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The downside of digital nomads in Latin America
Valentina Obando
01/19/2023 January 19, 2023
The multiplication of remote workers with salaries in dollars or euros has opened a debate on the economic injection and the impact on housing prices, which encourage the expulsion of original residents.

Who hasn't dreamed of working from a paradise beach, or from a capital city full of life, and that, in addition, the salary goes for two? That is a possibility that has materialized for many people in recent years, especially thanks to the popularization of remote work since the coronavirus pandemic.
But what for some is an improvement in their lifestyle, for others it is a threat. And the massive arrival of digital nomads to certain cities has opened a great debate about the impact it can have on access to housing for the original residents.
In November 2022, for example, dozens of citizens demonstrated in Mexico, using slogans such as "Digital nomadism is structural racism," against government decisions that promote the arrival of foreign remote workers and an agreement signed with the Airbnb platform.
According to the Nomadlist portal, Buenos Aires (Argentina), Mexico City (Mexico), Medellín (Colombia), Lima (Peru) and Guadalajara (Mexico) lead, in that order, the list of the favorite cities of digital nomads in Latin America. Eight of the first 15 are Mexican.
Gentrification and rising housing costs: the negative
In an interview with DW, Juan Carlos Zentella, director of Local and Global Ideas (a research center on territorial, urban and environmental issues), explained that in Mexico City the growing demand for housing in the Roma, Condesa and Polanco neighborhoods has skyrocketed real estate prices and, as a consequence, the expulsion of the historical residents of those neighborhoods.
"The arrival of digital nomads is a phenomenon that leads to gentrification and an increase in rents for those owners who, seeing the opportunity to earn more income, do not renew the contracts of the original tenants, in order to look for new tenants through platforms such as Airbnb, with prices that double or triple the original," says Zentella.
The researcher, however, emphasizes that these platforms have been "catalysts" for the increase in rents, but they are not the first responsible for the phenomenon, because, he insists, there are government policies that have a previous impact.
For Andrés Olaya, a public policy analyst, remote work has allowed middle-class youth from rich countries to become upper class just by changing country. He says that this affects the popularity of housing in the most central sectors and with better service coverage, because they can pay for better properties with their salaries, in dollars or euros.
Search messages in Facebook groups of digital nomads have multiplied in Latin America. Image: Colourbox
"Trying to find a month to month rental in...", "Looking for an apartment...", "Planning to work from..." are common messages in Facebook groups of digital nomads in Latin America, which have multiplied as a result of new open-door policies for remote workers.
In the world, more than 40 countries today issue special visas for freelancers or "digital nomads." Brazil, Costa Rica, Panama, Curacao, Belize, Mexico and Colombia are some of those that created these types of visas between 2021 and 2022.
With the requirements for issuing these visas, says Olaya, countries "play it safe" by requiring a minimum income, and that they do not work for a local company; that is, that they do not affect the labor market and that they have comprehensive health insurance. The problem is, according to the researcher, that there is no way to control so that their presence does not impact the real estate market.
Despite the controversy, Zentella assures that gentrification does not happen only because of the arrival of digital nomads or the expansion of Airbnb, but that it has a lot to do with local policies.
The positive: contribution to the economy
"They consume in businesses, cafes, shops and markets, which represents an important economic spillover," says Zentella. The expert highlights that renting homes or rooms through Airbnb is an important livelihood for many families, and that promoting tourism means income for various sectors.
According to Airbnb figures, in 2021 alone, guest spending, excluding host income, "helped generate $4.5 billion in wages, salaries and other labor income in a variety of sectors in Latin America and the Caribbean."
Are there solutions?
The desirable option, according to both researchers, would imply that States have a certain provision of social housing on which they control prices, as is the case with the model in force in Vienna, Austria, for example.
But with a perspective closer to the capacities of countries such as Mexico or Colombia, Zentella warns that the number of homes in each neighborhood intended for short-term stays could be limited, "so that they are not only for tourists and digital nomads."
These controls could be applied, according to Olaya, through the collaboration of the same platforms. For the expert, promoting the right to centrality, and for people to live in central places with access to all services is an urgent task for local governments.

PERIODICO EL COLOMBIANO
Cristian Álvarez Balbín
11 de junio de 2024



More and more digital nomads are arriving in Medellín: there are more than 8,300 per month and they propose differential tax collection. The tourist boom in the city grew to the point that many foreigners decided to turn it into their “office”. Studies say that they can spend 15 times more than an average foreigner, that the phenomenon is here to stay and that differential tax collection should be considered.

Yannick Weiand is a German immigration consultant working for a European company. Casually dressed, he looks calm and smiling with his laptop. If you were to see him in front of you, you would probably think that Yannick was doing something other than his important job.
The thing is that instead of working in a cold office in his hometown of Munich, Weiand preferred to travel thousands of kilometers to work in the city of eternal spring, surrounded by trees and the warmth of the Paisa city. Why?

Weiand defines himself as a digital nomad, who – thanks to the digitalization of his work after the pandemic – decided to travel the world while continuing to fulfill his work obligations without one thing interfering with the other.
“As I wanted to learn Spanish, I came to Colombia about two years ago. I was in Bogotá and then I came to Medellín. While I was here I decided to stay working, so I processed my documents... and here I am!” he added in almost perfect Spanish.
For him, the best thing about being a digital nomad is having the freedom to manage his time as he pleases and to share with other people while working. “I don't like working from home or from an office. For me it's terrible! So I prefer to come to the 'coworkings' where I work, I meet wonderful people and I even perfect my Spanish,” he said.
Like Yannick, around 8,300 digital nomads arrive in Medellín every month, according to a study by the specialized firm Breakthrough. The arrival of these people – who on average spend up to 15 times more than a traditional foreign tourist – has become a relevant aspect for Medellín due to its positive and negative economic and social impacts.
What is a digital nomad?

According to Laura Pedraza, community manager of Quokka Coworking, a digital nomad is a person between the ages of 25 and 35, who can work from anywhere in the world thanks to the Internet and who does not have a fixed schedule since their work relationship is measured by objectives or assigned tasks.
“That is, they can do their work during part of the day and dedicate the rest of the day to other activities such as walking, partying or taking a class that they like,” she added.
For Pedraza, digital nomadism in the country dates back to the late 90s and early 2000s with the arrival of major players such as the company WeWork. However, after the pandemic and the widespread use of teleworking, digital nomadism has enjoyed a popularity that has led more people around the world to become hooked on this way of working.
In Medellín, the arrival of digital nomads could be said to have happened accidentally. As a result of the tourist boom in the capital of Antioquia, its popularity among them grew to the point that many decided to turn it into their “office.”
This is where coworking spaces appear, spaces with all the comforts that nomads can rent by the hour or even by the month, in which teleworkers – or even small businesses – carry out their activities without having to remain tied to the headquarters of their companies.
Pedraza pointed out that, according to his experience at Quokka, a coworking space hosts up to seven foreign digital nomads every day who rent the spaces and work remotely for a maximum of six hours a day. “They rarely stay working all day. They simply carry out the tasks assigned for that day and that's it,” he added.
Challenges and warnings
However, the arrival of digital nomads – as well as the bonanza that their resources bring to the city – is not without challenges and warnings. This is pointed out by research from the University of Medellín, which has been focusing on this migratory-labor flow since January 2023.
One of the challenges – apart from the technological gap with the first world – is that many bosses and business owners are still reluctant to have their workers work outside the organization or without a set schedule, which limits the inclusion of “local” digital nomads in this global trend.
“Digital nomads generally do not have an employment contract with companies, but rather they mainly manage the provision of services. However, in the country, as other forms of employment prevail, young people who are hired have more complications in being able to carry out digital nomadism,” said Liliana Franco, a research professor at the Faculty of Economic Sciences at the U. de M.
Another warning that Professor Franco made has to do with the impact that digital nomads, with their greater availability of economic resources, have on aspects such as the increase in the value of certain services or even the massification of unplanned tourism. Issues that experts include in the symptoms of a gentrified society.
“Medellín is a paradise, and that is why it is very attractive for tourists, including digital nomads. In fact, the city is the second tourist destination in the world for these workers. Therefore, because they earn much more money than locals, they could influence the cost of rent where they stay,” she said.
A third issue that the professor emphasized is the taxes that these travelers pay, which in comparison with their countries of origin, would be much lower. It must be taken into account that, apart from the special visa for digital nomads and the payment of VAT, these travelers are not required to pay any other compensation to develop their activity in the country.
When the professor was asked about the viability of a differential charge for digital nomads or even a temporary “ARL” payment while they are in the city carrying out their work, Franco pointed out that after delving into the conclusions of the study this could be a viable scenario.
But not everything is warnings, for Professor Franco this phenomenon has positive aspects for the city: “We are going to show ourselves as a different destination, people are going to come to take advantage of other tourist spaces; and also the development of business models around digital nomadism – such as coworkings – will be an interesting economic opportunity,” she pointed out.
COLOMBIA
Thursday, October 19, 2023 17:42
Digital nomads and the impact on the real estate market
By Monica Del Castillo
mdelcastillo@inversioninmobiliariacr.com

Photo: Digital nomadism in Latin America has a promising and growing future

The Royal Spanish Academy defines nomads as people who go from one place to another without having a fixed residence. During the pandemic, this migratory phenomenon was exacerbated, reaching the point of being called a “digital nomad,” which is a person who uses the Internet to carry out their occupation and/or to sell their knowledge to other people or companies, and who works remotely.
This is a new lifestyle that allows you to work from any location on the planet with the aim of traveling freely, without interrupting your work. According to MBO Partners, there are currently approximately 28 million people classified as digital nomads or workers on the way to joining this community.
According to data from the Inter-American Bank, the number of people who worked remotely before the pandemic amounted to 2% in Latin America and in a post-pandemic scenario it rose to approximately 30%, with the region being one of the main preferred destinations for digital nomadism due to the quality of life and better services at low cost.
Costa Rica was one of the pioneering countries in promoting the idea of ??attracting these users, and materializing it in a formal law in 2021, being one of the first 19 countries to have approved this Digital Nomad Law.

GENTRIFICATION: DAMAGES OR BENEFITS?

In terms of the real estate market, there have been several changes, such as in the use of housing, where growth is seen in the main tourist spots or in areas within cities that provide connectivity services, which opened up opportunities to install attractive projects in these locations, but also promoted gentrification, which according to UN-Habitat, is a process of urban renewal and reconstruction that is accompanied by an influx of middle- or upper-class people that usually displaces the poorest inhabitants of the areas of intervention.
UN-Habitat in its study The phenomenon of gentrification, indicates that the return to the city leads to the expulsion of urban survivors, descendants of residents who originally stayed behind in the race of more affluent families to the suburbs and who had managed to stay by taking advantage of the low cost of housing and the income-generating opportunities typical of densely built neighborhoods: newsstands, convenience stores, small bookstores, cafes and restaurants, specialty stores, repair shops, small discount stores, etc.; That is, the same picturesque features that contribute to making cities attractive and, by the way, that make streets enjoyable urban elements. And it is not a stretch to assume that many of them will be forced to withdraw from their neighborhoods, becoming the new daily commuters who live far from their sources of work.
Gentrification has become a controversial concept in the field of urban studies, but despite its negative consequences for the displaced population, it is difficult to deny that gentrification also generates resources and creates demands for new services in an established city.
Dr. Mariana Flores García, Director of the National Institute of Architecture and Urbanism (INAU) of the National Executive Committee 2021-2024 (CEN) of the Federation of Colleges of Architects of the Mexican Republic (FCARM), in an interview with INversión INmobiliaria Magazine, considered that we are increasingly adapting to a more globalized and digital world, where ways of living impact migration to other life dynamics that meet new needs, whether connectivity, mobility, coexistence, etc. and where technology represents a vital tool.
Hence, there is now a greater number of digital nomads. Some countries in Latin America with a greater presence of digital nomads are Brazil, Mexico, Colombia, Costa Rica, Ecuador and Panama, among 16 others that are in the process of granting visas to remote workers.

He added that one of the challenges that have been identified is adaptability to the phenomenon of digital nomadism, not only with respect to the new demands for services and products, but also that the impacts on the dynamics and ways of life of locals have not been measured.
Little by little, initiatives have been proposed to regularize existing accommodation options such as Airbnb, since, due to the high demand for certain types of short-term rentals in some areas of the city, there is an increase in the economic cost of the services and housing available, as well as in local mobility.
“With the extra costs, local residents are forced to adjust their finances to the higher prices and, in the worst case, they end up changing their residence, which is when gentrification occurs. Among the demands of digital nomads, better internet services, coworking spaces, collaborative platforms, and technology services are identified, which opens up an important market in this area and destinations are gradually becoming stronger in these aspects. However, without adequate planning, scenarios of social exclusion can be generated at the same time,” said Dr. Mariana Flores García.
She stressed that the consequences of this phenomenon must be identified and evaluated in the short, medium and long term in each city from the local context, for its residents and their present and future living conditions, since without the appropriate regulatory mechanisms it is evident that a scenario of overexploitation of the available services and resources will be reached.
The active member of AMAU, the Mexican Association of Architects and Urban Planners in Mexico, since 2021, stated that first-hand it seems that digital nomads provide attractive development opportunities to companies and certain sectors of the population, based on cultural exchange and foreign investments, as well as the opening of new markets, and the economic spillover that this represents for destinations, including new jobs, products and services, and some hypotheses have emerged about future projections that have to do with the diversification of the existing housing supply, more accessible and adaptable, to the evolution towards new typologies and models of coexistence such as coliving, or to trigger mixed uses more forcefully.
On the other hand, by not having greater mobility to traditional work environments, pollution processes and environmental impact in the use of the automobile can be minimized, and the quality of life of users can be improved, including mental health. In addition, opportunities can be opened for processes of redensification of cities in a controlled manner, as long as sufficient mechanisms are in place for this. To achieve this goal, the necessary aspects must be aligned with public policy and regulatory aspects that have a direct impact on planning.
Another important aspect is that while work spaces are changing, there is still no clarity on the legal environment and job stability or risks that affect this new modality. It should be noted that the new hybrid work models (face-to-face-remote) have given rise to diversifying current work environments for active middle-aged professionals.
The generational gap in certain sectors has been minimized with the migration to technological tools, with greater growth among the youngest. In the case of Colombia, for example, the trend of digital nomads has an acceptance of 80%, especially among millennials who represent 23% of the total population.
DIGITAL NOMADS: A FASHION?
For María Eugenia Acevedo, regional manager of WORKINGS, which has offices in Panama and Costa Rica, interviewed by INversión INmobiliaria Magazine, she pointed out that digital nomadism in Latin America has a promising and growing future since the extensive digital infrastructure and the growing nomadic communities have made the countries of the region a Hub for these people, there is even a special visa for digital nomads.
Digital nomads in Mexico and their consequences
KNOW THE OPPORTUNITIES AND CHALLENGES THEY PRESENT FOR THE ECONOMY AND SOCIETY.
During the pandemic, Mexico was one of the countries that did not close its borders, allowing citizens from different countries - especially the United States - to move to the country during the months of confinement. This situation could be seen as a one-off, caused by the global crisis that was being faced; however, the possibility of working remotely was not something that was limited to 2020, but is already part of the work reality in Mexico and the entire world.
While many workers had to return to their jobs in person after the pandemic, others had the opportunity to decide to work remotely. Once the entry and exit restrictions of each country were lifted, the work and residence landscape changed forever, and digital nomads came onto the scene.
Why does Mexico attract digital nomads?
Finally, the great flexibility and freedom that digital nomads enjoy is the possibility of living anywhere. This has caused a wave of relocations worldwide and Mexico has become a point of interest for digital nomads, who are looking for a place where they can “travel” in the best conditions: easy connection from different points on the planet, cheap costs, good weather, international and diverse environment, culture and landscapes… Mexico seems to be the ideal destination and the numbers confirm it: according to the MBO Partners report in 2021 there were 15.5 million American digital nomads and the number increased by 42% since 2020 in Mexico City alone.
It is not surprising that Mexico offers the visa for digital nomads, which allows you to stay in Mexico for up to 12 months and can be extended up to a maximum of 3 years. It includes requirements such as a minimum income of 1,600 USD and not earning said income in the country. However, the presence of foreign capital, the flood of travelers, and the difference between the exchange rate of the US dollar or the euro to the Mexican peso is impacting the country's economy.
How does the arrival of digital nomads affect Mexico?
Mexico's Gross Domestic Product grew by 3% and is part of the top 15 economies with the highest GDP in 2022. On the other hand, at the end of this year, head of government Claudia Sheinbaum reached an agreement with UNESCO and Airbnb to capitalize on the city's presence on the platform. This measure, while attracting travelers from all over the world who decide to stay for long periods in the country, also affects the price of housing, especially in Mexico City, and impacts the increase in inflation, which remained at approximately 8% the previous year. Neighborhoods such as Roma Norte or La Condesa are becoming tourist and employment attractions where rent prices rise, cafes are filled with computers, and prices become more expensive. According to National Geographic, European digital nomads who move to Mexico City earn approximately 5,000 euros per month, which is equivalent to 100,000 Mexican pesos, so the same city is cheap for those who come from outside but is excessively expensive for those who earn their income in the national currency.
This controversial reality is part of the new social scenario that residents of Mexico face. The presence of digital nomads is a great opportunity for the country, but finding the balance between attracting foreign citizens and meeting the social demand of locals is the challenge that Mexico faces after the social changes brought about by the pandemic.
The massive influx of digital nomads into Latin American cities has brought economic benefits, but it has also brought negative consequences for local residents, particularly in terms of rising prices and gentrification.

Mexico City, Mexico

In Mexico City, middle-class neighborhoods such as Roma, Condesa, and Polanco have become attractive hubs for digital nomads due to their infrastructure, cafes with Wi-Fi, and entertainment options. However, this interest has caused strong pressure on the real estate market, where rental prices have risen dramatically. Local residents, who have historically lived in these areas, face difficulties in paying rents, which has led to a displacement of the population. The phenomenon is intensifying gentrification and changing the social structure of these neighborhoods.

Medellín, Colombia

In Medellín, the El Poblado neighborhood has become a key point for digital nomads, which has led to increases in the cost of living and rents. Although the city has gained popularity as a destination thanks to its mild climate and modernization of its digital infrastructure, local residents are seeing rental costs skyrocket, making it difficult to stay in these neighborhoods. Gentrification is evident, with traditional residents being displaced as foreigners rent and buy properties at high prices.

Rio de Janeiro and São Paulo, Brazil

In Rio de Janeiro, neighborhoods such as Ipanema and Copacabana, highly sought after by digital nomads, have seen a significant increase in rents. This demand pushes up prices not only for housing, but also for basic services such as restaurants and supermarkets, directly affecting the cost of living for residents. The phenomenon is similar in São Paulo, where neighborhoods such as Vila Madalena, known for its vibrant nightlife and bohemian culture, are experiencing a price increase due to the arrival of international remote workers.

San José, Costa Rica

Costa Rica has launched a special visa for digital nomads, attracting thousands of remote workers to places like San José and the Pacific coast. However, this growing demand has led to an increase in living costs, mainly in rents and services. In tourist areas like Santa Teresa and Tamarindo, where many nomads settle temporarily, prices for goods and services have risen significantly, which is affecting accessibility for the local population.

San Salvador, El Salvador

In San Salvador, favorable policies for digital nomads have driven growth in certain neighborhoods like Santa Elena, where demand for rentals has increased. Although El Salvador remains more accessible than other destinations in the region, the impact on the local economy is notable, with increases in the prices of goods and services affecting local residents, especially those with middle and low incomes.

Social and Economic Impacts

The rise in prices for goods, services and rents not only displaces local residents, but also creates social tensions. Cities that used to be accessible to the middle and lower classes are undergoing a transformation into foreigner-only areas, generating a cultural shift and a feeling of alienation among local residents. Gentrification manifests itself in the reduction of the supply of affordable housing and the change in character of neighborhoods, which are now more adapted to the needs of digital nomads than to those of the local community.

In short, although the arrival of digital nomads brings economic advantages and promotes innovation in these cities, the negative impact on the local population is significant, causing an escalation in prices and altering the social and economic dynamics. This phenomenon reflects the need for more inclusive policies that balance foreign investment with the protection of local residents and their quality of life.

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