With more wealthy western Europeans and Americans buying second homes abroad now than ten years ago and with the trend predicted to last for at least the next fifteen years, embedded tourists are flooding certain destinations, boosting local economies but at the same time pricing local buyers out of the property market.
In parts of France and Spain local campaigners are fighting the foreign invasion, in parts of Asia and the Middle East governments are creating incredibly competitive incentives to attract a foreign invasion.
So are embedded tourists an economic enemy or a welcome investor?
Embedded tourists are those people who own second homes abroad and who holiday in them for weeks months, or even years at a time. These individuals are not expatriates as they retain residence elsewhere, and yet their propensity for the extended holiday means that they are often absorbed into the local culture as if they were a permanent part of the community.
Many of these people eventually emigrate or retire to their second home and take up official and formal residence there, but until they do they are tourists embedded in the local culture who come and go with the seasons.
In Brittany, British second home owners make up a significant percentage of the local population, they undoubtedly boost the local economy as they don’t derive an income from it and yet remit a fair percentage of their wealth to it, they pay property and local taxes where applicable and they bring new people to the community with them who in turn further boost the economy. However, these Britons have been directly responsible for a staggering 25% increase in property prices in the region which has effectively priced a wide band of local people out of the market. Property that is considered affordable by Britons who have built up massive equity in their UK homes and who benefit from significantly higher potential incomes is simply property that is unaffordable to the very people who live permanently and work in the community that the property is situated in.
This has led to a backlash with locals demanding restrictions be placed on foreign buyers and with some estate agent offices being daubed with anti-British slogans and some embedded tourists being made to feel decidedly unwelcome. This negative situation has become known as the “Aspen Effect.”
In Aspen - the incredibly trendy and affluent Colorado ski resort particularly beloved of the American rich and famous - only 16% of local residents can afford to shop for their groceries in the town. Needless to say these people cannot afford the average 2 million dollar price tag for a house in the resort and they are forced to move further and further away from both their roots and their workplace. Of course, there is a positive side to all this - the average hourly rate for a cleaner in the resort tops USD 30!
Embedded tourists in resorts like Aspen are untouchable and don’t ever get to feel the heat of the locals’ resentment whereas those ‘average’ second home owners in Tuscany, Provence and now Brittany who have made the regions fashionable, desirable and unaffordable are loved for their money and hated for their presence in equal measures and in growing numbers!
So where then are the embedded tourists likely to head next? Turkey and South Cyprus are attractive…both countries have been swift to change laws to restrict foreign property ownership. Eastern Europe? Also growing in attraction, also with certain laws in place to restrict foreign ownership of property!
So where then are the embedded tourists welcome? Where will they be seen as a blessing rather than a curse and where will they find that temporary home away from home in an ideal overseas location? Egypt, Malaysia, Antigua and Dubai are all areas working hard to provide incentives to attract inward foreign property investment - from massive taxation breaks to renewable residency visas and investor protection schemes.
It seems that potential second home owners still have plenty of choice when seeking that perfect escape from dreary climates, stressful working conditions and expensive and restrictive property markets then. And it seems that actually, even in areas like Brittany, Turkey and Aspen these embedded tourists are only resented by the minority. These second home owners are not speculators keen to make a quick killing from a foreign property market; they are in it (home ownership) for the long term. They don’t detract from an area’s attraction; they don’t steal jobs and opportunities from the local workforce, they bring inward investment, positive international focus and a fair degree of economic stability.
For those who have been priced out of the local housing market the embedded tourist is an economic enemy: for the local government, local businesses and long term economic health of the region these long term tourists are welcome investors, welcome visitors and welcome to return year after year.
