According to research, it was previously believed that housing prices were positively impacted by the growth of tourism around a location. But recent developments and findings show that the impact varies from place to place and also depends on the type of tourism around the area. Yes, tourism and the rise of the hospitality business most definitely help boost the local economy and the overall GDP of the nation, but it has other impacts too.
It disrupts the lives of the locals, the price of houses increases around them, and many places are overtaken by non-local, commercial businesses to boost tourism. What are they? There is only so much space left on our lands, and with the advance of tourism, many residential areas are being converted into tourist spots.
Housing affordability has been a forever issue in the US and European real estate market. And both of these places are quite popular tourist destinations as well. This is making it increasingly difficult for the average working-class, young, and low-income group to afford houses near their workplaces or even inside the city. The number of houses being built is much lower than the required amount.
For example, according to official records, New York had 500,000 new migratory residents between 2009 and 2018, but it built only 100,000 new housing units. Where did the rest go? Such big cities are major tourist attractions, too; New York alone hosted more than 66 million tourists in 2019. There might be enough houses to house migratory residents, but is there enough space to house tourists? Know more about how your everyday tourism is affecting the real estate market and what you can do about it.
Tourist Hotspots Raise Local Housing Prices
Many local residents stand the chance of being outpriced out of living in urban areas due to the massive growth of tourism. Not only does this cause a problem for locals, but it also causes a massive hindrance for the low-paid workers in the hotels and other facilities around these areas. However, they are used as workers in this hospitality industry; they hardly find any affordable places to stay, making it harder to reach work.
New research by the Office of National Statistics (ONS) has shown that housing prices in the UK showed a steep rise in 2021 around tourist spots like coastal areas and some rural areas. It increasingly becoming a cause of concern for low-income groups.
Real Estate Being Reimagined in Tourists Spots
At tourist hotspots, real estate is being changed and reimagined in many different ways. Here is a quick view of the significant changes that are happening and the ones affecting this shift.
More properties and land allotted for hotels
Tourism brings in instant profit, and hence many real estate owners, be it building owners or property owners, are now reassigning their resources towards tourism real estate. The transaction in tourism and hospitality is quicker, and this industry is booming. But this has a highly negative impact on the land, and the effects are long-term and harm the environment in more ways than one. According to statistics published by The World Counts, tourism alone degraded more than 1,747,493 square kilometers of land to date. Added to that, the carbon footprint of tourism alone is more than 8%, and most of it is not eco-friendly.
Residential houses converted to BnB
According to Forbes news reports, each 1% increase in Airbnb listings leads to an instant 0.018% increase in rents and a 0.026% increase in local house prices. These numbers are scary for residential tenants and house owners. Why? New Airbnb properties are listed every other minute, and if the property prices keep increasing in relation to them, soon they will be off the roofs.
Furthermore, AirBnb is not the only form of BnB in the market. As tourism brings in instant profit for people in travel-friendly locations, many residential buildings are being fast converted into BnB homes. Locals are losing out on their chances at affordable housing, and the pressure on tourism keeps increasing.
Excessive tourism makes real estate non-sustainable
Though there have been numerous efforts to make tourism real estate sustainable and make the industry more eco-friendly, is it really possible? Tourism is growing much faster than the world economy and it is very easy for the whole industry to become harmful to the environment and use non-sustainable materials for construction. When tourism becomes excessive, most developers and real estate businesses start using cheap, non-sustainable products to keep up with the rising demands.
As a property manager or construction manager of real estate, you can help this situation and make it a little better. You can easily integrate construction management software like Procore to stay on top of all environmental compliances.
You can keep track of the sustainability of your projects and do your part in helping the environment even while you develop your tourism real estate properties. You can take this effort a step further and use eco-friendly construction material to build your properties and bring down the overall carbon footprint of the tourism industry.
How can we do it better?
To strike the right balance between real estate tourism and residential real estate, as property managers or real estate developers, you need to make investments in affordable housing plans around tourist hotspots. This will help your tourism industry survive and make housing more affordable for low-income, young employees of the hospitality industry. These people not be driven out of their own localities, while the tourism business can also thrive at the same time.
To make a proper plan to streamline your management process, you need to boost your strategy and leadership. Even if you are in the tourism real estate business, your C-suite executives need to revisit their growth plans and make construction eco-friendly and management more sustainable. You need to branch out your strategies to make a holistic plan to include people from all sections. You can use the MRI software to manage affordable housing, automate the whole management process, and free up your valuable time to focus on other business matters.
At Assetsoft, we can help you integrate multiple different software and also help in better technology selection in project management to stay on top of all tech trends. Talk to us today to know more!