Digital nomads: Gentrification or economic boost?

Illustration by Connectas

Written by Cristian Ascencio on Connectas and republished by Global Voices under a media partnership.

Although her workplace is based in Mexico City, Abril has lived in Cancún, overlooking the Caribbean, for the last two years. Here, she can swim at the beach whenever she pleases, get around without a car, and even have time to cook. Working on the Riviera Maya, one of Latin America’s most popular tourist destinations, has paradoxically resulted in more savings than costs for her. This is on top of her improved quality of life. “When I worked in an office, the stress was relentless. I had very little time to take care of myself. Living here is much calmer. I don’t have to endure the traffic and I live a healthier life,” she said.

Whether it be Cancún, Medellín, Cuenca, Buenos Aires, or Mexico City itself, all have become go-to destinations for digital nomads. That is, individuals who work online from mostly tourist destinations, thus benefiting from the best prices and many advantages these places have to offer.

Digital Nomad Bytes (snaps) – Day 1 in Medellín

The Promise City for digital nomads in Latin America

May 29, 2023

Moving to a new city means thousands of changes all at once without even realizing…

— ★GizehCarolina🌴 (@gizehcarolinaa) May 31, 2023

According to Esteban Terán from Impaqto Coworking, a coworking space with offices in Cuenca and Quito, Ecuador, digital nomads spend an average of three months in one destination before moving to another. They carry their belongings in a suitcase or backpack. They have no trouble spending their money on tourism and entertainment but do try to save on food. Terán therefore believes they don’t have quite the same impact on local economies as the tourism sector. “This lifestyle isn't for everyone. They educate themselves well in advance before reaching their destination. They’re usually aged between 30 and 40, so they already have work experience and typically work in the IT, finance, or design sectors,” he told CONNECTAS.

This year, Ecuador introduced a special visa granting legal residence in the country for up to two years, as a means of attracting digital nomads. In 2022, Costa Rica introduced a visa that authorized the residence of remote workers with proof of foreign employment contracts. People with this visa can enter and leave Costa Rica whenever they wish. As for taxation, they are exempt from paying taxes if they have already done so in the country of their employer. Nevertheless, those wishing to access this system must have a minimum monthly income of USD 3,000.

Mexico City and Medellín, Colombia, also receive a significant number of these high-income professionals. For example, in 2022, Mexico City signed an agreement with the online platform Airbnb to help support tourism in its most marginalized areas. However, the nomads’ arrival also causes tension, mainly because of the increased cost of living in traditional neighborhoods.

In Mexico City, neighborhood organizations accused Mayor Claudia Sheinbaum’s government of handing the city over to rental property platforms, thus causing the existing gentrification phenomenon to soar. New high-income residents thereby take over historic and traditional areas and displace local residents due to increased costs in rent and food.

Following this criticism, Sheinbaum looked at what other cities around the world had done to mitigate such impacts. Although her government officials insist that any online criticism is purely anecdotal and not backed by figures, they are currently looking into the situation in cities like Barcelona, where Airbnb hosts must obtain a special rental permit or risk paying a fine to limit this phenomenon.

On a more positive note, Enrique Soto, an academic from the School of Architecture at the National Autonomous University of Mexico, explains that attracting 5 percent of the potential in the U.S. digital nomad market would bring USD 3.72 million to the economy. However, he clarifies that specific regulations must be developed to ensure its original residents are not displaced. “Public policies that leverage some revenue from higher capital gains on property in order to reinvest in urban infrastructure improvements must be implemented,” he told CONNECTAS.

The Government of Mexico City signed an agreement with Airbnb to attract more digital nomads to the city. However, many of the capital’s residents (capitalinos) are being displaced from their rental accommodation due to this platform’s growth.

Because of the influx of high-income tourists and nomads in Medellín impacting prices, the situation has gone from optimistic to concerning. Sandra Arboleda, who rents out her apartment in the “city of eternal spring” on Airbnb, estimates that 30 percent of her guests are digital nomads from Europe. However, she has also hosted Colombians that seek Medellín's climate and entertainment to work there for a while.

“This city generally provides ample opportunities,” Arboleda explained. In fact, Medellín stands out on the pages that nomads use to find information and share experiences. “If you want low-cost living, pretty girls, decent climate, and cheap parties, Medellín is the place to be,” a nomad wrote in English on Nomad List. This website ranks the best places to live in Latin America for digital nomads. Mexico City is in first place, followed by Buenos Aires in second and Medellín in third. Points were deducted from the latter for poor internet quality and security concerns.

María Bibiana Botero, chief executive of the Medellín-based think-tank, Proantioquia, told W Radio: “If Medellín were a country, it would have the world’s highest proportion of digital nomads (in relation to its population).” Nomad List figures support this observation. According to this website, Medellín has 6,400 nomads per month at the time of writing, which is very close to the highly populated Mexico City (7,400 per month) and Barcelona (6,950 per month).

However, Proantioquia’s optimism contrasts with the concerns of civil organizations and activists. Even the city’s mayor, Daniel Quintero, took aim at this phenomenon on Twitter: “Housing is more expensive in Medellín due to less unemployment: it reached single figures and more young people are seeking independence. [Also] tourism and digital nomads [say] Medellín is the world’s third best city to visit.”

Anti-gentrification posters have also begun appearing in Medellín’s traditionally middle or upper-middle-class neighborhoods, like El Poblado. In a video posted on Twitter, Ana María Valle, an activist against this phenomenon, argues that “Airbnb is affecting rental prices. The social fabric of communes like El Centro, El Poblado, Laureles, and Belén is fraying since there aren’t any neighbors to build a future with.”

What’s going on with gentrification in MedellínIt’s imperative to take substantive action.
We’re appealing to district and national governments. We’re being driven out of the city. #Gentrificación #Medellín

— Ana María Valle Villegas (@amvallev) March 22, 2023

Valle explains that locals can’t compete with these dollar salaries. “We’re progressively losing spaces: access to restaurants, public spaces, basic necessities, among others,” she said. For this activist, taking action is imperative. She gives the example of countries like Portugal, which got rid of a visa that granted residence to foreigners who acquired accommodation.

But what kind of action can local and national governments actually take? Due to the delicate balance between benefits, mainly from foreign currency inflows, and problems, like the displacement of traditional residents and their subsequent loss of identity, which is often difficult to reclaim, this is a complex question to answer.

Experts maintain that one solution would be to invest a substantial portion of funds coming in through digital nomads into social impact housing solutions. For Enrique Soto, this would bring greater urban justice, given that many neighborhoods that currently have high surplus value have initially earned it through public investments. Either way, these solutions are vital since the rise in national or international remote working will not seem to end soon.

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