Digital nomads raise rent prices in mexico, sparking the conversation of gentrification

Published April 26th, 2022

Do yourself a favor and work remotely from Mexico City, it’s truly magical,” Becca Sherman posted in English on her Twitter account last February, and her tweet went viral.

The publication generated a whole conversation about the gentrification of the Roma neighborhood, where, due to the rent prices, it was argued that only foreigners can live in the area.

However, the truth is that, for several years, not only in neighborhoods of Mexico City, but also in beach cities such as Los Cabos, Puerto Vallarta, and Tulum, foreigners have been spending several months on vacation, and more so now, since that with the pandemic they are allowed to work remotely.

Gentrification is the process of changing the character of a neighborhood through the influx of more affluent residents and businesses. It is a common and controversial topic in urban politics and planning. Gentrification often increases the economic value of a neighborhood, but the resulting demographic displacement may itself become a major social issue. Gentrification often shifts a neighborhood’s racial or ethnic composition and average household income by developing new, more expensive housing and businesses in a gentrified architectural style and extending and improving resources that had not been previously accessible.

According to Rotamundos.com, a chain of hotels and rental properties, in the United States there are more than 3 million people classified as digital nomads, that is, those who can work from any city or country.

In addition, as one of the closest destinations for Americans is Mexico, since the pandemic began the influx of those who decided to come to live in Mexico has grown while the Covid health emergency dissipates.

Digital nomads raise rents

Javier Cárdenas Ibarra, Founder, and CEO of Rotamundos.com commented that the phenomenon of digital nomads will cause the vacation rental of houses or apartments to increase by 20% this year.

“They look for properties with certain standards: a good internet connection, a good bed, a cleaning service, and homes that are also sustainable and ecological,” explained Cárdenas Ibarra.

In addition, if foreigners used to stay only a couple of weeks, now they extend their stay up to six months or more because they have the flexibility to work remotely, he added.

Options for everyone

In addition to Mexico City, Tulum, Cancun, Playa del Carmen and Los Cabos, there are other attractive cities for foreigners such as Puerto Vallarta, Mazatlán, Rosarito, Acapulco, San Miguel de Allende, Monterrey and Querétaro.

David Padrón, director of Click & Home, a business dedicated to renting houses and apartments for tourists in Tulum, said that the rental of vacation homes in that city, as well as in the entire Riviera Maya, never fell as a result of the pandemic.

“Tourists stopped coming because there were no planes, but as soon as the confinement was lifted, they began to return,” he explained.

“Before they stayed for 14 days, but now they come to work from home for three months. They stay in one, but they don’t like the internet or the laundry, and they go somewhere else for another three months.”

According to Click & Home, vacation rentals in Tulum are around 300 dollars per day, so it is expensive, but it includes laundry services, room cleaning, internet, food, and contact with nature.

“Yes, people come and go, not only from the United States, but from Mexico, but right now we are full of people from New York, California, and Texas. A lot of Russians are also arriving,” he commented.

Softec, the real estate research firm, estimates that this year around 2,700 vacation rental homes will be rented in Tulum.

And regarding the construction of real estate to be rented for vacation periods, it is estimated that projects for another 9,000 properties will begin this year throughout the country.

Claudia Velázquez, Director of Operations at Softec, a real estate consultant, said that there are several conditions for 2022 to be an important year for vacation home rentals.

“In Mexico, inflation compared to the United States is lower and people with higher purchasing power can live better here,” the firm said.

“There is also a more professional administration of rental housing, where there are companies that already manage the entire service for you. They promote them on platforms, pay maintenance, make reservations, take care of everything and give you your return as an investor”.

According to Softec, in Tulum, there are 6 thousand properties that are offered for rent through platforms such as Airbnb, Booking, HomeAway, Expedia, and Despegar.com.

In Playa del Carmen there are around 10,700 homes and in Cabo San Lucas and San José del Cabo around 5,000.