Tourism Expedites Infrastructure Development

Tourism Expedites Infrastructure DevelopmentTourism Expedites Infrastructure Development

The increasing number of tourists traveling to the emerging markets is supporting the growth of real estate in developing countries.

To celebrate the United Nations’ World Tourism Day on September 27, the property platform explores how tourism affects real estate in the developing world, reported.

The relationship between tourism and real estate is interdependent. Tourism fuels some of the world’s largest real-estate developments. As more tourists flock to Iran, Indonesia, Sri Lanka and Mexico, these countries must develop their infrastructure to not only handle the capacity, but to attract more visitors.

Kian Moini, co-founder and managing director of global real-estate portal Lamudi, states: “As tourists arrive, demand increases for new developments, including restaurants, retail outlets and luxury hotels. Subsequently, international tourism is financially enabling the construction of these new projects, which in turn are attracting more tourists to the area.”

Statistics from the Bali Government Tourism Office reveal that in 2014, Bali welcomed 3.76 million tourists, a 14.89% increase from 2013. According to Knight Frank’s Wealth Report 2015, luxury real-estate prices have risen by 15% year-on-year.

As a result of growing tourism, an increasing number of investors are attracted to the region’s potential, investing in the development of commercial and residential properties to accommodate the influx of tourists.

The first half of 2015 saw an 8.9% increase in tourism in Mexico, compared to the same period in 2014. The country’s strengthening economy has created an attractive destination for international visitors.

These tourists are driving expansion and fueling demand for new developments. As a result, commercial real estate is gaining attention from international property investors, looking to benefit from new projects catering to the tourists’ demands.

Over the last few years, for instance, Ghana has taken giant strides toward improving its tourism sector. Statistics from the World Travel and Tourism Council indicates that tourism directly contributed 3% to Ghana’s GDP in 2013. Additionally, its total contribution was 7.2% of the country’s GDP and is expected to rise to 9% of GDP.

Recognizing the importance of tourism, the former president of Ghana, John Atta Mills, set up the Brand Ghana Office in 2012. This institution’s mandate is to make the country more attractive to tourists and investors.

Iran’s stagnant tourism industry is beginning to show signs of life, with officials claiming that five million foreign tourists visited the country in 2014—a marked increase on the 2.5 million visitors in 2013.

Thanks to the nuclear accord in July, which is expected to lift sanctions against Iran, and the government’s push for diplomacy to dispense with Iranophobia, a significant rise in inbound tourists to the Mideast nation is anticipated. However, underdeveloped infrastructure, including a shocking lack of quality hotels, threatens to hamper Iran’s efforts.

As the analysis by Lamudi shows, tourism boom and infrastructure development are involved in a positive feedback loop: An increase in tourist numbers leads to investments in infrastructure that help accommodate more tourists.

“The emerging markets are presenting new destination options, as tourism becomes increasingly affordable in these countries, compared with their western counterparts. As a result, real-estate developers must adapt and create new projects to meet the growing demand,” said Moini.

Every year, the UN celebrates World Tourism Day to highlight the importance of tourism and its social, cultural, political and economic value.