Those who stay here for more than 60 days contribute 3.8 per cent to GDP and 2.1 per cent to employment just through their consumption.
There has been a great deal of talk about residential tourism, its importance to the economy, its controversial aspect with regard to the hotel sector and urban development and its impact on the property sector, but there has also been a lack of figures to show what this movement of foreign tourists means to the Costa del Sol.
These people live on the coast for prolonged periods or stay for more than 60 days in properties in which they have invested, in some cases, absolute fortunes. This type of traveller, or investor, was hardly taken into account until recently. In fact, businesses in the residential tourism sector are calling on the administrations to be more aware of this flow of tourists and they say there is a need for a taxation system which will keep those who have already invested here happy and attract new foreigners who want to buy a house in this area.
A first report on ‘The socio-economic impact of residential tourism and foreign residents’, which was presented at a recent forum organised by SUR and Garrigues, in collaboration with the Provincial Association of Constructors and Developers, the National Association of Deveopers, the Association of Residential and Sports Tourism (Promotur), Economic Analysts of Andalucía and the Sierra Blanca group, estimates the wealth brought by foreign tourists who stayed in their own accommodation last year to be about 12.5 per cent of the GDP of Malaga province and its impact on the global employment of the Costa del Sol is almost seven per cent. Those who stay here for more than 60 days contribute 3.8 per cent to GDP and 2.1 per cent to employment just through their consumption, as José Antonio Muñoz López, an economist and part of the team at Analistas Económicos de Andalucía, explained at the forum. These percentages mean that the foreigners who stayed in houses or apartments created economic movement of almost 3,500 million euros and generated 37,853 jobs last year. This expert says that those he defines as residential tourists, because they stayed for longer periods, generated production of more than 1,000 million euros and 11,343 jobs.
Weight in tourism
This contribution by foreign residential tourism to GDP is about half of the contribution made by tourism in general to the Malaga economy, which José Antonio Muñoz López quantified as 26.8 per cent, based on the impact of spending by tourists in the province, which produced 7,500 million euros of economic activity last year. The tourism industry also generated 82,690 direct and indirect jobs, which was 15.2 per cent of the total. Foreign tourism in Malaga was responsible in this case for 19.8 per cent of GDP and 11.5 per cent of employment.
This economist based his conclusions on the fact that last year 4.3 million tourists stayed in hotels (16 million overnight stays) and 2.1 million stayed in their homes (68.3 million overnight stays). Of the latter, 750,000 of the tourists were foreigners, and they accounted for 41.6 million overnight stays.
He also stressed the impact that this flow of foreign residents has on the construction and property development sectors and on the population, pointing out that because these international travellers who stay long-term feature on the local population registers, they increased the number of inhabitants by 9.4 per cent last year.
In terms of their effect on the property sector, the 163 million euro investment made by foreigners and non-residents in new property last year generated around 2.7 per cent of GDP and 1.1 per cent of employment. José Antonio Muñoz López also quantified the consumption of foreign residents in Malaga, saying it was responsible for 14.4 per cent of the wealth of the province and 6.1 per cent of jobs.
Signs of recovery
If the figures surprised those attending the forum, the president of the Association of Constructors and Developers of Malaga, José Prado, pointed out that if they were applied to the level of activity in 2006, they would triple. He said that within the investment generated by non-residents in Spain, that in properties for tourism or residential use occupied third place between 1997 and 2008, which was 25 per cent of the total. “That shows the importance that it has had in our balance of capital”, he pointed out. But he also said that Spain received a total of 57.7 million tourists in 2012 and 20.2 million of them chose not to stay in a hotel. “On the Costa, we just have to look at the fact that between January and October this year, 566,430 passengers arrived at our airport from Germany and that is 30 per cent more than in 2012. Of those Germans, 51 per cent, or 280,000, chose to stay in a home which they use for holidays, the so-called residential tourism”, he stressed.
Ricardo Arranz, the president of the National Association of Developers and Residential Tourism, warned that the sector is beginning to come out of the crisis, but it has not done its homework. He considers that there is a need to set up a plan to reinforce the value of this destination, with an airport that can handle 30 million passengers and a road network that enables tourists to be skiing in the Sierra Nevada in just over an hour and a half, as well as about 20 prestigious international schools and 70 golf courses.
For his part, Pedro Rodríguez, the president of the Sierra Blanca group, stressed the power of this sector in terms of generating wealth and said that in 20 years the different residential developments on the Costa del Sol had generated investment of between 1,500 and 1,600 million euros and had maintained about two thousand direct jobs and almost double that number in indirect jobs. “At the moment, this sector guarantees the employment of 1,000 people”, he said, and more than half of the people who work in tourism are employed in the residential sector.
Ramón Dávila, the president of Promotur, who stressed at this forum that there needs to be a great deal more communication about the importance of the residential tourism sector, even pointed out that a foreign resident on a residential development in Marbella generates more employment than a small or medium-sized business, of which there are a great many in Malaga province. He pointed out that the foreigners who own a property in the residential developments in Marbella usually employ two or three people to work in the house or garden and in some cases, which are not exceptional, they employ as many as eight members of staff. “Residential tourism is a unique phenomenon on the Costa del Sol and carries a weight of 40 per cent in Andalucía”, he said.
The stigma of residence
Residential tourism is a sector which, due to several factors, has suffered from a stigma for decades and this is something that businesses in the sector believe should now be eliminated. Firstly, because with the economy the way it is, neither the destination nor the country can permit themselves the luxury of demonising an activity that generates wealth in tourism and the construction sector, radiating benefits for a number of sub sectors which, with the long drawn-out crisis, have few other business opportunities than those provided by the movement of foreign tourists who stay in their own properties or reside on the Costa del Sol for more than 60 days a year. And secondly, because neither are the administrations’ coffers in any fit state to put at risk a flow of investors from whom, if they are looked after, a great deal can be obtained. Maybe they have not really understood the equation of the effect that a reduction in the current fiscal pressure could have, a pressure that can even result in asphyxia, because the foreigners are thinking twice about coming here to live.
There are several reasons to act, and to do so quickly and with the awareness that there is a lot to lose. Residential tourism is showing signs of recovery, the markets are still looking at the Costa and the profile of the new residents is more interesting because these are professionals who choose to come here to live and who can run their businesses abroad from their second homes, thanks to new technologies and increased air connections. Matters such as having to declare to Hacienda all the assets they own abroad, with large fines if they fail to do so, and the high rate of taxes such as wealth tax, which does not exist in the EU, and inheritance tax, are like putting the brake on a high speed, long distance train that would benefit Spain. Such a lack of awareness by the authorities here means we could lose out to nearby countries such as Portugal.