Digital nomads: Impact or economic stimulus?

Digital nomads: Impact or economic stimulus?

Digital nomads in Medellín and other destinations provide an economic boost but can cause gentrification. Rising real estate prices and the emigration of the domestic population are a cause for concern. Experts suggest investing in socially impactful housing as a possible solution.

Digital nomads: Impact or economic stimulus?
Photo by: Andrea Piacquadio/ pexels.com

Although her workplace is located in Mexico City, Abril has been living in Cancún for the past two years with a view of the Caribbean. Here, she can swim at the beach whenever she wants, get around without a car, and even has time to cook. Working on the Riviera Maya, one of the most popular tourist destinations in Latin America, has paradoxically resulted in more savings than expenses for her. This happens alongside an improved quality of life. "When I worked in the office, the stress was constant. I had very little time to take care of myself. Life here is much calmer. I don't have to deal with traffic and I live a healthier life," she said.

Whether it's Cancún, Medellín, Cuenca, Buenos Aires, or Mexico City itself, all these places have become favorite destinations for digital nomads. These are individuals who work online from mostly tourist destinations, thus benefiting from the best prices and many advantages these places have to offer.

According to Esteban Terán from Impaqto Coworking, a co-working space with offices in Cuenca and Quito, Ecuador, digital nomads spend an average of three months at one destination before moving to another. They carry their belongings in a suitcase or backpack. They have no issues spending money on tourism and entertainment, but strive to save on food. Terán therefore believes they do not have the same impact on local economies as the tourism sector. "This lifestyle is not for everyone. They educate themselves well in advance before arriving at their destination. They are usually between 30 and 40 years old, already have work experience, and usually work in IT, finance, or design sectors," he said to CONNECTAS.

This year, Ecuador introduced a special visa that allows legal residency in the country for up to two years as a way of attracting digital nomads. In 2022, Costa Rica introduced a visa that grants remote workers residency upon proof of foreign employment contracts. People with this visa can enter and leave Costa Rica whenever they want. In terms of taxation, they are exempt from paying taxes if they have already paid taxes in the employer's country. However, those wishing to access this system must have a minimum monthly income of $3,000.

Mexico City and Medellín in Colombia are also attracting a significant number of these highly paid professionals. For example, in 2022, Mexico City signed an agreement with the online platform Airbnb to help support tourism in its most neglected areas. However, the arrival of nomads also causes tension, mainly due to increased living costs in traditional neighborhoods.

In Mexico City, neighborhood organizations have accused Mayor Claudia Sheinbaum of handing over the city to rental platforms, thereby exacerbating the existing gentrification phenomenon. New high-income residents are taking over historical and traditional areas, displacing local residents due to increased rent and food costs.

After these criticisms, Sheinbaum investigated what other cities around the world have done to mitigate such impacts. Although her officials claim that all online criticism is merely anecdotal and not supported by numbers, they are currently investigating the situation in cities like Barcelona, where Airbnb hosts must obtain a special permit to rent or risk paying fines to limit this phenomenon.

On a more positive note, Enrique Soto, an academic from the National Autonomous University of Mexico's School of Architecture, explains that attracting 5 percent of the potential market for American digital nomads would bring $3.72 million to the economy. However, he emphasizes that specific regulations need to be developed to ensure that original residents are not displaced. "Public policies that use some revenue from higher capital gains on real estate to reinvest in urban infrastructure improvements need to be implemented," he said to CONNECTAS.

Due to the arrival of high-paid tourists and nomads in Medellín, which impacts prices, the situation has gone from optimistic to concerning. Sandra Arboleda, who rents her apartment in the "city of eternal spring" through Airbnb, estimates that 30 percent of her guests are digital nomads from Europe. However, she has also hosted Colombians seeking Medellín's climate and entertainment to work there for a while.

"This city generally offers many opportunities," explained Arboleda. In fact, Medellín stands out on sites that nomads use to find information and share experiences. "If you want to live at low costs, enjoy beautiful girls, pleasant climate, and cheap entertainment, Medellín is the place for you," wrote one nomad in English on the Nomad List website. This website ranks the best places to live in Latin America for digital nomads. Mexico City ranks first, followed by Buenos Aires in second and Medellín in third. However, points were deducted from the latter due to poor internet quality and security issues.

María Bibiana Botero, executive director of the Proantioquia think tank based in Medellín, stated to W Radio: "If Medellín were a country, it would have the highest share of digital nomads in the world (in relation to its population)." Figures from Nomad List support this claim. According to this website, at the time of writing, Medellín has 6,400 nomads per month, very close to the number in densely 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 Mayor Daniel Quintero criticized this phenomenon on Twitter: "Housing prices are more expensive in Medellín due to lower unemployment: it has reached single-digit figures and more young people are seeking independence. [Also], tourism and digital nomads claim Medellín is the third best city to visit."

On the streets of Medellín, anti-gentrification posters have also begun to appear in traditional middle and upper-middle-class neighborhoods like El Poblado. In a video posted on Twitter, Ana María Valle, an activist against this phenomenon, claims that "Airbnb affects rental prices. The social structure of neighborhoods like El Centro, El Poblado, Laureles, and Belén is disintegrating because there are no neighbors with whom to build a future."

Valle explains that the local population cannot compete with those dollar wages. "We are gradually losing spaces: access to restaurants, public spaces, basic necessities, and others," she said. For this activist, taking action is imperative. She gives the example of countries like Portugal, which got rid of the visa that allowed foreigners to reside by acquiring accommodation.

But what actions can local and national governments actually take? Since there is a delicate balance between benefits, mostly from the influx of foreign currency, and problems, such as displacing traditional residents and their subsequent loss of identity, which is often difficult to recover, this is a complex issue to address.

Experts argue that one solution would be to invest a significant portion of funds obtained from digital nomads in housing solutions with social impact. According to Enrique Soto, this would bring greater urban justice, as many neighborhoods that currently have high value initially gained it through public investments. In any case, these solutions are vital because the rise of national or international remote work does not seem to be ending soon.

Creation time: 23 June, 2024 sa globalvoices.org, CC BY 3.0
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