An influx of digital nomads to major cities in Latin America has raised alarms about increased rents, displacement, and gentrification.
Digital nomads, or remote workers who lead a location-independent lifestyle and settle temporarily in various places, make up approximately 35 million people across the globe. According to Nomad List, an online travel resource for digital nomads, these workers’ top 21 “Most Liked Places in Latin America” include Buenos Aires, Mexico City, and Medellín.
In a post-pandemic world, an ongoing migration of remote workers has brought financial benefits to places like Medellín, a city that has seen significant economic improvement since the 90s, following decades of drug-related violence and revolt. And to the benefit of the nomads, these individuals usually have much stronger currencies.
Nevertheless, many argue that the influx has led to rising rents throughout the region, creating barriers to affordable housing and displacing locals from their homes. The mounting concerns have prompted officials and policy analysts to examine how short-term rentals, a service remote workers frequently utilize, might contribute to the problem.
Airbnb: The Elephant in the Room
With the surge of global freelancers, many landlords have foregone traditional rental contracts, converting their properties into temporary rentals.
Despite higher turnover rates, landlords can charge temporary tenants three times the yearly lease price, making this practice increasingly profitable. Naturally, Airbnb has played a central role in renting to nomads, if not a controversial one.
In 2022, Mexico City signed an agreement with Airbnb to support tourism in marginalized areas. However, residents took to the streets in protest, alleging the company contributed to ongoing displacement and gentrification. The backlash led former Mayor Claudi Sheinbaum, now a frontrunner of Mexico’s 2024 presidential elections, to engage in talks with 10 cities in the U.S. and Europe to better understand the measures authorities took to regulate temporary rentals, including Barcelona, where special permits are required for Airbnb hosts, and landlords are banned from renting out private rooms for short-term stays.
To many locals in Mexico City, an existential cost-of-living crisis looms.
“This is a way for the government to raise funds,” Gonzalo Vazquez de Icaza, a lawyer and content creator born and raised in Mexico City, told Vice News. “Money is coming into the country and it helps governments, especially local governments, so there is an economic benefit. But there’s certain zones in Mexico City where you can see a rental crisis, where people who had been renting for years have been pushed out by their landlords because renting their property out to a foreigner is more lucrative.”
“It is difficult for Airbnb to have appeared in areas that were not already in a major process of gentrification,” added Mexico City-based urban development expert Rosalba Loyde. “It’s an accelerator.”
Keeping Up with the Pace: Surging Tourism
In Medellín, the digital nomad movement has contributed to creating new restaurants and upscale shops and even brought money to the tourism industry. But experts say the rapid changes have also brought a unique set of challenges.
“In Spain, in Mexico and in many countries it has happened with great intensity and has those societies questioning what to do,” said urban planning expert Alejandro Echeverri, who served as the city’s director of urban projects from 2004 to 2007. “But nowhere, I think, with the speed and impact that is occurring in Medellín.”
Like Mexico City, short-term rentals in Medellín are becoming more common. AirDNA, an online resource that tracks data of 10M Airbnb and Vrbo properties, noted that listings on both platforms jumped by 45% to 12,372 in June, up from 8,532 the year before. According to the online property platform Propertai, in the high-income barrio of Laureles, rent prices increased by 80% in the first four months of 2023.
Luis Miguel Pelaez, a partner at Acrecer, a rental real estate company, believes the growing trend of delisted rental properties in Medellín is connected to owners wanting to take advantage of short-term leases. Pelaez has also observed that rents are rising and that the average stay for tourist rentals has increased from about one to two weeks to two to three months.
Regulation & Road Ahead
Interestingly, Medellín has laws governing short-term rentals in certain buildings. In response to the outcry over-inflating rental prices, Ledys López, the city’s tourism sub-secretary, said her office intends to campaign to make owners more aware of these laws. She also said the city could adopt a special permit policy similar to Barcelona’s but conceded that such a policy might be ineffective at quelling the limited housing problem
“The city where no one wanted to live in before, is now the city that everyone wants to visit, stay for long periods of time and even retire,” López said. Now, Medellín faces an entirely new challenge of governing a tourist city.
In Mexico City, Enrique Soto, an academic from the School of Architecture at the National Autonomous University of Mexico, says there is an opportunity for the city to profit from the digital nomad movement, noting that 5 percent of its U.S. market could bring in USD 3.72 million. Picking up where Sheinbaum left off, Mayor Martí Batres stated in July that regulation for short term-rental platforms will be ready in six months, emphasizing concerns about housing, among others.
“There is also concern from those who are professionally dedicated to lodging [e.g., hotel owners] that there may be unequal conditions of competition,” Batres stated, adding that further study was necessary to determine the gentrifying effects of Airbnb.
Armando Rosales, the president of Mexico City’s association of urban planners, says that housing is so expensive in-part because the city is not producing enough homes to keep up with the demand. Furthermore, many of the new homes that are being built are being purchased by people with higher incomes, who then utilize Airbnb to pay off their housing loans.
As major cities in Latin America contend with the digital nomad movement, the short-term rental market, and limited housing, experts agree there is no one-size-fits-all solution to address this problem. While more research is needed to understand the long-term impacts of the digital nomad movement and the prevalence of short-term rental companies, broader measures to improve the economy, such as increased housing development, reinvestments in urban infrastructure, and measures to ensure that original residents are not displaced, would be a solid starting point.
John McCabe
