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Real Estate and the Winter Olympics

Posted March 8, 2010 by Matthew Denton

These three lessons should be learned by host cities.

No sore loser can still succeed after the Olympics but in the case of host cities, there’s no room for complacency at all. That’s because there are no positive results of how the Olympics can impact a host city’s real estate market according to some recent studies. The Vancouver Winter Games can prove just that. They may “Own the Podium” but they won’t be guaranteed of owning the market.

Prior to any Olympics, momentum naturally builds up and this ignites the curiosity among homebuyers to check out if the city can be an ideal place for their home. But clearly, there’s no direct relationship between hosting the Olympics and creating a significant impact on the property market. In Vancouver’s case, NuWire Investor reports, “The upcoming Olympic Games, local experts agree, has little to do with the recent surge. Low interest rates and pent up demand fueled sales, they say. Vancouver’s natural shortage of developable space also serves to artificially inflate prices, keeping Vancouver among Canada’s most expensive cities, even in down times.”

And don’t forget about the highly publicized recent sale of the Whistler Blackcomb, the ski resort where the alpine events of the Games took place. The owner of the resort is running a $1.7 billion debt and as of this writing, it’s currently in talks regarding refinancing options.

Finally, a group of Canadian researchers have concluded that no impact is absolutely seen in real estate made by Olympic events. Real estate professor Tsur Somerville and his team analyzed housing prices and construction employment in the years leading up to and after the Olympics in the Atlanta, Los Angeles and Sydney for Summer Olympics, and Calgary, Alberta, Salt Lake City and Vancouver for the Winter Olympics. Speaking to UPI.com , he concludes, “We do not find support for the argument of host city backers that the Olympics delivers positive economic benefits, nor of the arguments made by opponents that there is some post-Olympic bust. Our results conclusively demonstrate that while construction employment dramatically increases in the period prior to the Games, house prices are the same as they would be in the absence of the Games.”

Therefore, a 2007 report by Guarant-InfoCentre that believes there’ll be gains in real estate in Sochi by the time it hosts the next Winter Games in 2014 is somewhat ambitious for me. It has not stated who the analysts are but they can guarantee that real estate prices will go up by 40 to 50 percent within the next two to three years. And what’s more surprising is they’re predicting it can go as high as 25 percent in Moscow.

Talk about overconfidence. Anyway, the Russians’ poor showing in the recent Games has prompted its president to check its sports development. Perhaps, they’ll be looking forward to building more properties too if they want to prove this report and don’t want to react like Plushenko did in Vancouver.

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