The real estate growth hypothesis in tourism destinations

Abstract

This article proposes and theoretically develops the Real Estate Growth Hypothesis concept. It empirically investigates the connection between the expansion of tourism and the progress of real estate in Calp, an established tourist hotspot situated on the Mediterranean coast of Spain. Using annual data for the period 1967-2019 and a time series methodology that considers the possible nonlinearity of the relationship, the article draws conclusions from local and long-term perspectives. The results indicate that tourism causes real estate development, but only in the case of positive shocks. In view of this result, practical implications are outlined, and suggestions are made for managing tourist destinations.