Last year, we published an article titled “Things to Consider When Investing in a Beachfront Property.” In this piece, we identified several factors an investor should consider before making an investment decision in coastal real estate. One of the most important factors we highlighted was the neighborhood and community where the property is located. We noted that these assets tend to appreciate in value, even in the absence of infrastructure, as long as the local community is known for its vibe, safety, and local culture. However, recent developments in the tourism and hospitality sectors have shifted the focus towards sustainability. Environmental awareness among tourists is on the rise, and investors must now assess the perspectives of local government and its residents towards environmental sustainability.
It is also essential to evaluate the presence and capacity of essential infrastructure in rural areas with the potential for tourism growth. Modern utilities, such as wastewater treatment facilities, extensive drainage systems, and reliable power grids, are critical in supporting the quality of life in the area. Therefore, the availability of these structures is essential not only for the growth of the local economy but also for the well-being of the local community and the surrounding environment. Ignoring the importance of necessary infrastructure puts an investor at risk, as the profitability of their investment may be compromised when major problems arise due to the lack of infrastructure. In some cases, it may lead to complete financial failure.
In 2018, the negative impacts of over-tourism and uncontrolled development were vividly demonstrated in Boracay, El Nido, Coron, Panglao Island, Siargao Island, and Puerto Galera. These destinations are renowned for their natural attractions, but their local infrastructure and environmental capacity were frequently overwhelmed by high visitor numbers.
In certain locations, the modern utility infrastructure proved to be insufficient in handling high volumes of wastewater generated by increasing tourist arrivals. The situation is further compounded by the wastewater generated by local residents, resulting in the frequent spillage of untreated effluent into nearby coastal areas.
To add to the issue, many establishments lacked their own sewage treatment facilities. Meanwhile, some were not even connected to the local drainage system. As a consequence, human wastes were directly discharged into the beaches, thus further exacerbating the problem. In some areas, the situation was even more dire, as there was a complete absence of sufficient treatment facilities that should have catered to nearby developments.
Overall, the culmination of unregulated and unsustainable practices resulted in the accumulation of untreated wastewater in coastal areas. This, in turn, created an ideal environment that facilitated the rapid proliferation of pathogenic microbes, such as Salmonella sp., and Escherichia coli. As they continued to propagate, presence of these pathogens increasingly posed significant health hazards for local residents and visiting tourists. Consequently, exposure to such pathogens caused skin infections and gastrointestinal illness. As the cases soared, it took the attention of local authorities and government agencies, particularly the Department of Environment and Natural Resources (DENR).
The investigations that followed revealed that numerous establishments violated several environmental laws such as the Clean Air Act, Clean Water Act, Water Code of the Philippines, and Environmental Impact Statement System. In addition, it was found that some businesses failed to secure the necessary permits, such as the Environmental Compliance Certificate. Consequently, hundreds of residential, commercial, and hospitality properties were issued eviction notices and forced to self-demolish. In some cases, legal actions were initiated to cancel land titles issued by local government units (LGUs) through reversion cases filed in court.
The consequences of unsustainable tourism and uncontrolled development has highlighted the need for the implementation of sustainable management plans and application of sustainable practices. Therefore, when considering a beachfront property for investment, it is crucial to assess the long-term plans of the local government regarding infrastructure that supports not just the local community but also the influx of tourists that will visit in the future. Moreover, assessing the attitude of the local community towards environmental sustainability is equally important since this can influence the profitability and eco-friendliness of the area.
For savvy but cautious investors, it is insufficient that only a few establishments implement sustainable management and development principles in the greater coastal area. If a large majority are unsustainable, it would significantly impact the business of sustainable establishments. Thereby compromising the overall profitability of a potential investment. Hence, in addition to assessing the attitude of local residents, it is crucial to determine whether the existing establishments that operate in the area of interest reflect sustainable principles. This can be accomplished by taking a stroll on the beach and observing the level of pollution in the area as seen by the naked eye. In addition, an investor can also evaluate the travel sustainability levels of existing establishments on popular travel agencies such as Agoda and Booking.com.
Investing in waterfront real estate is not just about acquiring and developing a piece of land. It is also about understanding the environmental and social impact of your investment on the local community and surrounding environment. By adopting sustainable development practices and partnering with like-minded stakeholders, investors can create a win-win situation where they can achieve their financial goals while also contributing to the sustainability and eco-friendliness of the area.
Written By Kevin Kyle B. Santos
Aviso Valuation and Advisory Corp. is a real estate consultancy firm that offers valuation and business advisory services compliant to international standards such as the International Valuation Standards (IVS) and International Financial Reporting Standards (IFRS). To assure that we only produce high-quality deliverables, as needed, we do tasks beyond the usual appraisal process like verifying pertinent property documents (i.e. land titles, tax declarations, etc.) with the appropriate government agencies for due diligence purposes prior to the acquisition of the properties.
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References:
- https://globalnews.booking.com/bookingcom-celebrates-one-year-of-travel-sustainable-with-new-product-features-for-accommodations-rental-cars-and-flights/
- https://partner.booking.com/en-gb/travel-sustainable
- https://partner.booking.com/en-gb/solutions/advice/sustainability-solutions
- https://partner.booking.com/en-gb/help/guides/sustainability-hospitality-handbook?fbclid=IwAR3_Ze62S_qFzuPsa4de4jYjvuHHZwAJzX4TN4NiM7qIGdOc0TDk4_4CksQ
- https://opinion.inquirer.net/161561/tourisms-road-to-recovery
- https://www.rappler.com/nation/205048-list-tourist-destinations-for-rehabilitation-after-boracay/
- https://askaviso.com/aviso-library/things-to-consider-when-investing-beachfront-property/
- https://www.unwto.org/sustainable-development
