Digital nomad hotspots grapple with housing squeeze

Digital nomad hotspots grapple with housing squeeze

A sticker reading
A sticker reading "Digital NoMad" at the Dali Hub co-working space for digital nomads in Dali, Yunnan province, China, on Sept 7, 2022. (Bloomberg photo)

LISBON/MEXICO CITY: Among the glitzy new apartment buildings springing up in Mexico City's Juarez neighbourhood, fashionable coffee shops are taking the place of taco stands and English is replacing Spanish on signs and posters aimed at an influx of newcomers.

The remote work boom sparked by Covid-19 has lured large numbers of "digital nomads" from the United States to the Mexican capital and other cities, drawn in part by lower housing costs south of the border.

But their arrival has fuelled some residents' anger - and protests - about gentrification, which they say is pricing local families out of their homes and leading to evictions in areas coveted by developers such as Juarez, Roma and Condesa.

"We're starting to see posters on the street saying that (digital nomads) aren't welcome, and people are getting very angry," said Sofia Ramirez, director of the think-tank Mexico ¿Como Vamos?.

Landlords in some popular districts are increasingly opting to let their properties to foreigners via Airbnb at higher rates, locals and researchers say, putting them out of reach of most existing residents.

Of the roughly 10,000 apartments listed on Airbnb in Mexico City, the average price per night is 1,450 pesos ($72), while 95% of Mexican workers earn less than 518 pesos ($26) per day, according to an analysis by the Thomson Reuters Foundation of data from advocacy group Inside Airbnb.

As the global nomadic workforce tops 35 million, according to a recent estimate by the site, researchers and locals say authorities must take steps to protect residents from surging housing demand and ensure they see economic benefits from the shift.

"Digital nomadism wouldn't be a problem if it was regulated to generate the least possible damage to locals. However, we see one population being affected to benefit a different one," said Sergio Ramirez from the 06600 Juarez Neighborhood Platform and Observatory, set up to shield local communities from gentrification.

'Heart of the problem'

In Portugal's capital, Lisbon - another hotspot for digital nomads - authorities have taken some measures to address a housing crunch caused partly by sizzling demand for short-term accommodation.

While Lisbon and Mexico City are relatively affordable for many foreigners, they were ranked the world's third- and fourth-least liveable cities based on local rents and wages, a recent study by CIA Landlord Insurance found.

"Here you are at the heart of the problem," said Susana Peralta, gesturing to the Alfama district, a formerly working-class neighbourhood dotted with chic restaurants and bars dedicated to Portugal's traditional fado music.

"The concentration of short-term rentals in this neighbourhood is this huge."

Some researchers estimate the proportion based on short-term rental listings to be more than 50% of all residential properties in the inner-city district of Santa Maria Maior.

A change in the short-term rental law of 2018 gave power to the municipalities to limit the number of short-term rentals in certain neighbourhoods, though it has not been strictly applied in some districts outside the centre, said Luis Mendes, a geographer at University of Lisbon who studies gentrification.

When the pandemic hit, Portuguese authorities banned evictions and key workers were housed in short-term rentals left empty by tourists, but such relief measures have since been lifted in tandem with travel curbs.

For Lisbon Mayor Carlos Moedas, tourism is "essential for the city". He said he was not afraid of overtourism - it is simply a question of managing it.

He talked enthusiastically about supporting digital nomads and locals via tech startups and the "trickle-down effect" their presence in Portugal could have for the broader economy and local people.

There are signs of this happening, said Romanian fitness app entrepreneur Olivia Benton, who runs Lisbon's Digital Nomad Meetup Group.

The group attempts to create "deeper connections" with the local community through talks, visits and hosting events at local cafes and is open to Portuguese residents.

Benton said she had never felt resentment or hostility from locals towards nomads like herself.

At one recent cafe meetup, dozens of young remote workers tapped away at their keyboards as cafe manager Daniella Siragusa served them cups of strong "bica" coffee.

"It's good to have nomads here," she said, adding that she was thankful for the business after repeated coronavirus lockdowns that she said had brought little by way of state support.

Maximise value

Blaming digital nomads as the source of housing shortages in Mexico City's up-and-coming neighbourhoods is misguided, and highlights the need for policy to address such social shifts, said Ramirez, the director of Mexico ¿Como Vamos?.

"Mexican authorities are responsible for the absence of a plan to relocate locals or to provide credits to affected businesses," she said.

According to a May report by Mexico ¿Como Vamos?, the lack of data on digital nomads has stopped the country from capitalising on their presence.

It recommends creating a legal status for digital nomads that provides them with opportunities to invest, create startups, and pay taxes in Mexico.

Many other tourist hotspots have been quick to embrace the nomads, seeing the trend of remaining longer in one location as a way to recoup pandemic losses.

Destinations such as Aruba, Barbados, Cape Verde, Croatia, Estonia, Indonesia, Malta and Norway have created digital nomad visas, allowing people to stay put and work for up to two years.

Beyond the dollars nomads spend, they can collaborate with local workers, helping to share their skills and knowledge, said Prithwiraj Choudhury, an expert on the future of work and associate professor at Harvard Business School.

Instead of trying to limit their numbers, he said governments should seek to "maximise the value creation from nomads". 

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