The Impact of Tourism on Orlando’s Real Estate Market

Orlando, Florida, known worldwide as the “Theme Park Capital of the World,” is synonymous with tourism. With attractions like Walt Disney World, Universal Studios, and SeaWorld, millions of tourists flock to the city annually, making it one of the most visited cities globally. But beyond the theme parks and resorts, Orlando’s booming tourism industry profoundly impacts its real estate market. In this blog, we will explore the significant effects of tourism on residential and commercial real estate, the growing demand for vacation homes, and how the short-term rental market has transformed the city.

1. Tourism Fuels Real Estate Demand

Tourism has long been a driving force in Orlando’s economy, and its ripple effects are clearly visible in the real estate market. In 2023 alone, over 70 million visitors descended upon Orlando, making it one of the most-visited U.S. destinations. This constant influx of tourists translates into increased demand for both short-term and long-term accommodations, driving the need for residential properties, hotels, vacation rentals, and investment properties.

For investors, Orlando is a prime location for real estate, offering high rental yields and steady appreciation. As tourism numbers continue to grow, more investors are flocking to the city, purchasing homes to cater to both tourists and long-term residents. As of 2024, property values in Orlando continue to rise, with the city seeing an 8.7% year-over-year increase in home prices, partly driven by the demand from out-of-state investors and international buyers .

2. Vacation Rentals on the Rise

The surge in vacation rental platforms like Airbnb and VRBO has revolutionized Orlando’s real estate market. Tourists seeking alternatives to traditional hotels are increasingly choosing vacation rentals, fueling demand for short-term rental properties. This trend has led to a spike in property acquisitions specifically for vacation rental purposes.

a. Popularity of Short-Term Rentals

In the past few years, Orlando has become a hub for short-term rental properties, with many investors purchasing homes solely for this purpose. As of 2024, there are over 20,000 active Airbnb listings in the Orlando area . Properties close to major attractions, such as Disney World or Universal Studios, are particularly attractive for vacationers, and homeowners in these areas can command high nightly rates, especially during peak seasons like summer and holidays.

b. Legal and Regulatory Landscape

However, the short-term rental market has faced regulatory scrutiny. To ensure these rentals don’t negatively impact local communities, certain cities and counties in the Orlando metropolitan area have implemented restrictions on short-term rentals, requiring homeowners to obtain licenses, pay taxes, and adhere to occupancy limits. Despite these regulations, the appeal of short-term rentals continues to drive real estate transactions, with investors seeing Orlando as a lucrative market to operate vacation homes.

3. The Influence of Foreign Investors

Orlando’s real estate market has long been attractive to foreign investors, thanks to its thriving tourism industry. International buyers, particularly from Canada, the United Kingdom, and Latin America, view Orlando as a prime location to invest in real estate. These buyers often seek vacation homes that they can use for part of the year and rent out to tourists the rest of the time.

According to the National Association of Realtors, international buyers contributed $11.5 billion to Florida’s real estate market in 2023, with Orlando being one of the top destinations . The city’s growing tourism numbers, coupled with its relatively affordable real estate compared to global markets, make it a compelling option for international investors.

4. Residential Communities Near Attractions

Tourism has also significantly impacted the development of residential communities around Orlando’s major attractions. Areas like Celebration, Lake Buena Vista, and Davenport have seen rapid growth due to their proximity to theme parks and entertainment districts.

a. Appeal to Homebuyers

Many homebuyers are drawn to the idea of living near Orlando’s tourist hubs, both for the convenience of visiting attractions and the potential for rental income. For example, Celebration, a master-planned community originally developed by The Walt Disney Company, remains a sought-after neighborhood for both full-time residents and vacation property buyers. The charm of living near Disney World, with the added benefit of potential rental income, makes properties in these areas highly desirable.

b. Infrastructure and Development

To support the growing population in areas surrounding Orlando’s attractions, there has been significant investment in infrastructure, including road expansions, new schools, healthcare facilities, and retail centers. This growth benefits both tourists and residents, contributing to an overall increase in property values. The ongoing development of mixed-use communities designed to cater to tourists and long-term residents alike has made these neighborhoods more self-sustaining, further driving real estate demand.

5. Commercial Real Estate Growth

While tourism greatly influences the residential market, it also has a profound effect on Orlando’s commercial real estate sector. Tourism-driven development has led to an increase in hotels, retail centers, and entertainment venues.

a. Hotel and Hospitality Industry

With millions of tourists visiting Orlando each year, the hotel industry continues to expand. In 2023, over 4,000 new hotel rooms were added to the market, catering to the growing demand . This trend is expected to continue as developers seize opportunities to build new hotels near key tourist areas, particularly along International Drive and near Orlando’s major theme parks.

b. Retail and Entertainment Spaces

Tourism has also spurred the growth of retail and entertainment spaces throughout the city. Malls, outlet centers, restaurants, and entertainment complexes like ICON Park have proliferated to cater to the needs of both tourists and locals. As tourism numbers increase, so does the demand for commercial real estate, creating jobs and fostering economic growth.

6. Seasonal Swings and Economic Resilience

One of the unique aspects of Orlando’s real estate market is its seasonal nature, driven by tourism peaks and lulls. During peak tourist seasons, such as summer and the holiday season, rental demand soars, allowing property owners to charge premium rates. However, during off-peak periods, some vacation rental owners may experience vacancies, making it crucial for investors to plan for these fluctuations.

Despite these seasonal swings, Orlando’s economy remains relatively resilient due to the steady flow of tourists throughout the year, supported by year-round attractions and events. This resilience extends to the real estate market, as the constant influx of visitors creates consistent demand for both residential and commercial properties.

7. Long-Term Impacts of the COVID-19 Pandemic

The COVID-19 pandemic had a temporary but significant impact on Orlando’s tourism and real estate markets. With theme parks and tourist attractions closed or operating at reduced capacity for much of 2020, the short-term rental market experienced a dip, and many property owners faced vacancies. However, as travel restrictions eased and tourism rebounded, the real estate market quickly recovered.

In fact, the post-pandemic recovery has led to increased demand for vacation properties and second homes in Orlando, as travelers now prioritize destinations with outdoor activities and family-friendly entertainment. This shift in consumer preferences has helped Orlando’s real estate market bounce back stronger than ever, with both domestic and international buyers keen to invest in the city’s thriving tourism-driven economy .

Conclusion

Tourism plays a pivotal role in shaping Orlando’s real estate market, influencing both residential and commercial sectors. The steady flow of visitors creates constant demand for short-term rentals, vacation homes, and investment properties, while also driving the development of residential communities and commercial real estate near major attractions. Investors, both domestic and international, continue to see Orlando as a prime destination for real estate investment, drawn by its strong tourism economy and growth potential.

While the market does experience seasonal fluctuations, Orlando’s resilience, infrastructure improvements, and evolving tourism industry ensure that its real estate sector remains robust. Whether you’re a homebuyer looking to settle near the theme parks or an investor seeking rental income, Orlando’s tourism-driven real estate market offers numerous opportunities.