Aruba’s Housing Crisis III: Ensuring locals are not left behind
Aruba’s Housing Crisis III: Ensuring locals are not left behind
I have previously written two columns on Aruba’s housing crisis. “Aruba’s Housing Crisis: Why Foreign Investors and Vacation Rentals are Driving Prices Up for Locals and Aruba’s Housing Crisis II: Airbnb-type Owners & Abuse of Policies and Subsidized Rates Last week attended a Comerciantenan Uni di Aruba business network event, where I had the privilege of hearing the keynote speech delivered by Mr. Geoffrey B. Wever, Minister of Economic Affairs, Communication, and Sustainable Development. I wrote a commentary on his speech as well.
In these columns, I highlight the impact of foreign investors and vacation rentals on driving up prices for locals. This makes it more difficult for locals to find affordable housing. I have also pointed out Airbnb-type owners’ abuse of policies and subsidized rates. I agree with the minister’s conclusions that economic growth, including the fabulous tourism numbers, has not benefited the community for a while because the GDP per capita remains stagnant.
The algorithm
The economic growth year-by-year is diminishing the benefits per capita. If I am right, that means the algorithm is: the more economic growth due to tourism, the less the locals benefit from the economic growth — a downward spiraling circle. In terms of housing, this means that the locals will make less and less and make their dream of owning their home nothing more than an illusion.
The vision of our pioneers
I have been fortunate (or lived long) enough to have met many of our tourism pioneers. The vision of our tourism pioneers was not to put our island in foreign hands but rather to bring tourism to the island to benefit the local economy for the locals. Why else would Aruba spend time, money, and effort developing tourism if not to benefit the locals?
Why tourism?
The tourism industry was meant to create opportunities for our community, not to displace them. It was meant to create jobs for them, provide a good living, and allow them to have their own home, not be outbid by foreigners when buying property. As long as we prioritize tourism as a key driver of our economy, we must also ensure that it benefits our local population and that, where necessary, we build firewalls to protect our locals.
More leaders should realize that our path if our algorithm is right, is a path of downfall. I am not alone in these thoughts. A while back, one of our tourism pioneers shared the following analogy with me describing our tourism.
“Our tourism initially seems like this cute little lion puppy; we take care of it, feed it, and nurture it. It cuddles us back and gives us warmth, love, and entertainment. As he grows, he will require more and more space. His meals have become more frequent and bigger. He will grow, grow and grow, and we will proudly watch him grow until one day we can’t give him enough food, he becomes famished, and he will turn around and eat us!”
We have a responsibility too.
Our leaders and community need to recognize that our locals, people, and especially the younger generation are at risk of being left behind. Despite having good jobs and education, they will continue to need help finding affordable homes in the neighborhoods of their choice. They can’t compete with the deeper pockets of foreign investors. We could even ask ourselves: if we didn’t already own our house, would we be able to buy it if it came on the market?
Local property managers and realtors are driven by earnings and commissions, incentivizing them to manage for or sell more homes to foreigners. While we can all understand the commercial’s motive, they must also consider that they make it harder for locals to access the housing market.
Bigger airport & more rooms
The 2030 gateway airport gateway project is on the way. The projection is to increase the capacity of the airport by 15%. The plan is it get more tourists in. Meanwhile, we are adding more hotel rooms. My simple math tells me we will add more than 2,000 new hotel rooms in the next three years. If I go back to my algorithm, this will exacerbate our housing crisis. It is coming, brother; the writing is on the wall.
Ok, but forget the locals for a moment. What happens if we have 2000 plus hotel rooms ready by 2027, but the airport expansion won’t be done until 2030? Won’t we have an inventory surplus? What do we do with those rooms? Drop prices? Compete with the existing rooms? If the answer is yes, the Average Daily Rate (ADR) will go down, and our GDP per capita won’t pick up either.
Can we handle it?
Back to more airport capacity and more rooms. This growth will further strain our infrastructure. Can we handle it? What happens when those 2000-plus rooms come online early in the morning, and every toilet is flushed twice? Can the existing (and old) sewage pipes handle the extra capacity? Will the new rooms be required to pay for and run a separate pipe for this floor to Buabli Plas? Can Bubali Plas even handle the extra flow?
Our community and our policymakers must be mindful of these developments, take steps to ensure that the right growth paths are taken, and ensure locals are included. This again raises the question if this is what the tourism pioneers intended.
What can we do?
So, how can we address this housing crisis and ensure our community is not displaced? I am not Übersmart, but I may have some ideas:
- We should limit foreign property ownership in Aruba. We need to adopt policies prioritizing locals in the housing market, such as giving them priority in purchasing homes, limiting the number of properties that non-locals can own, and imposing higher taxes on vacant homes or vacation rentals.
- We must create a transparent and accountable regulatory framework for vacation rentals, Airbnb-type owners, and property managers. We must ensure that these businesses comply with regulations, pay all taxes, and do not abuse subsidies or policies designed to support affordable housing.
- We must invest in affordable housing solutions that meet the needs of our community. We must provide incentives for local developers to build affordable homes, such as offering tax credits, reduced interest rates, and removing the red tape in government.
- We must prioritize the needs of our locals in all policymaking decisions. We need to voice our concerns to the policymakers, engage them in decision-making, and ensure our voices are heard. Doing so can ensure that our community thrives and that the next generation has a place to call home.
Conclusion
Aruba’s housing crisis is a complex issue that requires a multifaceted approach. We must limit foreign ownership, invest in affordable housing, create a transparent regulatory framework, and prioritize the needs of our locals. As a community, we must unite to ensure that the next generation has a place to live and that we do not leave anyone behind. Only then can we achieve sustainable development and a prosperous future for all.
