The rapid addition of new hotels threatens to slow down the construction of new housing, an economist with Arion Bank believes. Konráð Guðjónsson argues that the rapid addition of hotels to meet the needs of a booming tourism industry is straining the resources of the construction industry, making it harder to find workers to work on residential housing.
Read more: Hotelrooms in Reykjavik: too many or too few?
Konráð told the local news site visir.is that the slump in construction following the 2008 financial crash has created an overhang of unsatisfied demand. Demand for smaller apartments and rental properties is particularly high. Now, as new home construction is picking up, Konráð fears the rapid addition of hotels is straining the supply of construction workers, slowing down the addition of new residential housing.
“This all depends on how the construction industry respond. Currently the industry is running at maximum capacity. The issue is whether the sector is able to hire foreign workers. If foreign workers can be hired, the construction of new hotels does not necessarily need to impact the supply of residential housing.”
Read more: Labour shortage looming in the tourism and construction industries in Iceland
However, Konráð argues that the planned new construction of hotels comes very close to satisfying the projected increase in foreign visitors. Currently there is still a shortage of hotel rooms in Iceland, but if all projects which are in the works are completed on time the industry should be able to receive the two million foreign visitors annually which are predicted to visit Iceland in three years.
The rapid addition of new hotels threatens to slow down the construction of new housing, an economist with Arion Bank believes. Konráð Guðjónsson argues that the rapid addition of hotels to meet the needs of a booming tourism industry is straining the resources of the construction industry, making it harder to find workers to work on residential housing.
Read more: Hotelrooms in Reykjavik: too many or too few?
Konráð told the local news site visir.is that the slump in construction following the 2008 financial crash has created an overhang of unsatisfied demand. Demand for smaller apartments and rental properties is particularly high. Now, as new home construction is picking up, Konráð fears the rapid addition of hotels is straining the supply of construction workers, slowing down the addition of new residential housing.
“This all depends on how the construction industry respond. Currently the industry is running at maximum capacity. The issue is whether the sector is able to hire foreign workers. If foreign workers can be hired, the construction of new hotels does not necessarily need to impact the supply of residential housing.”
Read more: Labour shortage looming in the tourism and construction industries in Iceland
However, Konráð argues that the planned new construction of hotels comes very close to satisfying the projected increase in foreign visitors. Currently there is still a shortage of hotel rooms in Iceland, but if all projects which are in the works are completed on time the industry should be able to receive the two million foreign visitors annually which are predicted to visit Iceland in three years.
