The cultural and commercial center of Iceland
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The center of Iceland’s culture, business and government, Reykjavik is not only the island country’s capital but by far its largest city. Once a sleepy and isolated settlement, today Reykjavik has been one of the main beneficiaries of Iceland’s massive tourism boom and it is where almost all visitors to the nation first arrive. With one of the highest qualities of life in the world and plenty of things to see and do, Reykjavik holds a lot of promise for real estate investors.
Culture, History, and Business
Reykjavik is the oldest settlement in Iceland, having been established by Norsemen in AD 870. The name Reykjavik, which loosely translates to “Smokey Cove,” is testament to the area’s hot springs, which are believed to have first attracted the first Norsemen due to their warmth. For most of its history, the Reykjavik area was a small farming community before it began to grow into a town in the 18th century. In 1845 the Althing, the world’s oldest parliament, was moved to Reykjavik and the city grew significantly during the 20th century.
In 2008 Iceland suffered greatly as a result of the financial crisis, with its entire banking sector collapsing. However, since then the economy has rebounded spectacularly, largely due to massive increases in tourist numbers. Today, Iceland is one of the world’s premier tourist destinations, with people all over the world attracted to the country’s hot springs, glaciers, and other natural wonders. Reykjavik, with its international airport, attractive old town, and many museums, has been one of the biggest beneficiaries of that tourism boom.
Real Estate Appeal
Real estate values in Reykjavik have risen at a phenomenal rate during the tourism boom, with many investors looking to convert properties into short-term rentals catering to visitors. However, there are signs that the tourism sector—and thus the real estate market—are beginning to cool down. That makes the future of Reykjavik real estate investment less of a sure bet than it has been even a few short years ago.
While it is unclear what will happen to the market in the short-term, there is still plenty of promise in Reykjavik real estate long-term. The country is likely to continue to be a popular tourism hotspot, and the economy is certainly in much better shape today than it was just prior to the 2008 crash. With property prices looking like they may begin to decline, soon may present a chance to enter what has otherwise been an unaffordable market.
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