Buzz, Freedom For Sale, Viva!, Estohay and Lancelot. I additionally buy Island
Connections, which covers all of the Canaries, favouring Tenerife. All have extensive property
advertising sections.
Of these magazines, the Lanzarote Gazette is undoubtedly the one which most
British people read, followed by Buzz. Both are free, can be easily picked up in
tourist areas and always have large property sections with adverts from most of
the estate agents. This is a very handy way of quickly discovering what
properties are priced at in what location! They tend not to have adverts from
the Arrecife based agents, unlike the Spanish Viva! and (especially) Estohay
magazines.
Freedom For Sale is a free real estate promotional magazine that favours
Lanzarote but also has Fuerteventura property and a small Tenerife section.
This is given away in estate agents and, in addition to featuring agents' adverts,
also lists properties for sale that the publishers act as a sub-agent for. The
magazine is glossy and well presented and very much aimed at buyers without
much knowledge of the market.
I also look on notice boards in supermarkets and shopping centres. The board in
the predominantly-Spanish Deiland (Lanzarote's Metro Centre equivalent)
always has lots of properties for rent and for sale, along with pets, cars and the
rest.
In addition to estate agents, I also know a lot of other people who live in
Lanzarote full time. Most of these are tradesmen-handymen, decorators,
plumbers, satellite installers etc. They always have a good idea of what's
happening in the property market, and are in and out of peoples' houses on a
daily basis. They know what's selling and what isn't and what sort of prices
sellers are getting. Which is often different to the selling prices advertised.
Consequently, I have a very good idea of the state of the market.
Last year I put one of my apartments in Lanzarote up for sale. I placed it with a
half a dozen Lanzarote estate agents and also advertised it myself in the UK in
Daltons Weekly where a month's worth of adverts brought something like 25
enquiries. Ultimately I sold the property via one of the agents but the exercise
did demonstrate to me that there is definite interest within the UK for buying
property in Lanzarote.
Secondary Market Research
According to the official figures released by the Spanish Government (Appendix
ii) Spanish property prices grew by 12% in 2005. Some overseas property
investors think that the bubble is about to burst and there is evidence to doubt
the reliability of the Government's figures. The market marches on, particularly
with the never-ending supply of new-builds on the Spanish mainland and many
developers are keen to play down any suggestion that the market could be
flooded.
Quoted in the April 2006 edition of the Lanzarote Gazette, Jason Windle,
managing director of Spanish real estate firm Platinum Properties says,
"Even though there is talk that the Spanish property market has reached it's
peak, it it still catching up with the English market. I strongly believe that it has
a long way to go and we may still be only midway through the property boom".
Terry O'Connor, Business Development Director of overseas property company
The Superior Group is also quoted, agreeing that Spain and The Canaries are
still good options. "Mortgages are easily obtained, there's no worry with currency
instability and there's some great deals at the moment. Some areas have seen
inflation of 40% in the last two years and we expect at least 15% in 2006".
This is re-enforced by Nick Clark, Managing Director of The Homebuyer Show,
"Despite emerging property markets creating a real buzz at the moment,
traditional markets like Spain are still incredibly popular with visitors to our
shows". (Source; Lanzarote Gazette, April 2006(5))
However, the Spanish Property Insight website for April 06 (2) offers a
somewhat different view, quoting the International Monetary Fund's bi-annual
report which argues that property prices in Spain have risen more than is
justified by economic fundamentals such as growth in income, population and
interest rates. The implication is that Spanish property prices have been driven
by speculative investment, rather than actual demand. On a somewhat more
positive note, Insight also quotes Spain's Foundation of Saving Banks forecast
that Spanish Property price inflation will decline gradually rather than crash and
there will be no "hard landing". (2)
From my own experience I support the view of the financial institutions rather
than those of Windle, O' Connor and Clark, who will want to paint a more
positive picture for their own business reasons.
I've been observing the Lanzarote property market from 1999, which is when I
bought my first property there. From 1999 to 2004, prices went up on average
25% a year. So a one-bedroom apartment on a complex in Costa Teguise might
sell for £28,000 in 1999. A similar apartment on the same complex was priced
at £63,000 in 2004.
2004 was the year when the Lanzarote market slowed down, due, in my opinion,
to consumer value perception. £28,000 for a (admittedly fairly basic) holiday
home in the sun would be perceived by most people as a good deal. And one
that probably quite a few people could pay for without having to take out a
mortgage. £63,000 five years later becomes a lot less of a bargain, and a
purchase that would need to be more carefully considered and evaluated and
much more likely to require external funding.
Property began not selling. The Spanish philosophy is that property prices go up
every year, irrespective. It's not uncommon for Spanish owners to have their
property unsold for a year and then increase the price by 10%! A recent article
in the Sur In English newspaper claims that Spanish property is taking a staggering 32 months
on average to sell and that some owners looking to reduce this time are having
to make "brutal cuts" and slash their asking prices by between 18,000 and 30,000
Euros! (7)
Mark Strucklin, in the May 2006 edition of Spanish Property Insight offers the
following explanation;
"The off-plan investors who so distorted the market between 2001 and 2004 and
who made up over 50% of the market in some areas (my estimate) have largely
disappeared. Buyers are now people looking for holiday homes or relocation
properties-end users rather than speculators/investors-who are fewer in number
and much more cautious about buying. At the same time, due to the absurd
number of housing starts in Spain in recent years, there is a glut of properties on
the market in many popular areas with off-plan investors and developers all
trying to sell to the reduced number of home buyers". (8)
Even though Mark Strucklin and the Sur In English article are referring
predominantly to the Spanish mainland, there's no doubt that Lanzarote has also
experienced a significant slowing down of the market. The downswing of
tourism in Costa Teguise (caused by some of the major holiday companies
investing in the newer resort of Playa Blanca, building large new hotels and
sending the majority of their package and all-inclusive holidaymakers there)
motivated some of the owners of complexes that had been mainly tourist (like
the Tuscan in Costa Teguise) to get out and numerous apartments were sold at up to 30% below
the going rate. This influx of below-market rate property contributed to the stall
of the Lanzarote market, particularly at the lower end.
Also, because of the weakness of the German economy, the German buyer
disappeared around the same time, as they had in Mallorca. But, in the case of
the Canaries, British buyers didn't move in to take their place. (Source; Message
Board response, Mark Strucklin, Spanish Property Insight, 2 March 2005 (9))
Macro Environmental Analysis
Britons have been visiting The Canary Islands in significant numbers since the
1980's.
The Canaries have the lowest number of rainy days in Europe and the winters
are among the sunniest, with an average January temperature of 21 degrees.
Lying as far south as the Sahara Desert and about 70 miles off the North African
coast, the Canaries enjoy the clear, unpolluted waters of the Atlantic. Summers
are warm but not sweltering. The islands seamlessly combine the British and
Spanish ways of life;
There is no time difference with the UK
The currency is the Euro,
Travel and work visas aren't required.
Regular inexpensive charter flights from most UK airports
A flying time from the UK of around four hours
Cheap packages
Plenty of private accommodation to rent
Lively tourist resorts and picturesque Spanish villages within easy driving distance
Good roads
Cheap car hire
Lower cost of living
Cheap petrol, alcohol and tobacco
Low crime rate
UK pensions can be paid directly into Lanzarote banks
English widely spoken
An infrastructure that has embraced the foreign visitor,
Unlikely target for terrorist attacks
Politically and economically stable
Not prone to earthquakes
Lanzarote is a volcanic island, with the last eruption being 350 years ago.
Mount Timanfaya is in the middle of the island and in the very unlikely event of
it erupting, the coastal areas wouldn't be affected. There are many highly
sensitive and sophisticated detection devices on the island which very carefully
monitor seismic movement and would be able to give several months warning of
any activity, no matter how minor!
A firm UK favourite for both holiday-makers and second or retirement home
buyers.
Lanzarote has a tranquil atmosphere, miles of golden sandy beaches, fine
restaurants, vineyards and some spectacular scenery. There's a stark beauty to
the conical mountains, stony plains, sand dunes and 900 square kms of solidified
lava and volcanic rocks.
This is complemented by the stunning architecture of the late Cesar Manrique.
Undoubtedly the founding father of modern Lanzarote, Manrique designed most
of the island's main tourist attractions and heavily influenced virtually
everything else. The Manrique Foundation, based in Tachiche in the house that
the artist built for himself in five dormant volcanic bubbles, showcases many of
his creations from design to completion, as well as artwork from Manrique and
many of his contemporaries, including Picasso.
Further up the coast Jameos del Agua is a spectacular visitors attraction
constructed by Manrique from two large lava bubbles and an underground lake
that houses a restaurant, cafe, night club, gardens and concert hall.
At the northern-most tip of Lanzarote, Mirador del Rio is a daring mix of
architecture and landscape, carved into the cliff side hundreds of feet above the
sea that offers breathtaking views across to the adjoining island of La Graciosa.
Manrique's influence still continues, thirteen years after his death in a car
accident. Buildings have to be painted white, with green or brown woodwork.
Tourist development is strictly controlled, with only three or four high rise hotels
on the entire island. 90% of land on the island is protected and can't be built on
and UNESCO have declared Lanzarote a World Biosphere Reservation for its'
protection and conservation.
Perhaps surprisingly, given its' popularity, Canary property prices are around
10% less on average than they are in mainland Spain's coastal resorts. 2005's
average property price figures released by the Spanish Ministry of Housing
show a 9.7% increase for the year, slowing down in the last quarter to 2%, both
lower than the national Spanish average of 12.8% and 2.4% respectively (6)
The Spanish Government's 9.7% increase in property prices in the Canaries is
not born out by my own observations. Prices in Lanzarote are static and a canny
negotiator can often get a significant reduction on asking price. Mark Strucklin
in the May 06 Spanish Property Insight offers a very persuasive explanation about
why the Government's figures may not be totally accurate.
"The Government get their figures from authorised appraisal companies and it's
no secret that appraisal companies have been helping their main
clients-mortgage lenders-for years by producing 'optimistic' evaluations. This
doesn't mean that the government's figures are worthless-far from it. They are
still useful for identifying trends and comparing regions. However I do suspect
the government's figures of exaggerating property price increases in many parts
of Spain over the last few years".(9)
Macro environmental stakeholders would include; airline companies, local and
national governments (UK, Spain and Lanzarote) ecological groups, economic,
socio-cultural and technological institutions.
Micro Environmental Analysis
Stakeholders would include Lanzarote estate agents, potential buyers, magazines
etc that I'd advertise in and any freelance cameramen or editors I might employ.
There is currently only one UK-based agent for Lanzarote estate agents. The
Lanzarote Living website invites UK buyers to send them e-mails telling them
the sort of property they're interested in. They will then forward them to estate
agents in Lanzarote. It doesn't specify to how many agents the e-mails will be
sent to and seems very half-hearted, acting more as a link facility than actively
pursuing clients. There is also one huge error on the general information page,
where it claims that Lanzarote is 67 miles long; it's actually 37 miles.
Indirect competition is the number of UK based companies who are facilitating
the sale of other overseas property, predominantly in Spain, Cyprus and
Tenerife. The following list only includes UK companies or representatives. As
can be seen there are plenty of companies offering property in America,
Portugal and Cyprus. The companies offering property in Spain almost never
have properties in Lanzarote. The most popular Canary Island is Tenerife but
even that only has a handful of UK companies offering property. Again,
Tenerife seldom appears on the books of the companies promoting Spanish
property. (7)
Spain
Parador Properties
Gran Sol Properties (Europe)
Palmera Properties
Elite Property Sales
Property Networks Spain
Spanish Global Properties
Villas Online Direct
Spanish Way Properties
Mercers
1-2-1 Spanish Property
Linda Fincas
Mallorca
Mallorca Hot Property
Tenerife
Crossley, Morfitt & Lennox
Sunset Properties
Alexanders International
Tenerife Homes Direct
Willow
Cyprus
Coopers Overseas
Lewis Estates
Parador Properties
Price Cooper
KJM Properties
E Property Direct
Cyprus Property Sales
Cyprus Connect
Euro Property Guide
JD Direct
Cretan Courtyard Homes
Cyprus Property Services
Property Republic
Portugal
Purely Portugal
Casas do Barlavento
Albufeira Real Estate
USA
Florida Homes 1st
Florida Homes International
Lowerys
Florida Villas Sales
Luxury Villas Worldwide
Florida Real Estate Ltd
Calabay Homes
Florida Connection
Simply Florida
Executive Villas Florida
All of the above are competing for the overseas house hunters business.
However, someone who prefers the American lifestyle is unlikely to be
considering the Canary Islands. Cyprus is a more relevant competitor, and there
are many good deals to be had. More buyers are becoming aware of
the risks involved in buying in Northern Cyprus (where most of the bargains
are), particularly properties with Greeks title deeds built before the Turkish
invasion of North Cyprus in 1974 where the Greek Cypriots were forced from
their homes.
The UK government doesn't recognise the Turkish Republic of
Northern Cyprus and the Foreign Office website advises extreme caution in
buying property there, explaining that many thousands of claims by the original
Greek owners are currently going through the European courts. If they win and
are awarded their homes or land back the effect on the Cyprus property market
will be dramatic. (8)
Mainland Spain will always be popular. It is seasonal, however, and doesn't have
the Canaries all-round sunshine. Property is on average 10% more expensive
than in the Canaries.
Tenerife is the nearest competitor to Lanzarote. Property is slightly more
expensive in Tenerife and there are (percentage wise) less private villas and
apartments. It's also more "upfront" and has more of a reputation as a party
island than laid-back Lanzarote, which caters more for the family and retired
market.
SWOT Analysis
Strengths
Good knowledge of the finite and specialist Lanzarote market.
Good general knowledge about property renovation and design
Good knowledge of Lanzarote in general terms.
Have bought and sold property myself on Lanzarote
Knowledgeable about procedures
Knowledgeable about Spanish mortgages.
Have English-speaking contacts in Lanzarote banks
Know ten or twelve estate agents personally
Know how to contact the others
Own Lanzarote property myself
Am on the island once every two months
Know tradesmen
Am confident, able to get on with most people
Literate, articulate
Good writing skills
25 years media experience
Knowledgeable about marketing, advertising and promotion
Familiar with potential suitable advertising mediums
Basic camera and editing skills
Basic Spanish
Able to offer a personal, one-to-one service to both estate agents and
prospective buyers
Weaknesses
Sometimes overly cautious
Can get discouraged if results are slow in coming
Money spent on advertising will be wasted if no sales are forthcoming!
Housing market is unpredictable and very influenced by external events
(cost of flights, actions of governments and financial institutions, nearby
developments etc)
Financial results not necessarily linked to the effort (or money!) put in
Speculative
Difficult to accurately forecast sales
2,000 miles away!
Opportunities
The combination of my knowledge, circumstances, experience and the current
interest in overseas property, linked with available finance (particularly
among the middle aged, who have either paid off their UK mortgages, or who
have significant equity in property) should make this the right opportunity at the
right time.
Spanish mortgages cost significantly less than UK ones, making buying easier.
Threats
A larger UK-based company having the same idea (or stealing mine!) and pursuing it rigorously!
The Lanzarote Living website offers to put UK buyers in touch with Lanzarote
estate agents. I don't see this as much of a threat because anyone
Internet-literate enough to have found their website will have no problems in
finding the agents' websites. Indeed, there's actually direct links to a couple of
them! Communication with Lanzarote Living is via e-mail only. It's all very
de-personalised, with no suggestion of video material or a phone number.
Personal service would be a very important aspect of my business. I would also be
actively looking for clients, via advertising. Lanzarote Living don't appear to be
doing this.
A significant rise in interest rates (UK and Spanish) which would make Lanzarote
property less affordable. Euribor-the interest rate most commonly used to
calculate mortgage repayments in Spain-rose for the seventh consecutive month
in April 06, pushing up variable rate Spanish mortgage repayments. Euribor
rose to 3.318% at the end of April, up from March's 3.233%. Euribor is now at
it's highest level since September 2002 and the financial markets (so Spanish
Property Insight reports) expect it to rise to 3.75% at the end of 2006 and 4% by
April 2007.
Upcoming markets like Croatia and Bulgaria becoming even more popular and
taking potential property buyers away from the Canaries. Bulgaria will be
joining the EU in 2007 and tourism is already booming. Property is cheap and
foreign investors are flooding in. Skiing is one of the main attractions in
Bulgaria, which means that the country is attracting holiday home buyers who
probably wouldn't be interested in the sunshine lifestyle that Lanzarote offers.
According to (Channel) Five's How To Be A Property Developer Abroad (23
May 06) the ski resort of Bansko has seen a 60% rise in the last two years. Some
UK buyers, however, are just after cheap foreign investment properties, which
very definitely makes the Eastern European countries serious competition to
Lanzarote.
Some sort of UK governmental clamp down or tax on buying foreign property.
Unrealistic high pricing of some properties in Lanzarote by some owners.
Me being offered a very time-demanding UK media or writing job!
MARKETING STRATEGY
Objectives
To get a handful of Lanzarote estate agents let me represent some of their
properties in the UK and then find serious potential UK buyers and match them
up and split the commission earned with the agent.
Constraints
Locating serious buyers! I've already had informal conversations with a couple
of estate agents and they would be agreeable to my finding them clients. Much
harder is closing the deal and converting prospective property buyers into actual buyers!
Options
Work with seven or eight different agents. This is my favored approach. Other
possibilities would be;
Work with only one agent. Very much a "all my eggs in one basket" scenario!
What if they went out of business? Or we stopped getting along?
Deal with UK buyers and Lanzarote sellers directly, thus keeping the full 5%
commission to myself! The agents are based in Lanzarote full time and are very
well versed in the legal and financial procedures, taking buyers and sellers to
the Notary to have the transaction registered and resolving hold-ups or problems.
Unlike the estate agents (who have offices and advertise regularly) it would be
hard for me to source sellers without being on the the island full time. While
getting the full commission is appealing, "going it alone" is not a serious option.
Target markets
1) Lanzarote estate agents
2) UK residents with money, looking to buy property abroad, either as a second
or retirement home or as an investment. These could be;
Retired or approaching retirement.
Entrepreneurs and speculators
Professionals, with disposable incomes
Tradesmen, wanting to "start a new life" in Lanzarote
Marketing mix
Product
(Core) Linking Lanzarote agents with potential property buyers.
(Surround) Providing illustrative materials (DVD/Video, photos, sales sheets) so
that buyers can make initial viewings (and decide how interested they are)
without having to make costly inspection trips involving a round journey of
4,000 miles!
Giving advice and guidance through the property process.
(Choices) I'd promote a fairly wide range of properties, from apartments to
villas, generally set in the areas popular with UK buyers. Some would be
new-builds, some would be re-sales.
(Extras) I have extensive knowledge of Lanzarote and its' social and economic
infrastructure. I'm experienced in buying and selling property there and have
lots of contacts, in both financial and trade sectors. If buyers needed a Spanish
mortgage I could make suggestions and recommendations; if a property needed
up dating I could suggest tradesmen, where to buy supplies, furniture etc.
My relationship with Lanzarote is ongoing. I will continue to own property on
the island for the foreseeable future, and would therefore continue to be
available to former clients for advice and consultation.
I would probably be able to offer substantial accommodation discounts in one of
my properties to potential buyers on inspection trips. Alternatively, I could
arrange or suggest discount accommodation elsewhere.
I would also be able to offer a property location service where the client could
tell me what sort of property they were looking for, in what price range and
area. I'd then use my knowledge and contacts to come up with a short list of
properties. If my UK client went with any of these properties, I'd split the
seller's commission with the agent.
Place
I'd be working from home. The clients would never need to come. My location is
of no relevance. When in Lanzarote I'd stay in my apartment in Costa Teguise
while filming properties and visiting estate agents.
I would get the product to the estate agents via personal contact, fax and e-mail.
The buyers would be located via advertising and the promotional material
posted or e-mailed to them.
Price
Estate agents in Lanzarote work on a commission only basis. All charge exactly
the same amount-5% of the selling price (paid, of course, by the seller). Sellers
often have their properties with up to a dozen different agents. The one who
sells it gets the 5%, the offers get nothing! I would anticipate being given
properties to promote that are with several different agents (as these have only
a 1 in 5 or 1 in 10 chance of being sold through that particular agent). I could,
of course, only represent that property for one agent.
I would be looking at a split-commission deal (which is how it works in the
entertainment business), giving both the agent and I 2 1/2% of the sale price. This
would be my starting point with the agents. If pushed I would accept 2%. This
would be paid after the property has been sold and the seller has paid the agent.
Promotion
Promotion to the Lanzarote estate agents would be via personal contact, while
I'm in Lanzarote.
I would locate the UK property seekers primarily by advertising in the some of
the many magazines devoted to property and living abroad. Daltons Weekly
offers cost-effective advertising on a weekly turnaround so I would start there.
Private Villas, Holiday Villas, Living Spain (which I've written for), A Place In The Sun Magazine
and Exclusive Holidays all have property for sale alongside property to rent.
They are more expensive to advertise in than Daltons and I would assess how
my use of Daltons was going before trying them.
A 20 word classified advert in Daltons is £65.80 for four weeks or £107.20 for
eight weeks. I would initially be looking at this sort of advertising spend to
minimise costs. This was what I used when I was selling one of my apartments
and the response was very good.
These sorts of magazines are good because even though they tend not to have
huge circulations (Daltons sells around 40,000 copies a week) their readership is
specifically people who are interested in living or holidaying abroad. When I've
advertised holiday rentals in magazines with much larger, but far more general
readerships the response has generally not been as good. The same would
probably be true with overseas property sales. I will return to to this at some
future point, particularly looking at magazines geared at older people,
retirement etc.
There is a new property magazine called My Property Trader which is starting
publication in June. In addition to promoting property within the North East for
sale and rent, it is also going to have a "Property Abroad" section. My past
experience is that cash-strapped North Easterners tend not to
have the kind of money needed for either buying foreign property or booking
their foreign accommodation privately, making local advertising redundant. I will,
however, keep an eye on the magazine and see how it goes.
For the same reason I would rule out local door-to-door leafleting, poster campaigns
and the like.
The best form of advertising, of course, is word-of-mouth. I would certainly
intend running this business in an honest, credible, trustworthy way. By doing so, friends of
satisfied customers would feel confident about contacting me if they also were
looking for property in Lanzarote.
I would build up a data-base of potential customers generated by my
advertising and from time-to-time would circulate them with details of new
properties. I would keep records of what sort of property individuals were
interested in, price range and location and would offer promotional "first look"
opportunities
This is a very specific venture and my advertising spend would be very directly
targeted. Free advertising (in the guise of news or feature items) can sometimes be
generated. I'm very experienced in Public Relations (Former head of PR for the
Northern Regional Health Authority, freelance PR and promotions for The Bootleg
Beatles and dozens of other bands and entertainment concerns) and know that
local press, radio and television are always on the lookout for stories. I
may be able to get some free exposure via a carefully worded press release. I'd
have to come up with an angle, (ie "Geordies rush/don't rush to find their place
in the sun!") because the media won't just give me an unpaid advert. I am, however,
very good at inventing angles and feel confident I could get free press exposure
on a regular basis.
I wouldn't consider paid television or radio advertising. Property has
traditionally been advertised in print and I would stay with this. Prospective
buyers need time to evaluate and consider. Television and radio doesn't allow
this and is very expensive!
Foreign property trade exhibitions are another possibility. Taking stands at trade
exhibitions can prove to be expensive and often don't produce enough sales to
make it financially viable with the organisers being the main people making money.
I would go to several as a visitor before making any final decision.
In the short term I would probably stay away from setting up a web-site. All of
the estate agents have web-sites, which, of course, can be logged on from the
UK. My initial target market is probably going to be older people, who may not
have Internet access or the wherewithal to use search engines effectively.
Indeed, I don't want them to go on the internet and discover they can source
properties and Lanzarote estate agents directly!
Setting up a web-site could be costly, and would need to be maintained, which
again could be time-consuming and costly. Again, this is something I may come
back to in the future.
I would, of course, make use of e-mail.
E Bay is a major selling tool and one that I would certainly try out, although I
would certainly need to set a reserve price on all property! On (Channel) Five's
How To Be A Property Developer Abroad (30 May 06) the developer featured
said he would be putting the featured development (an inland Spanish house) on
E Bay. Sure enough, the following day, there it was for a selling price of
£65,000! I'm going to be following the progress of this potential means of selling
with great interest!
Legal Framework
I'd operate the business as a sole trader. This does mean I would be personally
liable for any business debts incurred. As the primary expenditure will be
advertising, which I would pay for as and when I required it, it's very unlikely
the business would incur debts of any significance, making being a sole trader
the most appropriate legal status.
I would have a simple written agreement between me and the estate agent
saying that we would split the commission from any sales that I generate for
them. The standard rate is 5% and I'd be looking for 2 1/2% or 2%.
Business name would be "(Ian Penman trading as) Lanzarote Lifeline". I've
checked that this is not a registered trademark. Companies House tell me that
there isn't another company with that name registered with them. Lanzarote Lifeline is
also available as a website domain for .co, .com, .uk, .org and a dozen others.
I would work from home
My commercial dealings would be with the Lanzarote estate agents, as they
would be paying me from their commissions. No money would be personally
received by me from either buyers or sellers. As I'd be writing very few business
cheques (if any; I'd be booking adverts over the phone and paying on my credit
card) I wouldn't set up a business account, saving bank charges. I'd use my UK and Lanzarote
personal bank accounts for paying in and withdrawals.
I'm already registered with the Inland Revenue as self employed (and have
been for 25 years!). My accountant is Tony Lapping. I already submit yearly
accounts.
I would not anticipate reaching the VAT turnover threshold of £54,000 income
per annum for at least four years, if at all.
I have standard household contents insurance which covers the personal items I
would be using for this business creation. (Computer, word processor, video and
stills cameras). I wouldn't have clients to my house and would not need specific
business insurance. I would not be showing clients round properties and
therefore do not need Public Liability insurance. Clients would book their own
flights for inspection trips. In all correspondence with clients I would advise
them to take out personal travel insurance. Neither Product Liability or
Professional Indemnity insurance would be relevant to the the service I'd be
providing.
I already pay a self-employed Class II national insurance contribution.
The Inland Revenue lists both "Editor" and "Director of Photography" as
television technician grades they accept as freelance. Any casual freelance staff
I use would be contracted as one of these, making them responsible for their
own tax and national insurance. As they would be working for themselves (and
not on my premises) I would not need Employers Liability insurance.
FINANCIAL PLAN
Lanzarote Lifeline is intended as a low-cost, low risk venture that would be in
addition to my present, on-going sources of income (property rental in the UK
and Lanzarote, journalism and media consultancy). I don't need it to provide me with a
living wage, as I already have that. I would not need to take drawings from the
venture. Start up costs would be very low and would come from my savings.
My balance sheet lists £1200 for equipment. This is as follows; Video
camera-£250, Tripod-£50 Stills cameras-£200, computer-£350, DVD/VHS
recorder-£115, DVD player-£35, printer-£70 Discs, tapes, cases, leads, ink,
paper etc-£130. I already own most of this.
Running costs would also be low. All Lanzarote business would be conducted
while I was on the island administering my properties. I would only need to buy
£150 worth of new equipment (the DVD/VHS recorder and additional DVD
player). The main on-going Revenue costs would be advertising. I've factoring in
£60 a month for this. If I booked 12 weeks at a time in Dalton's the actual cost
would be £45 per month. I would use the extra £15 for trials in some of the
different ad-papers round the country like Loot and Friday Ads.
The property market can be unpredictable. I have spoken to several Lanzarote
estate agents and the following balance sheet is based on their analysis of the
current market. My projections are based on assisting the agents to sell ten
properties over a twelve month period. If I take on five properties a month
(one from each agent) I would need a 1 in 6 success rate.
Most Lanzarote estate agents would agree that the current market is static making them
open to anything that would bring in clients they wouldn't otherwise have access to.
With very limited financial risk, Lanzarote Lifeline would be an ideal 'New Venture'
that draws on my strengths, resources, contacts and knowledge.
Ian Penman 8 June 2006
Forecasted Sales 12 month Profit Statement
Sensitivity Analysis 12 month Profit Statement 50% increase in sales
Sensitivity Analysis 12 month Profit Statement 50% reduction in sales
Cash Flow Forecast Formulas
Update 2013
The Lanzarote property market of today bears very little resemblance to the
2006 one that I wrote the Lanzarote Lifeline Business Plan about. Re-reading it,
I still feel that the concept is a good one that wouldn't have taken much in the
way of capital outlay to implement. Key elements of most businesses are
specialist knowledge and networking-putting people in touch with each other for their mutual advantage. These were the basis of Lanzarote Lifeline.
Unlike with Lanzarote UKTV, which was very much a paper exercise written
solely for my Masters, I did toy with the idea of pursing Lanzarote Lifeline. As
the plan explains, I know various Lanzarote estate agents, have audio-video production
skills and extensive promotional and marketing experience. I was in Lanzarote
four or five times a year and could stay in my apartment when working on the
project.
So why didn't I take it further? Shortly after finishing the plan I began to get the
definite feeling that the Lanzarote property market was in decline. The boom
time of the early 2000's were over. When I was selling one of my apartments in
2005 I did get a good response to my advertising. But, as I know from some of
my Lanz inmobiliaria friends, the hardest part of property sales is closing the
deal. Everyone has seen the A Place In The Sun television programme and sat
at home assessing the different properties on show, deciding whether they are
value for money, how they rate the decor and wouldn't it be great to retire to
somewhere warm or just have a regular bolt hole to call your own? It's an
entertaining game to play that most viewers have no serious intentions of putting
into practice.
The majority of the respondents to my adverts probably fell into that category.
They'll have watched the DVD I sent, read the information sheet and thought
"someday!". Several people did get as far as taking a stroll round the complex but I'm fairly certain they were going to be in Lanz on holiday anyway.
I sent out around ten DVD's which converted into no sales. Hard to know what a
successful conversion rate might be. One in twenty, perhaps? Impossible to
accurately predict, which is one of the main problems with selling property;
moving such a high priced product can be very prone to outside considerations.
Posting on the Spanish Property Insight website in June 2006, long established Lanzarote
estate agent 'Stewlanz' (Stewart Andrew) explained what factors had lead to relatively cheap apartments hitting the Lanzarote property market over the previous few years.
Historically, Lanzarote has never been a "cheap" holiday destination - until recent years when large tour operators have had to unload seats and hotel accommodation which they are paying for whether they are used or not.
However, I am sure that you would have noticed how many small, privately owned complexes have been put up for freehold sale in the past couple of years? This is a subject which deserves its' own thread - but suffice to say that the owners of these complexes (which were all built in late 70's) were not willing to refurb at a cost of millions just to get Tour Operators who want to pay them 20 euros per unit per night! Plus, the town halls are leaning on them to up the standard of their - admittedly - tired complexes. It doesn't take much to see why the complex owners decided to cash in their chips and sell for a few million instead of spending it.
This is great news for the apartment buying public as a lot of these complexes are front line, or almost front line within the main tourist resorts. So, where families have enjoyed holidays in the past, they can now BUY the apartment they have stayed in! Great news for the buyer, the vendor, the local town hall too as when complexes are bought privately and a community established, then they are generally kept at a very high standard. So, great for other tourists to see nice apartments front line rather than tired 30 odd year old complexes.
Stew's in-depth knowledge of the Lanzarote property market is apparent. I would disagree with his final comment, however. Apartments on the same Costa Teguise complex as mine started to be sold off in the late 90's, probably for the reasons that Stew describes. The apartments were sold to individuals, giving effectively 100 'managers' who all wanted to do different things, rather than one company who would work in a uniform way across an entire complex. It's a large complex with pools, gardens, offices, car parks and the like that all need maintaining which is funded by the hefty monthly community charge on each apartment that all owners have to pay. Because of the size of the community charge (At one point 180 euros a month for a one bedroom apartment) many owners couldn't or wouldn't pay or payed late and the complex deteriorated. From Stew's comments, this can't have happened with all complexes. But, as I know from personal experience, it certainly did with some. This, I feel certain, had a negative effect when I was trying to sell the apartment in 2005 and would apply to many potential sales on other complexes. The 'tired complex' factor would certainly have worked against Lanzarote Lifeline.
A consideration I should have explored more extensively in the plan was the
unwise rise of the new build. Spain overdosed on newly built properties in the
early 00's and Lanzarote was no exception. Developers brokered mortgage deals
for their buyers with the banks who had financed the development and the banks made
mortgages easy to get, particularly on new builds. Older properties generally had the advantage of being in better, more established locations than the new developments, few of which were 'front line' (next to the sea). Banks would finance these purchases but gave preference to the new
builds that they had sunk money into.
Playa Blanca, twenty years ago a small fishing village with a couple of hotels
and a few restaurants and cafes, had, by 2006, extended several miles from the
coast as developers built and built. For sure potential purchasers would get their
"place in the sun" but their view of the sea required ten minutes in a car.
All of a sudden Lanzarote had too much property available. On the outskirts of Costa Teguise,
the Teguise Greens development was heavily promoted by several of the leading local estate agents. The properties looked neat and tidy but the development had too much of a housing estate feel to it and for UK buyers they were too far away from the sea. Now, ten years later the developer has gone bust and there are rows of empty or unfinished houses.
Too many were built and in the wrong location. Another unforeseen factor was the world recession. I mention in the plan that external threats could include the UK Government putting a tax on buying foreign properties. Which is pretty much what Gordon Brown did. His ham-fisted
devaluation 'solution' made British goods cheaper abroad but goods and services
in other currencies (including the Euro) became much more expensive. In the space of
three months a 50,000 euro property requiring the exchange of currency from
sterling to euros (as most did) that would have been £35,000 was now £45,000.
Brown's crass piece of financial maneuvering made no difference if the
purchaser's native currency was euros so Irish buyers felt no pain. But buyers
with their funds in sterling or looking for a Spanish mortgage fed by funds from
the UK would have to come up with 30% more than just several months
previously and may have decided not to proceed with the purchase. Which would
have had an extremely detrimental effect on the viability of Lanzarote Lifeline.
In common with both the mainland and rest of the Canaries, most Lanzarote
properties in 2008 were overpriced, as Spanish property experts now agree.
Prices had risen by 200% in ten years. Thanks to Brown the cost of money had also gone up, making Lanzarote property close to 50% more expensive in real terms to UK buyers than it had
been just several years previously.
Many developers had recklessly initiated developments of far too many
properties. A combination of greed and the discounts available for buying
materials and fixtures and fittings in bulk caused many property developers to
be overly optimistic in their estimates as to how many houses they were going
to be able to sell and the banks blindly kept dishing out the cash to fund this folly.
In the boom days, agents tended to generally keep to their own area. Even today,
the Playa Blanca agents usually only deal with property in that resort. Located at
the southern-most tip of the island, Blanca was the centre of Lanzarote's house-building mania seven or eight years ago. Today thousands of properties lie empty or unfinished all along the twin duel-carriageways that lead into the town. Consequently the PB agents have more than enough
properties to be getting on with right on their doorstep.
For the non-Playa Blanca agents it's every every inmobilaria for itself across the
entire island and, to a point, Fuerteventura too as they all try to keep their heads
above water. Which would make have made any new clients that Lanzarote
Lifeline could have brought in very attractive to the agents.
In the plan I suggested that emerging Bulgaria and Croatia might take
potential buyers away from the Canaries. This turned out not to be the case in
any significant way. The international Bulgarian house price boom of 2000-2008
saw prices grow by a massive 300%. In 2009 the cost of an average dwelling
dropped by 21.4%. The reign of these countries as flavor of the month for the
international purchaser is now well and truly over, with 2013 property prices 25% less for Croatia and 40% less for Bulgaria than their 2008 peak. Bulgaria is one of Europe poorest and most
corrupt countries, a fact that began to deter many foreign property buyers.
In a typical 'shoot-themselves-in-the-foot' move (almost certainly instigated by
pressure from the big holiday companies who want all holiday-makers cash to
come to them) the Canarian government recently dug up a law from the 1990's
which states that anyone renting out holiday lets has to have a tourist licence.
Right....Where do you get one? You can't. No tourist licences are currently being
awarded. Anyone who does holiday lets without one can be liable to a fine of
thousands of euros. Finding owners doing holiday lets is easy for the inspectors
currently operating across the Canary Islands; Owners Direct, Holiday Lettings
and dozens of other advertising sites are full of them!
Many people bought into the Canaries because of the estate agent-driven idea
that the lets they'd be able to rely on for their new holiday villa or apartment
would pay the mortgage. Without this income many owners will have problems
keeping up mortgage payments, particularly on properties bought at the inflated
prices that were the norm between 2005-2008. The choice is; risk a 10,000 euro
fine or stop doing holiday lets and sell up at what will almost certainly be a significant loss or
get the mortgage money from somewhere else. Which many would be unable to do.
There is a get-out clause in the act which is the 'family and friends' provision
that allows owners to let to relatives and people they know personally. Some
owners will undoubtedly be doing this anyway but it's unlikely to be sufficient to fully cover the
mortgage. Regular renters of a favorite apartment or villa may be accommodating enough to
play ball if the inspectors knocked on the door asking to see letting agreements,
but telling new clients; "If anyone asks, say you're my Uncle Billy" is not
the best way to get repeat bookings from strangers. Long lets of three months or more are
acceptable but the whole 'illegal' holiday lets scenario will surely have a
negative effect on the Lanzarote property market and Lanzarote Lifeline if I'd
put it into practice.
More on the 'illegal' lettings controversy here; tenerifelitigation.com
Another very significant factor in the decline of the Lanzarote property market
that would probably make Lanzarote Lifeline not viable is the current
reluctance of the Spanish banks (all of whom had supported the developers in
the property boom) to give out mortgages on properties other than the ones
they've re-possessed. The official figures released by ISTAC, the Canarian
Institute of Statistics, show that only 1,356 new mortgages were given out across
the Canary Islands in May 2013, a decrease of 31.06% from the 2012 monthly
average. Over the same period gross investment in the Canary islands from
foreign sources went down 66.40%. As a result, properties are taking longer and
longer to sell.
In mainland Spain and the Canaries combined there were only 14,053 new mortgage
approvals in June 2013, a mind-boggling 42% down in a year and the lowest level since statistics were first published in 2003. On his Spanish Property Insight site, property expert
and author of the Sunday Times Spanish Property Doctor column Mark Stucklin reveals; "Only 31% of home purchases in June included a mortgage, according to the notaries' association. The average new mortgage value in June was 97, 495 euros, below the 100,000 euro level for the first time and 9% down in 12 months. Overall new mortgage lending in value terms fell 47% in a year. Mortgage lending has collapsed to the lowest level since the crisis began and it's clear that the credit crunch in Spain is still in full swing."
Stucklin goes on to explain the current consequence of the banks pulling back the availability of mortgages; "House hunters have lower budgets (cash only) so vendors have to drop their prices to find a buyer. Add to that the recent increases in taxes on house purchases, rising unemployment and the imminent liquidation of large portfolios of properties and Spanish house prices can only go one way: South".
Summing up, Mark Stucklin concludes; "On the Spanish coast foreigners with cash are now the main buyers. The lending drought affects the domestic housing market, not so much the international market on the coast." (12)
My feeling is that Lanzarote and the other Canaries have suffered less than the mainland, where areas like Valencia and Malaga have seen property prices drop by 50% since 2007 although other parts of Spain have fared slightly better at 30%. The very sluggish property sales in Lanz, where UK purchasers have always out-numbered all other foreigners, does indicate, though, that the lack of willingness of banks to grant mortgages has significantly reduced the number of Britons buying property, even though prices are much affordable now than they were in 2007.
It's very much a buyers' market on Lanzarote these days where the 'cheeky offer' is king. Many agents sites have a 'Bank Repossession' section. Posting on the Discover Lanzarote site 'Lanzalocal' offers this explanation;
Banks are keen to sell all properties on their books....especially now as the Canarian Govt. has just passed a law allowing them to seize properties held by the Banks in order to provide low-cost housing for those people evicted by the Banks because of being unable to make payments on their mortgage......so most will listen to reasonable offers as here in Spain the Banks are only looking for the clearance of the amount owed on the mortgage plus a reasonable fee for legal costs of the repossession( not to make a profit but simply to cover their loss).......however since the merger of many smaller Banks into various larger entities such as Bankia etc most bank properties are offered through only 3 or 4 larger websites(main ones are http://www.casaktua.com http://www.solvia.es http://www.altamirasantander.com. http://www.servihabitat.com )which means lots of speculators are snapping up property in the hope of future returns when the market revives......especially as most of these properties on these sites invite offers or come with guaranteed mortgages. (13)
The Lanzarote Investments agency have some excellent bargains and recently sold a one bedroom upper floor apartment on the Los Naranjos complex on the outskirts of Costa Teguise.
Prices listed started at 18,800 euros, a price not seen on this sort of property since the 1990's. As the listing explained "Price is subject to finance requested to purchase the property"
A cash purchase or with a mortgage less than 40% the price is 21,300 euros.
With a mortgage of 40-60% the price is 18, 800 euros. With a mortgage of
60-80% it's 22, 500 euros. With a mortgage of more than 80% the price is 25,000
euros. On top of this would be the standard hefty Spanish taxes on property sales of 8%.
Los Naranjos was originally a holiday complex.When the holiday companies
pulled out the owners had the apartments renovated and then put on the market
at 115,000 euros each. I looked at one seven years ago, and it was basic
but acceptable, although the location was a little off the beaten track. The estate
agent who showed me around told me that although the owners had around 90 apartments to sell,
the price was the price and they wouldn't entertain offers.
The complex was very quiet and
the impression I got was that not many had been sold. A willingness to negotiate or a more sensible price-say the 90,000 euros that an apartment on a comparable complex like the Tuscan was selling for at the time-would have made sense. The 115,000 euros price tag seemed to stick for years. No longer.
Lanzarote Investments has non-repossessed properties at the San Francisco Apartments in Puerto del Carmen for sale. Studios run from 36,000 euros to 58,000 euros, two bedroom apartments are 110,000 euros. These are reductions from the 2006 prices that started at 95,000 euros. The apartments are small and the complex has seen better days but is in a very central location in Lanzarote's premier resort. Another very good deal for anyone OK with 'cheap-and-cheerful.'
Many estate agents are gone. The Lanzarote newspaper La Voz reports that one chain
who had a slick operation squarely aimed at the tourist market with branches in
all the resorts suddenly shut up shop. The agent concerned has recently been arrested and charged with allegedly swindling a million euros out of 17 customers between 2007-2011 by falsely claiming property had been bought on their behalf and then receiving property transfer tax and monthly community
charge. Nine of the victims are from Ireland, four from the UK, two from Spain,
and one each from Germany and Italy. Most of the victims weren't resident
and bought as an investment. (14)
The Lanzarote agents that remain, including Paloma Castro of Imno Estates and
Laura Sweeney of Location, are seasoned operators who truly know the market
and all the players in it, both Spanish and otherwise. But even that is no guarantee.
Stewart ('Stewlanz') Andrew, for years one of Puerto Del Carmen's leading agents is
now a sports therapist. What was 103 agencies is probably now 35, of which a dozen
or so are optimistic new companies without the Lanzarote experience of Castro
or Sweeney.
Lanzarote is a small island where bad news and bad reputations travel fast.
To a large extent the 'wide boys' have disappeared. Most agencies have widened their remit to offer associated services drawn from rentals, property maintenance, furnishing, management and the like.
Jonny Bailey of Atlantico Homes writes on the Property Overseas Today site that in 2013; "Lanzarote looks set to welcome close to two million visitors, with the bulk arriving on budget flights from the UK.....As a result local agents are expecting to see an increase in
demand for good quality homes and apartments".
With a gob-smacking disregard for the current 'illegal lettings' situation and the
threats of hefty fines Bailey concludes that Lanzarote is "an extremely attractive
proposition for investors seeking a full 12 months worth of rental returns from
their holiday properties." (15)
I certainly wouldn't have engaged in this sort of misleading spin, which includes the flagging up of 'holiday properties' (and therefore playing down long lets which many UK buyers wouldn't want to get involved in) encouraging buyers to participate in practices that are currently 'illegal' and subject to huge fines. Is my lack of guile is another reason why the Business Plan wouldn't have worked?
With the official tally of 1, 696,532 visitors to Lanzarote in 2012 showing a drop
of just 1.06% on the 2011 figures tourism is still healthy on the island. Of this,
903, 316 were from the UK, just a 0.31% drop from the 2011 figure of 906, 084.
Irish tourists dropped by 0.79% to 176, 965 from 2011's 178, 378.
The numbers of tourists visiting Lanz is stable and the island is holding its' own
as a holiday destination. But from the length of time the agents have individual
properties for sale and the often large reductions in asking price it's clear the
property market is stagnant. This view is re-enforced by the organiser of one of
the UK's largest overseas property trade shows who told me that as far as their
exhibitions are concerned there's currently very little interest in buying property
in the Canaries.
My 2006 pronouncement about not needing a website for Lanzarote Lifeline
while possibly right at the time was undoubtedly wrong within months. Most of
the population is now on line including the retired who would certainly be one
of my prime group of clients. Costs of starting a site have come down. Or, in the
case of many blog providers like Google and WordPress, vanished all together.
A Facebook page would also be an essential part of the promotion. The time
spent on maintaining these sites would just need one sale to make worthwhile.
UPDATE OF THE UPDATE (August 2018)
Five years on and the Spanish property market has started to move once more, with selling prices back to 2006 levels and rising. In Lanzarote there's still a raft of half-finshed properties on the outskirts of the three main resorts where the builders or developers have gone bust. Passers by of these ghost estates will undoubtedly be wondering why they can't be sold off at bargain prices and finished. Or pulled down and the land sold. Spanish bureaucracy moves slowly it seems!
ENDS (For now.)
Bibliography
1) www.shelteroffshore.com
2) www.spanishpropertyinsight.com_april2006
3) Holiday Villas magazine, April/May 2005
4) Source; Estohay, Lanzarote Gazette, Buzz, Viva, Freedom For Sale magazines
April 06
5) Lanzarote Gazette, April 2006
6) Spanish Government's official figures
7) Sur In English, 2-8 June 2006
8) www.spanishpropertyinsight.com_may2006
9) Message Board, Spanish Property Insight 2 March 2005
10) Source; Advertising in Dalton's Weekly, Private Villas, Holiday Villas, A
Place in the Sun magazine
11) Foreign Office website;www. fco.gov/
12) www.spanishpropertyinsight.com/2013/09/18/official-spanish-house-price-index-fifth-year-falls/
Ian Ravendale North East freelance journalist ian ravendale Newcastle freelance journalist Ian Ravendale Sunderland freelance journalist Ian Ravendale Tyne and Wear journalist northern freelance journalist Ian Ravendale long established freelance journalist Ian Ravendale Well known journalist Ian Ravendale veteran freelancejournalist Ian Ravendale Quick witted journalist Ian Ravendale Knowledgeable journalist Ian Ravendale freelance journalist Ian Ravendale long-established north east journalist Ian Ravendale respected freelance journalist Ian Ravendale busy Wearside journalist Ian Ravendale recognised freelance journalist Ian Ravendale respected journalist Ian Ravendale versatile freelance journalist tLanzarote expert Ian Ravendale Lanzarote proiperty and media expert Ian Ravendale Lanzartote journalist Ian Ravendale Lanzarote journalist Ian Ravendale Lanzarote expert Ian Ravendale Lanzarote property owner Ian Ravendale Lanzarote property owner and journalist Ian Ravendale Lanzarote property owner and broadcaster Ian Ravendale Lanzarote academic and researcher Ian Ravendale Lanzarote writer Ian Ravendale Costa Teguise writer Ian Ravendale Canary Islands journalist Ian Ravendale Lecuter and Lanzarote property owner Ian Ravendale
Spanish property prices (supposedly) grew by 12% over the last 12 months but
some overseas property investors think that the bubble is about to burst.
The Spanish Property Insight website for April 06 quotes the International
Monetary Fund's bi-annual report which argues that property prices in
Spain have risen more than is justified by economic fundamentals such as growth
in income, population and interest rates.The implication is that Spanish property prices
have been driven by speculative investment, rather than actual demand. Insight
also quotes Spain's Foundation ofSaving Banks forecast that Spanish Property price
inflation will decline gradually rather than crash and there will be no "hard landing". (2)
I've been observing the Lanzarote property market from 1999, which is when I
bought my first property there. From 1999 to 2004, prices went up on average
25% a year. So a one-bedroom apartment on a complex in Costa Teguise might
sell for £28,000 in 1999. A similar apartment on the same complex was selling
for £63,000 in 2004.
2004 was the year when the market slowed down, due, in my opinion, to
consumer value perception. £28,000 for a (admittedly fairly basic) holiday home
in the sun would be perceived by most people as a good deal. And one that
probably quite a few people could pay for without having to take out a
mortgage. £63,000 five years later becomes a lot less of a bargain, and a
purchase that would need to be more carefully considered and evaluated and
much more likely to require external funding.
Property began not selling. The Spanish philosophy is that property prices go up
every year, irregardless. It's not uncommon for Spanish owners to have their
property unsold for a year and then increase the price by 10%! A recent article
in Sur In English claims that apartments can take a staggering 32 months on
average to sell and that some owners looking to reduce this time are having to
slash their asking prices by up to 30,000 Euros! (7)
Mark Strucklin, in the May 2006 edition of Spanish Property Insight offers the
following explanation;
"The off-plan investors who so distorted the market between 2001 and 2004 and
who made up over 50% of the market in some areas (my estimate) have largely
disappeared. Buyers are now people looking for holiday homes or relocation
properties-end users rather than speculators/investors-who are fewer in number
and much more cautious about buying. At the same time, due to the absurd
number of housing starts in Spain in recent years, there is a glut of properties on
the market in many popular areas with off-plan investors and developers all
trying to sell to the reduced number of home buyers".
In Lanzarote at around the same time a downswing of tourism in established
areas like Costa Teguise was caused by some of the major holiday companies
investing in the newer resort of Playa Blanca, building large new hotels and
sending the majority of their package and all-inclusive holidaymakers there.
Some of the owners of complexes that had been mainly tourist, but also partially
residential (like the Tuscan in Costa Teguise) decided to get out and sold off
apartments at 30% below the market rate. They could do this as they had
close on 100 to get rid of! This influx of below-market rate property caused
the Lanzarote market to stall, particularly at the lower end.
Also, the German buyer disappeared around the same time, as they had in
Mallorca. But in the case of the Canaries, British buyers didn't move in to take
their place. (Source;; Message Board response, Mark Strucklin, Spanish
Property Insight, 2 March 2005) (8)
The course I studied was Sunderland University's Master of Arts in Media Production (Film and Television). Part of the funding the university received came from the European Social Fund and was conditional on there being a 'business' element to the course. This took the form of a module called New Venture Creation, which, unlike the rest of the programme, was run by Sunderland University's Business School. I've been self-employed for many years, taught a Business and Finance Music Management HND for four and was a Music Industry Consultant for the New Deal For Musicians scheme for five, all of which made approaching business from an academic, formulaic viewpoint an interesting challenge. As a professional writer and journalist the part I enjoyed most was coming up with and then writing the lengthy business plan assignment that concluded the course.
A good rule of thumb for any business is 'Go With What You Know'. So, as with the preceding Media Marketing assignment, I decided to base my idea in Lanzarote. I'd bought and sold several properties there. know many of the island's estate agents and am familiar with the Lanzarote property market. Hence, Lanzarote Lifeline. Bear in mind this business plan was written in 2006 and the world of foreign property sales has radically changed since then! An update follows at the end.
'LANZAROTE LIFELINE'
Business Plan
Ian Penman,
(Address)
e-mail; ian.penman1@btinternet.com
NI number; xxxxxxxxxxxxxxxxx
CONTENTS
1) Power Point Presentation script
2) Map of Lanzarote
3)Executive Summary
4) Strategic Elements
i) Vision and Mission Statements
ii) Industry Environment Analysis
iii) Critical Success Factors and Key Constraints
iv) Environment and Market Analysis
v) Primary Market Research
vi) Secondary Market Research
vii Macro Environmental Analysis
viii) Micro Environmental Analysis
ix) SWOT Analysis
5) Marketing Strategy
i) Objectives
ii) Constraints
iii) Options
iv) Target Markets
v) Marketing Mix
vi) Product
vii) Place
viii Price
ix) Promotion
6) Legal Framework
7) Financial Plan
i) Forecasted Sales/12 month Profit Statement
ii) Sensitivity Analysis/12 month Profit Statement 50% increase in sales
iii) Sensitivity Analysis/12 month Profit Statement 50% reduction in sales
iv) Cash Flow Forecast formulas
8)Appendix
i) Bibliography
ii) Ian Penman CV (not included)
iii) Average Property Prices 2004/2005 published by the Spanish
Government (not included)
iv) Lanzarote Estate Agents listing (not included)
v) Pilot Property Promotional DVD (not included)
Script for Power Point Presentation. (In a 'real' situation this would have been delivered in person, with images via Power Point and the business plan left for scrutiny. Some information from the presentation would, of course be duplicated in the plan and I've left it like that. I haven't included the images that would have been used in the presentation, preferring to include them in the body of the Business Plan.)
According to the Daily Mail 92% of the population would like to retire abroad if
they could!
There are dozens of magazines dedicated to living or holidaying abroad,
including Holiday Villas, Exclusive Holidays, Private Villas, Holiday Directory,
and Living In Spain. Television programmes like A Place In The Sun, Get A
New Life and House Hunters In The Sun and digital television channels like
Real Estate TV, The Travel Channel, Discovery Travel, Sky Travel and Sky
Travel Extra re-enforce Britons ongoing desire to own holiday, retirement or
investment homes abroad.
The Canary Islands is one of the UK's the most popular holiday destinations
because of its' year-round sunshine and laid-back lifestyle.
Britons who have homes in the Canaries. One of these is me! I've owned
property in Lanzarote since 1999 and am very familiar with the real estate
market there.
Lanzarote is generally regarded as the most up-market of the Canaries. There's
an ever-growing supply of both new-builds and established properties for sale.
Suprisingly there's very little information or sales material available in the UK
relating to the Lanzarote property market, unlike for Tenerife or mainland
Spain.
The April-May issue of Holiday Villas magazine lists the average selling price
of a one bedroom apartment in the Canaries as £88,177. Lanzarote still has
many properties which are significantly less than this! For example;
Tuscan Apartments, Costa Teguise (£60,000 up)
Agana Alta, Arrecife (£57,000 up)
San Franciso Apartments, Puerto del Carmen (£65, 000 up)
There are 104 estate agents (or inmobiliaria agencias) in Lanzarote. With a
permanent population of around 110,000 this translates to one estate agency per
1000 of the population! All the estate agents are in competition with each other
and often sellers will have their properties for sale with up to a dozen different
agents. The conventional market is slow at the moment and Lanzarote Lifeline,
my "New Venture" would offer a select group of Lanzarote estate agents a
promotional tool that could potentially increase their sales by 100% or more.
A large percentage of property sales are to non-residents as holiday, retirement
or investment homes. These are mainly British and Irish, followed by Germans,
French, Scandinavians and mainland Spanish.
With the exception of one Re-Max office in the capital of Arrecife, Lanzarote
estate agents are small one or two person businesses. Getting to the decision
makers is very easy as they're in their offices every day!
An essential aspect of all businesses is to put buyers in touch with sellers.
With Lanzarote Lifeline I would source potential UK buyers, introduce them to
properties they may be interested in and then bring them together with the
relevant Lanzarote estate agents. If a sale was forthcoming from this
introduction, the 5% commission that all the agents charge would be split
between us-probably 2% to me, 3% to the estate agent.
As sellers often have their property with multiple agencies, to avoid confusion I
would only take each specific property from one agent. I would anticipate
working with five or six agencies, and would probably start by taking one or two
properties from each.
I would advertise in the UK holiday magazines, like Daltons Weekly and
Private Villas. Potential buyers would get information packs about the
properties and, if they express "serious" interest in a particular property, a short
DVD/video shot by me.
The business would initially be run solely by me, working from home. I have 25
years media experience, have bought and sold property in Lanzarote and have
good relationships with many of the islands' estate agents. I would shoot on my
personal 8 mm video camera (light, small and portable) and edit on my home
computer, using a free Avid download. Digital and 35 mm photos would be also
taken, using my HP Photosmart and Olympus stills cameras.
I'd shoot the footage when I'm over in Lanzarote administering my properties.
Sync sound wouldn't be needed and I would work on my own. My only Capital
outlay would be a DVD recorder and additional player (£150). If the business
took off I'd engage other editors/cameramen (and put them up in my
apartment!). The main Revenue outlay would be the advertising, but this could
be done in stages. A small classified advert in Daltons Weekly would cost £12
per week.
How do I know this will work? I recently put one of my apartments in
Lanzarote up for sale. I placed it with half a dozen Lanzarote estate agents and
also advertised it myself in Daltons Weekly. A month's worth of adverts
brought something like 20 enquiries. These initially received a pack which
contained an information sheet and five photos. Those who expressed further
interest received a five minute DVD which I shot showing the
complex and the apartment.
Four or five of the recipients of the DVD expressed a serious interest and a
couple actually went out to Lanzarote to view the property. Before any offers were made,
however, I got an offer via one of the estate agents and went with that.
I see Lanzarote Lifeline as a perfect low-cost, low risk business venture which
draws on my specialist strengths, knowledge and circumstances. I'm happy to take any questions you might have.
(Presentation ends. What follows next is the actual Business Plan.)
EXECUTIVE SUMMARY
I plan to represent Lanzarote estate agents in the UK. I would locate potential property buyers and share the commission with the estate agent is a sale was forthcoming.
1.38 million Britons own property abroad. According to a survey carried out by
the Daily Mail, 92% of the population would like to retire abroad if they could.
By 2008 the number of Britons with foreign property is expected to rise to 3.12
million (Source;the Shelter Offshore.com website) (1)
Between 40% and 50% of all properties purchased by the British are in Spain.
or the Canary Islands. By the end of 2003, 620,000 Brits owned property in
Spain or the Canaries, an increase of 50,000 on the previous year. (Source;
Spanish Property Insight website, April 2006 (2)).
Most British owners of Spanish property own holiday homes or investment
property and are not resident. There is, however, a move towards living in Spain
on a permanent or semi-permanent basis. With a flying time from the UK of
around four hours, Lanzarote has a population of 140,000, of which a third are
probably British or Irish. The other 66% are Spanish, Canarian, Dutch, German,
French or Scandanavian, a third of which will be fluent in English
Politically and administratively Spanish, while remaining autonomous, the
Canary Islands are one of the UK's most popular holiday destinations because of
the year-round sunshine and laid-back lifestyle. Many of these holiday makers
would like to join the ever-growing numbers of Britons who live full-time in the
Canaries. I've owned property in Lanzarote since 1999 and am very familiar
with the island and its' infrastructure.
Generally regarded as the most up-market of the Canaries Lanzarote is the fourth largest island.The number of British tourists alone increased from 43,000 in 1982 to nearly three-quarters of a million by the turn of the century and now stands at around 1.5 million. Indeed, the number of
tourists on the island often exceeds the number of indigenous inhabitants.
Tourism (including the ever-growing construction industry) is the island's biggest
employer and it's estimated that 90% of the working population are involved in tourism in some
sort of way. (Source; Lanzarote Travel Guide, Rowland Mead p26 (3))
There's an ever-growing supply of both new-builds and established properties for sale. Surprisingly, there's
very little information or sales material directly available in the UK relating to the Lanzarote
property market, unlike for Tenerife or mainland Spain.
There are 103 estate agents (or 'inmobiliarias') in Lanzarote -around one agency for every 1100 of the population. All of the agents are in competition with each other and sellers will often have their property for sale ('se vende') with up to a dozen different agents. The conventional market is slow at the moment and my New Venture would offer a select group of Lanzarote estate agents a promotional tool to potentially increase their sales. I would locate prospects within the UK, give them promotional and illustrative material (video and stills) and if a serious interest was expressed, would put them in touch with the relevant Lanzarote agency. If a sale was forthcoming I'd share the commission with the agent.
My only Capital outlay would be a DVD/video recorder and additional player
(£150) so I could run off copies of the 5 minute promotional DVD's /videos I'll
shoot. I already have a video camera and would edit on my home computer,
using a free Avid download. Digital and 35 mm photos would be taken using my
HP Photosmart and Olympus stills cameras.
I'd shoot the footage when I'm over in Lanzarote administrating my properties
and therefore wouldn't incur costs for flights or accommodation. I always hire a
car while in Lanzarote and have a very good discount deal with the hire
company I use. Sync sound wouldn't be needed and I'd work on my own. The
main Revenue outlay would be the advertising I'd need to do within the UK
Anticipated first year profits would be in the region of £18,000.
STRATEGIC ELEMENTS
Vision and Mission Statements
The reasoning behind Lanzarote Lifeline is to tap into the ever-increasing
demand by Britons to have "A Place In The Sun" to escape to, both short (family
holidays) and long term (emigration or retirement). And also to offer me a
perfect low-cost business venture which would draw on my specialist strengths,
knowledge and circumstances.
I would strive to offer my clients a service that satisfies them, fulfills their needs
and makes me a profit. I would operate in an ethical, straight-forward way,
giving realistic, honest advice to potential buyers and estate agents, helping both
achieve their aims of finding that dream property and making a sale,
respectively.
The venture is driven by the huge interest of Britons in overseas property and
the availability of money to fund this interest; the rise in the UK housing market
has given many people the finance necessary to buy second homes. Also, the
post-war "Baby Boomers" are now retiring and more than ever before, looking at
retirement as a positive opportunity, rather than winding down in preparation
for the undertaker! Fun in the sun, against vegetating in the UK! 60 is the new
40!
 |
| Costa Teguise beach |
Industry Environment Analysis
Market entry would be by speaking to a select group of Lanzarote Estate Agents
and seeing which were interested in me working with them. There are too many
agents on the island, and they are all in competition with each other. I would be
offering access to a new set of buyers with no financial risk to the agents, giving
them an advantage over the agents that I wasn't working with.
With the exception of two or three chains, including a Re-Max in the capital of
Arrecife, most of the Lanzarote estate agents are one-or-two-man businesses. It's
very easy to get to see the decision-makers as they're in their offices every day!
By viewing the four or five minute videos/DVD's I would shoot of each property,
potential UK buyers would be able to decide how interested they were in each
one, without going to the trouble and expense of going to Lanzarote. No one
would buy, of course, just based on a video but it would enable the prospective
buyer to determine the amount of interest they had in a property. It would be
their very own edition of the A Place In The Sun programme! I can advise on
location, rental (holiday and long-let) potential, the procedures of buying and
ways of funding the purchase.
A DVD shot to promote one of my Lanzarote properties I was selling was included
with my Power Point presentation assignment.
Around 60 % of all Spanish property sales are new builds (Source; Spanish
Property Insight website April 06 (2)) Estate Agents often do deals with
developers, for the sale of new builds. These carry a higher commission rate and
 |
| Laying the foundations for yet more new-builds on the outskirts of Playa Blanca |
which can all can be promoted for not much more than the price of a single property..
Developers usually do deals with banks who are able to offer prospective buyers
terms that are generally more favourable than with re-sales. With a hundred properties
to shift the Lanzarote agents would probably welcome my assistance! The same
would be true for the sale of properties on (former) holiday complexes, as with
Los Naranjas and Playa Roca in Costa Teguise.
Critical Success Factors and Key Constraints
Critical success factors relate to providing enough actual buyers to make the
venture viable. The estate agent business is based on selling property. If you're
not selling you're not making money! Key constraints; Buying a house is the
biggest purchase most of us will ever make, and not one to consider lightly.
People are even more cautious about buying property abroad, in case there's
some sort of "catch" or scam going on and they lose their money. This is a major
obstacle to overcome, but not insurmountable; the 1 million-plus Britons who
already own foreign property did!
ENVIRONMENT AND MARKET ANALYSIS
My initial approaches would be to the agents I already know personally, via my
own property purchases and sales. I would want to keep to a small group
initially-probably five or six. These would be;
Inmo-Estates, Costa Teguise
Lanzarote Property Options, Costa Teguise
Asor Estates, Costa Teguise
Location , Costa Teguise
Inversiones Timanfaya, Puerto
Costa Teguise
Like many other businesses, personal contact is key. As I'm in Lanzarote once
every couple of months, and often drop in to see the agents anyway, this would
be very easy to achieve.
Prospective UK property buyers would be located via advertising specific
properties in some of the magazines dedicated to overseas property and
holidays. I would draw from my own knowledge and experience as to where and
how to advertise. Customer retention would be achieved by bringing an
on-going supply of prospective buyers to the agents! I would advertise on a
continuing basis to attract new potential buyers.
Primary Market Research
As someone who has bought and sold property in Lanzarote I am very familiar
with the process. I know which areas/locations are more likely to attract buyers
and what sort of properties are currently selling and at what prices. I also know
that the market has slowed down over the past year.
The 103 estate agents in Lanzarote are broken down via location as follows;
Costa Teguise (17)
Puerto del Carmen (22)
Arrecife (31)
Tias (3)
Playa Blanca (18)
Others (12)
Of these, probably half are British or Irish. The others are predominantly
Spanish, with a minority of other nationalities like French, Norwegian and
German. Invariably there's at least one person in every office who speaks very
good English. The only exception to this is some of the Arrecife based agents
who deal less with the tourist market.
Most agents primarily sell domestic properties. Only a handful, as above, sell business or
commercial premises. As this is a specialist area, aimed at a far more limited
group (many of whom will be Spanish, and less inclined to deal with non-Spanish
people) I'll put this sector aside for now and concentrate on house and
apartment sales. I may come back to commercial at a later date.
The April/May 05 issue of Holiday Villas magazine (3) lists the average selling
price of a one-bedroom apartment in the Canaries as £88,177. Lanzarote still
has many properties which are significantly less than this.
For example;
 |
| Main Swimming pool, Tuscan Apartments |
Los Molinos, Costa Teguise (£60,000 up)
 |
| Like many outlets with cheaper properties Puerto del Carmen's San Franciso Apartments is a former holiday complex |
San Franciso Apartments, Puerto del Carmen (£60,000 up)
Santa Coloma, Arrecife (£55,000)
Altavista, Arrecife (£65,000
San Francisco Javier, Arrecife (£65,000).
(Source; Lanzarote magazines (4))
The property purchasers I'll be targeting will be exclusively British and Irish.
They'll be relatively easy to reach and there won't be language problems. As
I've discovered, people tend to want to do business with someone they can freely
converse with! With between 50,000-70,000 sales of property in Spain and the
Canaries last year to this group, (Source; Spanish Property Insight, April 06(2))
the market is big enough. Being based in the UK, but being in Lanzarote every
couple of months will be my Unique Selling Point that will enable me to
communicate in person with the agents but also to locate UK buyers.
Properties range from studio apartments on complexes to multi-roomed villas
with swimming pools. Prices start at £50,000 and go up to several million.
Britons want property almost exclusively in the tourist areas like Costa Teguise,
Puerto del Carmen and Playa Blanca or in residential areas like Tias and Playa
Honda which have large British contingents. Even though property there
overall is cheaper, Britons generally aren't interested in the industrial capital of
Arrecife. It's crowded, congested, difficult to get round and very Spanish, with
many shop, cafe, restaurant and bar staff speaking no English (unlike in the
tourist areas where everybody does) The 'Spanishness' of Arrecife appeals to me
but probably not to most UK buyers!
 |
| Arrecife, capital and industrial centre of Lanzarote |
I would, therefore, not take on any Arrecife property. These days, so one of my Spanish estate agent friends tells me, not even the Spanish want to live there! Costa Teguise is only a ten minute drive away,
and an increasing number of residents are working in Arrecife but living in Costa Teguise.
Coastal resorts are the most popular locations for UK buyers. Puerto del Carmen
is the biggest and liveliest resort on the island and property there is generally around 10%
more expensive than elsewhere.
In recent years Costa Teguise has been replaced as Lanzarote's number two resort by Playa Blanca and is quickly heading towards becoming largely residential. Developments like Las Piteras and Teguise Greens have been aimed at buyers who will live on the island all the year round and not just pop over every now and again for holidays.
 |
| Teguise Greens, Costa Teguise |
a thriving British community who have bought into property at probably 10%
less than they'd pay in the resort. Available land has been plentiful around Tias
and nearby Guime and there are some exceptionally lavish villas and mansions
(selling for between £300,000-£1,000,000) that, based on a metre-for-metre basis
are actually cheaper per capita than some of the resort-based apartments!
 |
| A typical house in the centre of Tias |
complexes are up for sale, but buyers need to be aware of possible renovation
work that might need doing and also problems with the local government about
change of usage from tourism to residential. Many of these complexes, like the San Franciso Apartments
are in the heart of tourist town and convenience needs to be weighed up against the noise generated by nearby bars that stay open until the early hours. Puerto Del Carmen is, after all, Lanz's busiest resort.
 |
| Puerto Del Carmen's Avenida De Las Playas, the resort's tourism centre |
everywhere, some up to four miles away from the coast and many new hotels
catering for the all-inclusive holiday maker. This glut of new property has
 |
| More Playa Blanca new builds |
 |
| Puerto Calero Marina |
wonderful prices. Playa Quemada is a fishing village close to Carmen and
Calero with a unique, unspoiled charm. Buyers need to beware as a lot of the
properties there don't have planning permission and could, in theory, be pulled
down if the Cabildo (island government) decided to flex their muscles.
.jpg) |
| Playa Quemada |
Lanzarote is only 37 miles long, this is not absolute and sometimes the Costa
Teguise agents have some Puerto del Carmen properties for sale and
vice-versa. As Playa Blanca is right at the south of the island, and fairly
self-contained the agents there tend to sell only local property, particularly new
builds. I don't actually know any of the Playa Blanca agents, but this could be
easily remedied; estate agents are very easy to get to see!
I'm in Lanzarote every two months and always check on the property market.
With the agents I know personally I drop by for a chat, and pick up their latest
lists. With the others, I look in their windows (and pick up their lists!)
I also read all of the local magazines, including the Spanish ones. These include the Lanzarote
Gazette, Buzz, Freedom For Sale, Viva!, Estohay and Lancelot. I additionally buy Island
Connections, which covers all of the Canaries, favouring Tenerife. All have extensive property
advertising sections.
British people read, followed by Buzz. Both are free, can be easily picked up in
tourist areas and always have large property sections with adverts from most of
the estate agents. This is a very handy way of quickly discovering what
properties are priced at in what location! They tend not to have adverts from
the Arrecife based agents, unlike the Spanish Viva! and (especially) Estohay
magazines.
Freedom For Sale is a free real estate promotional magazine that favours
Lanzarote but also has Fuerteventura property and a small Tenerife section.
This is given away in estate agents and, in addition to featuring agents' adverts,
also lists properties for sale that the publishers act as a sub-agent for. The
magazine is glossy and well presented and very much aimed at buyers without
much knowledge of the market.
I also look on notice boards in supermarkets and shopping centres. The board in
the predominantly-Spanish Deiland (Lanzarote's Metro Centre equivalent)
always has lots of properties for rent and for sale, along with pets, cars and the
rest.
In addition to estate agents, I also know a lot of other people who live in
Lanzarote full time. Most of these are tradesmen-handymen, decorators,
plumbers, satellite installers etc. They always have a good idea of what's
happening in the property market, and are in and out of peoples' houses on a
daily basis. They know what's selling and what isn't and what sort of prices
sellers are getting. Which is often different to the selling prices advertised.
Consequently, I have a very good idea of the state of the market.
Last year I put one of my apartments in Lanzarote up for sale. I placed it with a
half a dozen Lanzarote estate agents and also advertised it myself in the UK in
Daltons Weekly where a month's worth of adverts brought something like 25
enquiries. Ultimately I sold the property via one of the agents but the exercise
did demonstrate to me that there is definite interest within the UK for buying
property in Lanzarote.
Secondary Market Research
According to the official figures released by the Spanish Government (Appendix
ii) Spanish property prices grew by 12% in 2005. Some overseas property
investors think that the bubble is about to burst and there is evidence to doubt
the reliability of the Government's figures. The market marches on, particularly
with the never-ending supply of new-builds on the Spanish mainland and many
developers are keen to play down any suggestion that the market could be
flooded.
Quoted in the April 2006 edition of the Lanzarote Gazette, Jason Windle,
managing director of Spanish real estate firm Platinum Properties says,
"Even though there is talk that the Spanish property market has reached it's
peak, it it still catching up with the English market. I strongly believe that it has
a long way to go and we may still be only midway through the property boom".
 |
| Playa Blanca development |
The Superior Group is also quoted, agreeing that Spain and The Canaries are
still good options. "Mortgages are easily obtained, there's no worry with currency
instability and there's some great deals at the moment. Some areas have seen
inflation of 40% in the last two years and we expect at least 15% in 2006".
This is re-enforced by Nick Clark, Managing Director of The Homebuyer Show,
"Despite emerging property markets creating a real buzz at the moment,
traditional markets like Spain are still incredibly popular with visitors to our
shows". (Source; Lanzarote Gazette, April 2006(5))
However, the Spanish Property Insight website for April 06 (2) offers a
somewhat different view, quoting the International Monetary Fund's bi-annual
report which argues that property prices in Spain have risen more than is
justified by economic fundamentals such as growth in income, population and
interest rates. The implication is that Spanish property prices have been driven
by speculative investment, rather than actual demand. On a somewhat more
positive note, Insight also quotes Spain's Foundation of Saving Banks forecast
that Spanish Property price inflation will decline gradually rather than crash and
there will be no "hard landing". (2)
From my own experience I support the view of the financial institutions rather
than those of Windle, O' Connor and Clark, who will want to paint a more
positive picture for their own business reasons.
I've been observing the Lanzarote property market from 1999, which is when I
bought my first property there. From 1999 to 2004, prices went up on average
25% a year. So a one-bedroom apartment on a complex in Costa Teguise might
sell for £28,000 in 1999. A similar apartment on the same complex was priced
at £63,000 in 2004.
 |
| Tuscan Apartments complex, Costa Teguise, Lanzarote |
to consumer value perception. £28,000 for a (admittedly fairly basic) holiday
home in the sun would be perceived by most people as a good deal. And one
that probably quite a few people could pay for without having to take out a
mortgage. £63,000 five years later becomes a lot less of a bargain, and a
purchase that would need to be more carefully considered and evaluated and
much more likely to require external funding.
Property began not selling. The Spanish philosophy is that property prices go up
every year, irrespective. It's not uncommon for Spanish owners to have their
property unsold for a year and then increase the price by 10%! A recent article
in the Sur In English newspaper claims that Spanish property is taking a staggering 32 months
on average to sell and that some owners looking to reduce this time are having
to make "brutal cuts" and slash their asking prices by between 18,000 and 30,000
Euros! (7)
Mark Strucklin, in the May 2006 edition of Spanish Property Insight offers the
following explanation;
"The off-plan investors who so distorted the market between 2001 and 2004 and
who made up over 50% of the market in some areas (my estimate) have largely
disappeared. Buyers are now people looking for holiday homes or relocation
properties-end users rather than speculators/investors-who are fewer in number
and much more cautious about buying. At the same time, due to the absurd
number of housing starts in Spain in recent years, there is a glut of properties on
the market in many popular areas with off-plan investors and developers all
trying to sell to the reduced number of home buyers". (8)
Even though Mark Strucklin and the Sur In English article are referring
predominantly to the Spanish mainland, there's no doubt that Lanzarote has also
experienced a significant slowing down of the market. The downswing of
tourism in Costa Teguise (caused by some of the major holiday companies
investing in the newer resort of Playa Blanca, building large new hotels and
sending the majority of their package and all-inclusive holidaymakers there)
motivated some of the owners of complexes that had been mainly tourist (like
the Tuscan in Costa Teguise) to get out and numerous apartments were sold at up to 30% below
the going rate. This influx of below-market rate property contributed to the stall
of the Lanzarote market, particularly at the lower end.
 |
| Los Porches complex, Costa Teguise centre |
disappeared around the same time, as they had in Mallorca. But, in the case of
the Canaries, British buyers didn't move in to take their place. (Source; Message
Board response, Mark Strucklin, Spanish Property Insight, 2 March 2005 (9))
Macro Environmental Analysis
Britons have been visiting The Canary Islands in significant numbers since the
1980's.
The Canaries have the lowest number of rainy days in Europe and the winters
are among the sunniest, with an average January temperature of 21 degrees.
Lying as far south as the Sahara Desert and about 70 miles off the North African
coast, the Canaries enjoy the clear, unpolluted waters of the Atlantic. Summers
are warm but not sweltering. The islands seamlessly combine the British and
Spanish ways of life;
The currency is the Euro,
Travel and work visas aren't required.
Regular inexpensive charter flights from most UK airports
A flying time from the UK of around four hours
Cheap packages
Plenty of private accommodation to rent
 |
| Northern Lanzarote's Punta Mujeres |
Good roads
Cheap car hire
Lower cost of living
Cheap petrol, alcohol and tobacco
Low crime rate
UK pensions can be paid directly into Lanzarote banks
English widely spoken
An infrastructure that has embraced the foreign visitor,
Unlikely target for terrorist attacks
Politically and economically stable
Not prone to earthquakes
 |
| Mount Timanfaya volcanoes |
Lanzarote is a volcanic island, with the last eruption being 350 years ago.
Mount Timanfaya is in the middle of the island and in the very unlikely event of
it erupting, the coastal areas wouldn't be affected. There are many highly
sensitive and sophisticated detection devices on the island which very carefully
monitor seismic movement and would be able to give several months warning of
any activity, no matter how minor!
A firm UK favourite for both holiday-makers and second or retirement home
buyers.
Lanzarote has a tranquil atmosphere, miles of golden sandy beaches, fine
restaurants, vineyards and some spectacular scenery. There's a stark beauty to
the conical mountains, stony plains, sand dunes and 900 square kms of solidified
lava and volcanic rocks.
This is complemented by the stunning architecture of the late Cesar Manrique.
Undoubtedly the founding father of modern Lanzarote, Manrique designed most
of the island's main tourist attractions and heavily influenced virtually
everything else. The Manrique Foundation, based in Tachiche in the house that
the artist built for himself in five dormant volcanic bubbles, showcases many of
his creations from design to completion, as well as artwork from Manrique and
many of his contemporaries, including Picasso.
 |
| Cesar Manrique's wonderful Jameos del Agua |
constructed by Manrique from two large lava bubbles and an underground lake
that houses a restaurant, cafe, night club, gardens and concert hall.
At the northern-most tip of Lanzarote, Mirador del Rio is a daring mix of
architecture and landscape, carved into the cliff side hundreds of feet above the
sea that offers breathtaking views across to the adjoining island of La Graciosa.
 |
| The restaurant at Mirdaor del Rio with Graciosa in the background |
accident. Buildings have to be painted white, with green or brown woodwork.
Tourist development is strictly controlled, with only three or four high rise hotels
on the entire island. 90% of land on the island is protected and can't be built on
and UNESCO have declared Lanzarote a World Biosphere Reservation for its'
protection and conservation.
Perhaps surprisingly, given its' popularity, Canary property prices are around
10% less on average than they are in mainland Spain's coastal resorts. 2005's
average property price figures released by the Spanish Ministry of Housing
show a 9.7% increase for the year, slowing down in the last quarter to 2%, both
lower than the national Spanish average of 12.8% and 2.4% respectively (6)
The Spanish Government's 9.7% increase in property prices in the Canaries is
not born out by my own observations. Prices in Lanzarote are static and a canny
negotiator can often get a significant reduction on asking price. Mark Strucklin
in the May 06 Spanish Property Insight offers a very persuasive explanation about
why the Government's figures may not be totally accurate.
"The Government get their figures from authorised appraisal companies and it's
no secret that appraisal companies have been helping their main
clients-mortgage lenders-for years by producing 'optimistic' evaluations. This
doesn't mean that the government's figures are worthless-far from it. They are
still useful for identifying trends and comparing regions. However I do suspect
the government's figures of exaggerating property price increases in many parts
of Spain over the last few years".(9)
Macro environmental stakeholders would include; airline companies, local and
national governments (UK, Spain and Lanzarote) ecological groups, economic,
socio-cultural and technological institutions.
Micro Environmental Analysis
Stakeholders would include Lanzarote estate agents, potential buyers, magazines
etc that I'd advertise in and any freelance cameramen or editors I might employ.
There is currently only one UK-based agent for Lanzarote estate agents. The
Lanzarote Living website invites UK buyers to send them e-mails telling them
the sort of property they're interested in. They will then forward them to estate
agents in Lanzarote. It doesn't specify to how many agents the e-mails will be
sent to and seems very half-hearted, acting more as a link facility than actively
pursuing clients. There is also one huge error on the general information page,
where it claims that Lanzarote is 67 miles long; it's actually 37 miles.
Indirect competition is the number of UK based companies who are facilitating
the sale of other overseas property, predominantly in Spain, Cyprus and
Tenerife. The following list only includes UK companies or representatives. As
can be seen there are plenty of companies offering property in America,
Portugal and Cyprus. The companies offering property in Spain almost never
have properties in Lanzarote. The most popular Canary Island is Tenerife but
even that only has a handful of UK companies offering property. Again,
Tenerife seldom appears on the books of the companies promoting Spanish
property. (7)
Spain
Parador Properties
Gran Sol Properties (Europe)
Palmera Properties
Elite Property Sales
Property Networks Spain
Spanish Global Properties
Villas Online Direct
Spanish Way Properties
Mercers
1-2-1 Spanish Property
Linda Fincas
Mallorca
Mallorca Hot Property
Tenerife
Crossley, Morfitt & Lennox
Sunset Properties
Alexanders International
Tenerife Homes Direct
Willow
Cyprus
Coopers Overseas
Lewis Estates
Parador Properties
Price Cooper
KJM Properties
E Property Direct
Cyprus Property Sales
Cyprus Connect
Euro Property Guide
JD Direct
Cretan Courtyard Homes
Cyprus Property Services
Property Republic
Portugal
Purely Portugal
Casas do Barlavento
Albufeira Real Estate
USA
Florida Homes 1st
Florida Homes International
Lowerys
Florida Villas Sales
Luxury Villas Worldwide
Florida Real Estate Ltd
Calabay Homes
Florida Connection
Simply Florida
Executive Villas Florida
All of the above are competing for the overseas house hunters business.
However, someone who prefers the American lifestyle is unlikely to be
considering the Canary Islands. Cyprus is a more relevant competitor, and there
are many good deals to be had. More buyers are becoming aware of
the risks involved in buying in Northern Cyprus (where most of the bargains
are), particularly properties with Greeks title deeds built before the Turkish
invasion of North Cyprus in 1974 where the Greek Cypriots were forced from
their homes.
The UK government doesn't recognise the Turkish Republic of
Northern Cyprus and the Foreign Office website advises extreme caution in
buying property there, explaining that many thousands of claims by the original
Greek owners are currently going through the European courts. If they win and
are awarded their homes or land back the effect on the Cyprus property market
will be dramatic. (8)
Mainland Spain will always be popular. It is seasonal, however, and doesn't have
the Canaries all-round sunshine. Property is on average 10% more expensive
than in the Canaries.
expensive in Tenerife and there are (percentage wise) less private villas and
 |
| Feeling the beats in Playas De Las Americas, Tenerife |
island than laid-back Lanzarote, which caters more for the family and retired
market.
SWOT Analysis
Strengths
Good knowledge of the finite and specialist Lanzarote market.
Good general knowledge about property renovation and design
Good knowledge of Lanzarote in general terms.
Have bought and sold property myself on Lanzarote
Knowledgeable about procedures
Knowledgeable about Spanish mortgages.
Have English-speaking contacts in Lanzarote banks
Know ten or twelve estate agents personally
Know how to contact the others
Own Lanzarote property myself
Am on the island once every two months
Know tradesmen
Am confident, able to get on with most people
Literate, articulate
Good writing skills
25 years media experience
Knowledgeable about marketing, advertising and promotion
Familiar with potential suitable advertising mediums
Basic camera and editing skills
Basic Spanish
Able to offer a personal, one-to-one service to both estate agents and
prospective buyers
Weaknesses
Sometimes overly cautious
Can get discouraged if results are slow in coming
Money spent on advertising will be wasted if no sales are forthcoming!
Housing market is unpredictable and very influenced by external events
(cost of flights, actions of governments and financial institutions, nearby
developments etc)
Financial results not necessarily linked to the effort (or money!) put in
Speculative
Difficult to accurately forecast sales
2,000 miles away!
Opportunities
The combination of my knowledge, circumstances, experience and the current
interest in overseas property, linked with available finance (particularly
among the middle aged, who have either paid off their UK mortgages, or who
have significant equity in property) should make this the right opportunity at the
right time.
Spanish mortgages cost significantly less than UK ones, making buying easier.
Threats
A larger UK-based company having the same idea (or stealing mine!) and pursuing it rigorously!
The Lanzarote Living website offers to put UK buyers in touch with Lanzarote
estate agents. I don't see this as much of a threat because anyone
Internet-literate enough to have found their website will have no problems in
finding the agents' websites. Indeed, there's actually direct links to a couple of
them! Communication with Lanzarote Living is via e-mail only. It's all very
de-personalised, with no suggestion of video material or a phone number.
Personal service would be a very important aspect of my business. I would also be
actively looking for clients, via advertising. Lanzarote Living don't appear to be
doing this.
A significant rise in interest rates (UK and Spanish) which would make Lanzarote
property less affordable. Euribor-the interest rate most commonly used to
calculate mortgage repayments in Spain-rose for the seventh consecutive month
in April 06, pushing up variable rate Spanish mortgage repayments. Euribor
rose to 3.318% at the end of April, up from March's 3.233%. Euribor is now at
it's highest level since September 2002 and the financial markets (so Spanish
Property Insight reports) expect it to rise to 3.75% at the end of 2006 and 4% by
April 2007.
Upcoming markets like Croatia and Bulgaria becoming even more popular and
taking potential property buyers away from the Canaries. Bulgaria will be
joining the EU in 2007 and tourism is already booming. Property is cheap and
foreign investors are flooding in. Skiing is one of the main attractions in
Bulgaria, which means that the country is attracting holiday home buyers who
probably wouldn't be interested in the sunshine lifestyle that Lanzarote offers.
According to (Channel) Five's How To Be A Property Developer Abroad (23
 |
| Ski slope apartments in Bansko |
UK buyers, however, are just after cheap foreign investment properties, which
very definitely makes the Eastern European countries serious competition to
Lanzarote.
Some sort of UK governmental clamp down or tax on buying foreign property.
Unrealistic high pricing of some properties in Lanzarote by some owners.
Me being offered a very time-demanding UK media or writing job!
MARKETING STRATEGY
Objectives
To get a handful of Lanzarote estate agents let me represent some of their
properties in the UK and then find serious potential UK buyers and match them
up and split the commission earned with the agent.
Constraints
Locating serious buyers! I've already had informal conversations with a couple
of estate agents and they would be agreeable to my finding them clients. Much
harder is closing the deal and converting prospective property buyers into actual buyers!
Options
Work with seven or eight different agents. This is my favored approach. Other
possibilities would be;
Work with only one agent. Very much a "all my eggs in one basket" scenario!
What if they went out of business? Or we stopped getting along?
Deal with UK buyers and Lanzarote sellers directly, thus keeping the full 5%
commission to myself! The agents are based in Lanzarote full time and are very
well versed in the legal and financial procedures, taking buyers and sellers to
the Notary to have the transaction registered and resolving hold-ups or problems.
Unlike the estate agents (who have offices and advertise regularly) it would be
hard for me to source sellers without being on the the island full time. While
getting the full commission is appealing, "going it alone" is not a serious option.
Target markets
1) Lanzarote estate agents
2) UK residents with money, looking to buy property abroad, either as a second
or retirement home or as an investment. These could be;
Retired or approaching retirement.
Entrepreneurs and speculators
Professionals, with disposable incomes
Tradesmen, wanting to "start a new life" in Lanzarote
Marketing mix
Product
(Core) Linking Lanzarote agents with potential property buyers.
(Surround) Providing illustrative materials (DVD/Video, photos, sales sheets) so
that buyers can make initial viewings (and decide how interested they are)
without having to make costly inspection trips involving a round journey of
4,000 miles!
Giving advice and guidance through the property process.
(Choices) I'd promote a fairly wide range of properties, from apartments to
villas, generally set in the areas popular with UK buyers. Some would be
new-builds, some would be re-sales.
(Extras) I have extensive knowledge of Lanzarote and its' social and economic
infrastructure. I'm experienced in buying and selling property there and have
lots of contacts, in both financial and trade sectors. If buyers needed a Spanish
mortgage I could make suggestions and recommendations; if a property needed
up dating I could suggest tradesmen, where to buy supplies, furniture etc.
My relationship with Lanzarote is ongoing. I will continue to own property on
the island for the foreseeable future, and would therefore continue to be
available to former clients for advice and consultation.
I would probably be able to offer substantial accommodation discounts in one of
my properties to potential buyers on inspection trips. Alternatively, I could
arrange or suggest discount accommodation elsewhere.
I would also be able to offer a property location service where the client could
tell me what sort of property they were looking for, in what price range and
area. I'd then use my knowledge and contacts to come up with a short list of
properties. If my UK client went with any of these properties, I'd split the
seller's commission with the agent.
Place
I'd be working from home. The clients would never need to come. My location is
of no relevance. When in Lanzarote I'd stay in my apartment in Costa Teguise
while filming properties and visiting estate agents.
I would get the product to the estate agents via personal contact, fax and e-mail.
The buyers would be located via advertising and the promotional material
posted or e-mailed to them.
Price
Estate agents in Lanzarote work on a commission only basis. All charge exactly
the same amount-5% of the selling price (paid, of course, by the seller). Sellers
often have their properties with up to a dozen different agents. The one who
sells it gets the 5%, the offers get nothing! I would anticipate being given
properties to promote that are with several different agents (as these have only
a 1 in 5 or 1 in 10 chance of being sold through that particular agent). I could,
of course, only represent that property for one agent.
I would be looking at a split-commission deal (which is how it works in the
entertainment business), giving both the agent and I 2 1/2% of the sale price. This
would be my starting point with the agents. If pushed I would accept 2%. This
would be paid after the property has been sold and the seller has paid the agent.
Promotion
Promotion to the Lanzarote estate agents would be via personal contact, while
I'm in Lanzarote.
I would locate the UK property seekers primarily by advertising in the some of
the many magazines devoted to property and living abroad. Daltons Weekly
offers cost-effective advertising on a weekly turnaround so I would start there.
Private Villas, Holiday Villas, Living Spain (which I've written for), A Place In The Sun Magazine
and Exclusive Holidays all have property for sale alongside property to rent.
They are more expensive to advertise in than Daltons and I would assess how
my use of Daltons was going before trying them.
A 20 word classified advert in Daltons is £65.80 for four weeks or £107.20 for
eight weeks. I would initially be looking at this sort of advertising spend to
minimise costs. This was what I used when I was selling one of my apartments
and the response was very good.
These sorts of magazines are good because even though they tend not to have
huge circulations (Daltons sells around 40,000 copies a week) their readership is
specifically people who are interested in living or holidaying abroad. When I've
advertised holiday rentals in magazines with much larger, but far more general
readerships the response has generally not been as good. The same would
probably be true with overseas property sales. I will return to to this at some
future point, particularly looking at magazines geared at older people,
retirement etc.
There is a new property magazine called My Property Trader which is starting
publication in June. In addition to promoting property within the North East for
sale and rent, it is also going to have a "Property Abroad" section. My past
experience is that cash-strapped North Easterners tend not to
have the kind of money needed for either buying foreign property or booking
their foreign accommodation privately, making local advertising redundant. I will,
however, keep an eye on the magazine and see how it goes.
For the same reason I would rule out local door-to-door leafleting, poster campaigns
and the like.
The best form of advertising, of course, is word-of-mouth. I would certainly
intend running this business in an honest, credible, trustworthy way. By doing so, friends of
satisfied customers would feel confident about contacting me if they also were
looking for property in Lanzarote.
I would build up a data-base of potential customers generated by my
advertising and from time-to-time would circulate them with details of new
properties. I would keep records of what sort of property individuals were
interested in, price range and location and would offer promotional "first look"
opportunities
This is a very specific venture and my advertising spend would be very directly
targeted. Free advertising (in the guise of news or feature items) can sometimes be
generated. I'm very experienced in Public Relations (Former head of PR for the
Northern Regional Health Authority, freelance PR and promotions for The Bootleg
Beatles and dozens of other bands and entertainment concerns) and know that
local press, radio and television are always on the lookout for stories. I
may be able to get some free exposure via a carefully worded press release. I'd
have to come up with an angle, (ie "Geordies rush/don't rush to find their place
in the sun!") because the media won't just give me an unpaid advert. I am, however,
very good at inventing angles and feel confident I could get free press exposure
on a regular basis.
I wouldn't consider paid television or radio advertising. Property has
traditionally been advertised in print and I would stay with this. Prospective
buyers need time to evaluate and consider. Television and radio doesn't allow
this and is very expensive!
Foreign property trade exhibitions are another possibility. Taking stands at trade
exhibitions can prove to be expensive and often don't produce enough sales to
make it financially viable with the organisers being the main people making money.
I would go to several as a visitor before making any final decision.
In the short term I would probably stay away from setting up a web-site. All of
the estate agents have web-sites, which, of course, can be logged on from the
UK. My initial target market is probably going to be older people, who may not
have Internet access or the wherewithal to use search engines effectively.
Indeed, I don't want them to go on the internet and discover they can source
properties and Lanzarote estate agents directly!
Setting up a web-site could be costly, and would need to be maintained, which
again could be time-consuming and costly. Again, this is something I may come
back to in the future.
I would, of course, make use of e-mail.
E Bay is a major selling tool and one that I would certainly try out, although I
would certainly need to set a reserve price on all property! On (Channel) Five's
How To Be A Property Developer Abroad (30 May 06) the developer featured
said he would be putting the featured development (an inland Spanish house) on
E Bay. Sure enough, the following day, there it was for a selling price of
£65,000! I'm going to be following the progress of this potential means of selling
with great interest!
Legal Framework
I'd operate the business as a sole trader. This does mean I would be personally
liable for any business debts incurred. As the primary expenditure will be
advertising, which I would pay for as and when I required it, it's very unlikely
the business would incur debts of any significance, making being a sole trader
the most appropriate legal status.
I would have a simple written agreement between me and the estate agent
saying that we would split the commission from any sales that I generate for
them. The standard rate is 5% and I'd be looking for 2 1/2% or 2%.
Business name would be "(Ian Penman trading as) Lanzarote Lifeline". I've
checked that this is not a registered trademark. Companies House tell me that
there isn't another company with that name registered with them. Lanzarote Lifeline is
also available as a website domain for .co, .com, .uk, .org and a dozen others.
I would work from home
My commercial dealings would be with the Lanzarote estate agents, as they
would be paying me from their commissions. No money would be personally
received by me from either buyers or sellers. As I'd be writing very few business
cheques (if any; I'd be booking adverts over the phone and paying on my credit
card) I wouldn't set up a business account, saving bank charges. I'd use my UK and Lanzarote
personal bank accounts for paying in and withdrawals.
I'm already registered with the Inland Revenue as self employed (and have
been for 25 years!). My accountant is Tony Lapping. I already submit yearly
accounts.
I would not anticipate reaching the VAT turnover threshold of £54,000 income
per annum for at least four years, if at all.
I have standard household contents insurance which covers the personal items I
would be using for this business creation. (Computer, word processor, video and
stills cameras). I wouldn't have clients to my house and would not need specific
business insurance. I would not be showing clients round properties and
therefore do not need Public Liability insurance. Clients would book their own
flights for inspection trips. In all correspondence with clients I would advise
them to take out personal travel insurance. Neither Product Liability or
Professional Indemnity insurance would be relevant to the the service I'd be
providing.
I already pay a self-employed Class II national insurance contribution.
The Inland Revenue lists both "Editor" and "Director of Photography" as
television technician grades they accept as freelance. Any casual freelance staff
I use would be contracted as one of these, making them responsible for their
own tax and national insurance. As they would be working for themselves (and
not on my premises) I would not need Employers Liability insurance.
FINANCIAL PLAN
Lanzarote Lifeline is intended as a low-cost, low risk venture that would be in
addition to my present, on-going sources of income (property rental in the UK
and Lanzarote, journalism and media consultancy). I don't need it to provide me with a
living wage, as I already have that. I would not need to take drawings from the
venture. Start up costs would be very low and would come from my savings.
My balance sheet lists £1200 for equipment. This is as follows; Video
camera-£250, Tripod-£50 Stills cameras-£200, computer-£350, DVD/VHS
recorder-£115, DVD player-£35, printer-£70 Discs, tapes, cases, leads, ink,
paper etc-£130. I already own most of this.
Running costs would also be low. All Lanzarote business would be conducted
while I was on the island administering my properties. I would only need to buy
£150 worth of new equipment (the DVD/VHS recorder and additional DVD
player). The main on-going Revenue costs would be advertising. I've factoring in
£60 a month for this. If I booked 12 weeks at a time in Dalton's the actual cost
would be £45 per month. I would use the extra £15 for trials in some of the
different ad-papers round the country like Loot and Friday Ads.
estate agents and the following balance sheet is based on their analysis of the
current market. My projections are based on assisting the agents to sell ten
properties over a twelve month period. If I take on five properties a month
(one from each agent) I would need a 1 in 6 success rate.
Most Lanzarote estate agents would agree that the current market is static making them
open to anything that would bring in clients they wouldn't otherwise have access to.
With very limited financial risk, Lanzarote Lifeline would be an ideal 'New Venture'
that draws on my strengths, resources, contacts and knowledge.
Ian Penman 8 June 2006
Forecasted Sales 12 month Profit Statement
Cash Flow Forecast Formulas
Update 2013
The Lanzarote property market of today bears very little resemblance to the
2006 one that I wrote the Lanzarote Lifeline Business Plan about. Re-reading it,
I still feel that the concept is a good one that wouldn't have taken much in the
way of capital outlay to implement. Key elements of most businesses are
specialist knowledge and networking-putting people in touch with each other for their mutual advantage. These were the basis of Lanzarote Lifeline.
Unlike with Lanzarote UKTV, which was very much a paper exercise written
solely for my Masters, I did toy with the idea of pursing Lanzarote Lifeline. As
the plan explains, I know various Lanzarote estate agents, have audio-video production
skills and extensive promotional and marketing experience. I was in Lanzarote
four or five times a year and could stay in my apartment when working on the
project.
So why didn't I take it further? Shortly after finishing the plan I began to get the
definite feeling that the Lanzarote property market was in decline. The boom
time of the early 2000's were over. When I was selling one of my apartments in
2005 I did get a good response to my advertising. But, as I know from some of
my Lanz inmobiliaria friends, the hardest part of property sales is closing the
deal. Everyone has seen the A Place In The Sun television programme and sat
at home assessing the different properties on show, deciding whether they are
value for money, how they rate the decor and wouldn't it be great to retire to
somewhere warm or just have a regular bolt hole to call your own? It's an
entertaining game to play that most viewers have no serious intentions of putting
into practice.
The majority of the respondents to my adverts probably fell into that category.
They'll have watched the DVD I sent, read the information sheet and thought
"someday!". Several people did get as far as taking a stroll round the complex but I'm fairly certain they were going to be in Lanz on holiday anyway.
I sent out around ten DVD's which converted into no sales. Hard to know what a
successful conversion rate might be. One in twenty, perhaps? Impossible to
accurately predict, which is one of the main problems with selling property;
moving such a high priced product can be very prone to outside considerations.
Posting on the Spanish Property Insight website in June 2006, long established Lanzarote
estate agent 'Stewlanz' (Stewart Andrew) explained what factors had lead to relatively cheap apartments hitting the Lanzarote property market over the previous few years.
Historically, Lanzarote has never been a "cheap" holiday destination - until recent years when large tour operators have had to unload seats and hotel accommodation which they are paying for whether they are used or not.
However, I am sure that you would have noticed how many small, privately owned complexes have been put up for freehold sale in the past couple of years? This is a subject which deserves its' own thread - but suffice to say that the owners of these complexes (which were all built in late 70's) were not willing to refurb at a cost of millions just to get Tour Operators who want to pay them 20 euros per unit per night! Plus, the town halls are leaning on them to up the standard of their - admittedly - tired complexes. It doesn't take much to see why the complex owners decided to cash in their chips and sell for a few million instead of spending it.
This is great news for the apartment buying public as a lot of these complexes are front line, or almost front line within the main tourist resorts. So, where families have enjoyed holidays in the past, they can now BUY the apartment they have stayed in! Great news for the buyer, the vendor, the local town hall too as when complexes are bought privately and a community established, then they are generally kept at a very high standard. So, great for other tourists to see nice apartments front line rather than tired 30 odd year old complexes.
Stew's in-depth knowledge of the Lanzarote property market is apparent. I would disagree with his final comment, however. Apartments on the same Costa Teguise complex as mine started to be sold off in the late 90's, probably for the reasons that Stew describes. The apartments were sold to individuals, giving effectively 100 'managers' who all wanted to do different things, rather than one company who would work in a uniform way across an entire complex. It's a large complex with pools, gardens, offices, car parks and the like that all need maintaining which is funded by the hefty monthly community charge on each apartment that all owners have to pay. Because of the size of the community charge (At one point 180 euros a month for a one bedroom apartment) many owners couldn't or wouldn't pay or payed late and the complex deteriorated. From Stew's comments, this can't have happened with all complexes. But, as I know from personal experience, it certainly did with some. This, I feel certain, had a negative effect when I was trying to sell the apartment in 2005 and would apply to many potential sales on other complexes. The 'tired complex' factor would certainly have worked against Lanzarote Lifeline.
A consideration I should have explored more extensively in the plan was the
unwise rise of the new build. Spain overdosed on newly built properties in the
early 00's and Lanzarote was no exception. Developers brokered mortgage deals
for their buyers with the banks who had financed the development and the banks made
mortgages easy to get, particularly on new builds. Older properties generally had the advantage of being in better, more established locations than the new developments, few of which were 'front line' (next to the sea). Banks would finance these purchases but gave preference to the new
builds that they had sunk money into.
Playa Blanca, twenty years ago a small fishing village with a couple of hotels
and a few restaurants and cafes, had, by 2006, extended several miles from the
coast as developers built and built. For sure potential purchasers would get their
"place in the sun" but their view of the sea required ten minutes in a car.
All of a sudden Lanzarote had too much property available. On the outskirts of Costa Teguise,
the Teguise Greens development was heavily promoted by several of the leading local estate agents. The properties looked neat and tidy but the development had too much of a housing estate feel to it and for UK buyers they were too far away from the sea. Now, ten years later the developer has gone bust and there are rows of empty or unfinished houses.
 |
| Teguise Greens pre-build artist's impression. The lack of activity proved to be eerily accurate. |
Too many were built and in the wrong location. Another unforeseen factor was the world recession. I mention in the plan that external threats could include the UK Government putting a tax on buying foreign properties. Which is pretty much what Gordon Brown did. His ham-fisted
devaluation 'solution' made British goods cheaper abroad but goods and services
in other currencies (including the Euro) became much more expensive. In the space of
three months a 50,000 euro property requiring the exchange of currency from
sterling to euros (as most did) that would have been £35,000 was now £45,000.
Brown's crass piece of financial maneuvering made no difference if the
purchaser's native currency was euros so Irish buyers felt no pain. But buyers
with their funds in sterling or looking for a Spanish mortgage fed by funds from
the UK would have to come up with 30% more than just several months
previously and may have decided not to proceed with the purchase. Which would
have had an extremely detrimental effect on the viability of Lanzarote Lifeline.
In common with both the mainland and rest of the Canaries, most Lanzarote
properties in 2008 were overpriced, as Spanish property experts now agree.
Prices had risen by 200% in ten years. Thanks to Brown the cost of money had also gone up, making Lanzarote property close to 50% more expensive in real terms to UK buyers than it had
been just several years previously.
Many developers had recklessly initiated developments of far too many
properties. A combination of greed and the discounts available for buying
materials and fixtures and fittings in bulk caused many property developers to
be overly optimistic in their estimates as to how many houses they were going
to be able to sell and the banks blindly kept dishing out the cash to fund this folly.
In the boom days, agents tended to generally keep to their own area. Even today,
the Playa Blanca agents usually only deal with property in that resort. Located at
the southern-most tip of the island, Blanca was the centre of Lanzarote's house-building mania seven or eight years ago. Today thousands of properties lie empty or unfinished all along the twin duel-carriageways that lead into the town. Consequently the PB agents have more than enough
properties to be getting on with right on their doorstep.
 |
| The outskirts of Playa Blanca, circa 2006 |
For the non-Playa Blanca agents it's every every inmobilaria for itself across the
entire island and, to a point, Fuerteventura too as they all try to keep their heads
above water. Which would make have made any new clients that Lanzarote
Lifeline could have brought in very attractive to the agents.
In the plan I suggested that emerging Bulgaria and Croatia might take
potential buyers away from the Canaries. This turned out not to be the case in
any significant way. The international Bulgarian house price boom of 2000-2008
saw prices grow by a massive 300%. In 2009 the cost of an average dwelling
dropped by 21.4%. The reign of these countries as flavor of the month for the
international purchaser is now well and truly over, with 2013 property prices 25% less for Croatia and 40% less for Bulgaria than their 2008 peak. Bulgaria is one of Europe poorest and most
corrupt countries, a fact that began to deter many foreign property buyers.
In a typical 'shoot-themselves-in-the-foot' move (almost certainly instigated by
pressure from the big holiday companies who want all holiday-makers cash to
come to them) the Canarian government recently dug up a law from the 1990's
which states that anyone renting out holiday lets has to have a tourist licence.
Right....Where do you get one? You can't. No tourist licences are currently being
awarded. Anyone who does holiday lets without one can be liable to a fine of
thousands of euros. Finding owners doing holiday lets is easy for the inspectors
currently operating across the Canary Islands; Owners Direct, Holiday Lettings
and dozens of other advertising sites are full of them!
Many people bought into the Canaries because of the estate agent-driven idea
that the lets they'd be able to rely on for their new holiday villa or apartment
would pay the mortgage. Without this income many owners will have problems
keeping up mortgage payments, particularly on properties bought at the inflated
prices that were the norm between 2005-2008. The choice is; risk a 10,000 euro
fine or stop doing holiday lets and sell up at what will almost certainly be a significant loss or
get the mortgage money from somewhere else. Which many would be unable to do.
There is a get-out clause in the act which is the 'family and friends' provision
that allows owners to let to relatives and people they know personally. Some
owners will undoubtedly be doing this anyway but it's unlikely to be sufficient to fully cover the
mortgage. Regular renters of a favorite apartment or villa may be accommodating enough to
play ball if the inspectors knocked on the door asking to see letting agreements,
but telling new clients; "If anyone asks, say you're my Uncle Billy" is not
the best way to get repeat bookings from strangers. Long lets of three months or more are
acceptable but the whole 'illegal' holiday lets scenario will surely have a
negative effect on the Lanzarote property market and Lanzarote Lifeline if I'd
put it into practice.
More on the 'illegal' lettings controversy here; tenerifelitigation.com
Another very significant factor in the decline of the Lanzarote property market
that would probably make Lanzarote Lifeline not viable is the current
reluctance of the Spanish banks (all of whom had supported the developers in
the property boom) to give out mortgages on properties other than the ones
they've re-possessed. The official figures released by ISTAC, the Canarian
Institute of Statistics, show that only 1,356 new mortgages were given out across
the Canary Islands in May 2013, a decrease of 31.06% from the 2012 monthly
average. Over the same period gross investment in the Canary islands from
foreign sources went down 66.40%. As a result, properties are taking longer and
longer to sell.
In mainland Spain and the Canaries combined there were only 14,053 new mortgage
approvals in June 2013, a mind-boggling 42% down in a year and the lowest level since statistics were first published in 2003. On his Spanish Property Insight site, property expert
and author of the Sunday Times Spanish Property Doctor column Mark Stucklin reveals; "Only 31% of home purchases in June included a mortgage, according to the notaries' association. The average new mortgage value in June was 97, 495 euros, below the 100,000 euro level for the first time and 9% down in 12 months. Overall new mortgage lending in value terms fell 47% in a year. Mortgage lending has collapsed to the lowest level since the crisis began and it's clear that the credit crunch in Spain is still in full swing."
Stucklin goes on to explain the current consequence of the banks pulling back the availability of mortgages; "House hunters have lower budgets (cash only) so vendors have to drop their prices to find a buyer. Add to that the recent increases in taxes on house purchases, rising unemployment and the imminent liquidation of large portfolios of properties and Spanish house prices can only go one way: South".
Summing up, Mark Stucklin concludes; "On the Spanish coast foreigners with cash are now the main buyers. The lending drought affects the domestic housing market, not so much the international market on the coast." (12)
My feeling is that Lanzarote and the other Canaries have suffered less than the mainland, where areas like Valencia and Malaga have seen property prices drop by 50% since 2007 although other parts of Spain have fared slightly better at 30%. The very sluggish property sales in Lanz, where UK purchasers have always out-numbered all other foreigners, does indicate, though, that the lack of willingness of banks to grant mortgages has significantly reduced the number of Britons buying property, even though prices are much affordable now than they were in 2007.
It's very much a buyers' market on Lanzarote these days where the 'cheeky offer' is king. Many agents sites have a 'Bank Repossession' section. Posting on the Discover Lanzarote site 'Lanzalocal' offers this explanation;
Banks are keen to sell all properties on their books....especially now as the Canarian Govt. has just passed a law allowing them to seize properties held by the Banks in order to provide low-cost housing for those people evicted by the Banks because of being unable to make payments on their mortgage......so most will listen to reasonable offers as here in Spain the Banks are only looking for the clearance of the amount owed on the mortgage plus a reasonable fee for legal costs of the repossession( not to make a profit but simply to cover their loss).......however since the merger of many smaller Banks into various larger entities such as Bankia etc most bank properties are offered through only 3 or 4 larger websites(main ones are http://www.casaktua.com http://www.solvia.es http://www.altamirasantander.com. http://www.servihabitat.com )which means lots of speculators are snapping up property in the hope of future returns when the market revives......especially as most of these properties on these sites invite offers or come with guaranteed mortgages. (13)
The Lanzarote Investments agency have some excellent bargains and recently sold a one bedroom upper floor apartment on the Los Naranjos complex on the outskirts of Costa Teguise.
 |
| Los Naranjos, Costa Teguise |
Prices listed started at 18,800 euros, a price not seen on this sort of property since the 1990's. As the listing explained "Price is subject to finance requested to purchase the property"
A cash purchase or with a mortgage less than 40% the price is 21,300 euros.
With a mortgage of 40-60% the price is 18, 800 euros. With a mortgage of
60-80% it's 22, 500 euros. With a mortgage of more than 80% the price is 25,000
euros. On top of this would be the standard hefty Spanish taxes on property sales of 8%.
 |
| Los Naranjos, probably during its' holiday complex days |
pulled out the owners had the apartments renovated and then put on the market
at 115,000 euros each. I looked at one seven years ago, and it was basic
but acceptable, although the location was a little off the beaten track. The estate
agent who showed me around told me that although the owners had around 90 apartments to sell,
the price was the price and they wouldn't entertain offers.
 |
| A Los Naranjos apartment with living room at one end... |
 |
| ...and kitchen at the other. |
The complex was very quiet and
the impression I got was that not many had been sold. A willingness to negotiate or a more sensible price-say the 90,000 euros that an apartment on a comparable complex like the Tuscan was selling for at the time-would have made sense. The 115,000 euros price tag seemed to stick for years. No longer.
Lanzarote Investments has non-repossessed properties at the San Francisco Apartments in Puerto del Carmen for sale. Studios run from 36,000 euros to 58,000 euros, two bedroom apartments are 110,000 euros. These are reductions from the 2006 prices that started at 95,000 euros. The apartments are small and the complex has seen better days but is in a very central location in Lanzarote's premier resort. Another very good deal for anyone OK with 'cheap-and-cheerful.'
Many estate agents are gone. The Lanzarote newspaper La Voz reports that one chain
who had a slick operation squarely aimed at the tourist market with branches in
all the resorts suddenly shut up shop. The agent concerned has recently been arrested and charged with allegedly swindling a million euros out of 17 customers between 2007-2011 by falsely claiming property had been bought on their behalf and then receiving property transfer tax and monthly community
charge. Nine of the victims are from Ireland, four from the UK, two from Spain,
and one each from Germany and Italy. Most of the victims weren't resident
and bought as an investment. (14)
The Lanzarote agents that remain, including Paloma Castro of Imno Estates and
Laura Sweeney of Location, are seasoned operators who truly know the market
and all the players in it, both Spanish and otherwise. But even that is no guarantee.
Stewart ('Stewlanz') Andrew, for years one of Puerto Del Carmen's leading agents is
now a sports therapist. What was 103 agencies is probably now 35, of which a dozen
or so are optimistic new companies without the Lanzarote experience of Castro
or Sweeney.
Lanzarote is a small island where bad news and bad reputations travel fast.
To a large extent the 'wide boys' have disappeared. Most agencies have widened their remit to offer associated services drawn from rentals, property maintenance, furnishing, management and the like.
Jonny Bailey of Atlantico Homes writes on the Property Overseas Today site that in 2013; "Lanzarote looks set to welcome close to two million visitors, with the bulk arriving on budget flights from the UK.....As a result local agents are expecting to see an increase in
demand for good quality homes and apartments".
With a gob-smacking disregard for the current 'illegal lettings' situation and the
threats of hefty fines Bailey concludes that Lanzarote is "an extremely attractive
proposition for investors seeking a full 12 months worth of rental returns from
their holiday properties." (15)
I certainly wouldn't have engaged in this sort of misleading spin, which includes the flagging up of 'holiday properties' (and therefore playing down long lets which many UK buyers wouldn't want to get involved in) encouraging buyers to participate in practices that are currently 'illegal' and subject to huge fines. Is my lack of guile is another reason why the Business Plan wouldn't have worked?
With the official tally of 1, 696,532 visitors to Lanzarote in 2012 showing a drop
of just 1.06% on the 2011 figures tourism is still healthy on the island. Of this,
903, 316 were from the UK, just a 0.31% drop from the 2011 figure of 906, 084.
Irish tourists dropped by 0.79% to 176, 965 from 2011's 178, 378.
The numbers of tourists visiting Lanz is stable and the island is holding its' own
as a holiday destination. But from the length of time the agents have individual
properties for sale and the often large reductions in asking price it's clear the
property market is stagnant. This view is re-enforced by the organiser of one of
the UK's largest overseas property trade shows who told me that as far as their
exhibitions are concerned there's currently very little interest in buying property
in the Canaries.
My 2006 pronouncement about not needing a website for Lanzarote Lifeline
while possibly right at the time was undoubtedly wrong within months. Most of
the population is now on line including the retired who would certainly be one
of my prime group of clients. Costs of starting a site have come down. Or, in the
case of many blog providers like Google and WordPress, vanished all together.
A Facebook page would also be an essential part of the promotion. The time
spent on maintaining these sites would just need one sale to make worthwhile.
UPDATE OF THE UPDATE (August 2018)
Five years on and the Spanish property market has started to move once more, with selling prices back to 2006 levels and rising. In Lanzarote there's still a raft of half-finshed properties on the outskirts of the three main resorts where the builders or developers have gone bust. Passers by of these ghost estates will undoubtedly be wondering why they can't be sold off at bargain prices and finished. Or pulled down and the land sold. Spanish bureaucracy moves slowly it seems!
 | |||
| 2000's development on the edge of Costa Teguise still unfinished. What the photo doesn't show is the graphitti over many of the apartments, making the estate even more of an eyesore. |
ENDS (For now.)
Bibliography
1) www.shelteroffshore.com
2) www.spanishpropertyinsight.com_april2006
3) Holiday Villas magazine, April/May 2005
4) Source; Estohay, Lanzarote Gazette, Buzz, Viva, Freedom For Sale magazines
April 06
5) Lanzarote Gazette, April 2006
6) Spanish Government's official figures
7) Sur In English, 2-8 June 2006
8) www.spanishpropertyinsight.com_may2006
9) Message Board, Spanish Property Insight 2 March 2005
10) Source; Advertising in Dalton's Weekly, Private Villas, Holiday Villas, A
Place in the Sun magazine
11) Foreign Office website;www. fco.gov/
12) www.spanishpropertyinsight.com/2013/09/18/official-spanish-house-price-index-fifth-year-falls/
Ian Ravendale North East freelance journalist ian ravendale Newcastle freelance journalist Ian Ravendale Sunderland freelance journalist Ian Ravendale Tyne and Wear journalist northern freelance journalist Ian Ravendale long established freelance journalist Ian Ravendale Well known journalist Ian Ravendale veteran freelancejournalist Ian Ravendale Quick witted journalist Ian Ravendale Knowledgeable journalist Ian Ravendale freelance journalist Ian Ravendale long-established north east journalist Ian Ravendale respected freelance journalist Ian Ravendale busy Wearside journalist Ian Ravendale recognised freelance journalist Ian Ravendale respected journalist Ian Ravendale versatile freelance journalist tLanzarote expert Ian Ravendale Lanzarote proiperty and media expert Ian Ravendale Lanzartote journalist Ian Ravendale Lanzarote journalist Ian Ravendale Lanzarote expert Ian Ravendale Lanzarote property owner Ian Ravendale Lanzarote property owner and journalist Ian Ravendale Lanzarote property owner and broadcaster Ian Ravendale Lanzarote academic and researcher Ian Ravendale Lanzarote writer Ian Ravendale Costa Teguise writer Ian Ravendale Canary Islands journalist Ian Ravendale Lecuter and Lanzarote property owner Ian Ravendale
Spanish property prices (supposedly) grew by 12% over the last 12 months but
some overseas property investors think that the bubble is about to burst.
The Spanish Property Insight website for April 06 quotes the International
Monetary Fund's bi-annual report which argues that property prices in
Spain have risen more than is justified by economic fundamentals such as growth
in income, population and interest rates.The implication is that Spanish property prices
have been driven by speculative investment, rather than actual demand. Insight
also quotes Spain's Foundation ofSaving Banks forecast that Spanish Property price
inflation will decline gradually rather than crash and there will be no "hard landing". (2)
I've been observing the Lanzarote property market from 1999, which is when I
bought my first property there. From 1999 to 2004, prices went up on average
25% a year. So a one-bedroom apartment on a complex in Costa Teguise might
sell for £28,000 in 1999. A similar apartment on the same complex was selling
for £63,000 in 2004.
2004 was the year when the market slowed down, due, in my opinion, to
consumer value perception. £28,000 for a (admittedly fairly basic) holiday home
in the sun would be perceived by most people as a good deal. And one that
probably quite a few people could pay for without having to take out a
mortgage. £63,000 five years later becomes a lot less of a bargain, and a
purchase that would need to be more carefully considered and evaluated and
much more likely to require external funding.
Property began not selling. The Spanish philosophy is that property prices go up
every year, irregardless. It's not uncommon for Spanish owners to have their
property unsold for a year and then increase the price by 10%! A recent article
in Sur In English claims that apartments can take a staggering 32 months on
average to sell and that some owners looking to reduce this time are having to
slash their asking prices by up to 30,000 Euros! (7)
Mark Strucklin, in the May 2006 edition of Spanish Property Insight offers the
following explanation;
"The off-plan investors who so distorted the market between 2001 and 2004 and
who made up over 50% of the market in some areas (my estimate) have largely
disappeared. Buyers are now people looking for holiday homes or relocation
properties-end users rather than speculators/investors-who are fewer in number
and much more cautious about buying. At the same time, due to the absurd
number of housing starts in Spain in recent years, there is a glut of properties on
the market in many popular areas with off-plan investors and developers all
trying to sell to the reduced number of home buyers".
In Lanzarote at around the same time a downswing of tourism in established
areas like Costa Teguise was caused by some of the major holiday companies
investing in the newer resort of Playa Blanca, building large new hotels and
sending the majority of their package and all-inclusive holidaymakers there.
Some of the owners of complexes that had been mainly tourist, but also partially
residential (like the Tuscan in Costa Teguise) decided to get out and sold off
apartments at 30% below the market rate. They could do this as they had
close on 100 to get rid of! This influx of below-market rate property caused
the Lanzarote market to stall, particularly at the lower end.
Also, the German buyer disappeared around the same time, as they had in
Mallorca. But in the case of the Canaries, British buyers didn't move in to take
their place. (Source;; Message Board response, Mark Strucklin, Spanish
Property Insight, 2 March 2005) (8)
