Every two years, cities around the world can bid for a chance to host the biggest sporting event in the world: the Olympic Games. One of the many impacts the Olympics have on a host city is a major effect on the property market.
The 2028 Games will be held in California, with this being the second time the L.A city has hosted the Games since 1984. Despite cities usually undergoing major construction and real estate development, this is not the plan for the future host as they plan to welcome participants and spectators to the city as it is; however, prices within the property market may rise with the increase in demand.
Here are three things you might not realize about the impact of hosting the Olympics on property markets.
The Impacts of The Olympics on The Overall Economy
The Olympics have several benefits for the country where they’re held. Firstly, new job posts are created specifically for this event. Positions in retail and hospitality are increasingly sought during this time, considering the high number of tourists during this period. Countries also spend a great effort (and money!) on general improvements, which has the potential to increase overall tourism.
However, you may not be aware of the major setbacks this can have on the economy. Although there is a lot of money coming in, most countries end up spending more than they actually make, resulting in long-term debt that will require an increase in tax being paid by citizens and residents.
Understanding The Property Market
To understand how the Olympic Games affect the property market, you should first understand the property market in general. The housing market is affected by factors such as interest rates and the economic state of a country, as well as changes in population and demand. Major events like the Olympics provide an influx of tourism and demand that may increase the prices of houses in the hosting city.
If you want to purchase property in an Olympic host city, start by researching the overall market to have a grasp on the subject. Also, don’t forget that the market will differ from location to location, and so you’ll need to carefully analyze the area you are interested in.
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The Impact of The Olympics on Previous Hosts
If we want to know how the 2028 Olympic Games could affect California’s property market, we can analyze how hosting the Games has affected housing markets in previous cities. The Olympics do not always have the best impact on the city and country as a whole.
The 1976 Games, for example, were held in Canada and the debt associated with this was not fully paid until 2006. This is one such negative side effect of hosting the Olympic Games, and it can impact taxpayers significantly.
However, statistics suggest that smaller and less developed cities, such as Barcelona and Athens, are more likely to see the benefits. In 1992, Barcelona was elected to host the Games and the price of property in the city increased by 130% in the five years prior to the Olympics. This was mainly due to a renovation of the city (which included an improvement of the high-speed train, connecting the city to the capital) that promoted an increase in tourism to the location. A similar increase in property price in the five years prior to the Olympics was also experienced during the 1996 Atlanta Games, the 2000 Sydney Games and in Athens in 2004.
Another good example is London, where house prices increased by 26% once people became aware this was the chosen city to host the event. There was such a massive positive impact that even areas with a negative reputation surrounding the English capital saw a rise in property investment, and this continued after the Games.
So, it’s clear that the Olympics contribute to property prices as these tend to increase before the Games are held, although other factors (such as inflation and general market trends) also play a role.
