MEXICO CITY—Alexandra Dunnet loves her two-bedroom apartment. It’s nothing fancy but the location, in an upscale lively bohemian neighborhood full of cafes, restaurants and parks, is enviable. Then, last year, the building’s owners began forcing out its tenants and converting their apartments into Airbnbs. Dunnet pays 10,200 pesos, or $520, for her place. Identical apartments in her building now go for $4,000 a month on Airbnb.
Over the last couple of years, Mexico City has become a haven for well-paid digital nomads from the U.S. who are attracted by what locals have always loved about it: the balmy weather, great food, vibrant ambiance and terrific nightlife. They can also afford to pay rent prices more in line with New York City and San Francisco, in the process displacing longtime residents, even if unwittingly.
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“It’s really sad because it was a great community of neighbors that was broken up in a very violent way,” said Dunnet, a Mexican actress and writer who says she is the last long-term tenant left in her building. She expects the owner to convert her apartment into an Airbnb when her lease ends in February. The building is being managed by the company “Mr. W,” whose tagline is “Hotels are Boring.”
Allegations that Airbnb is taking much-needed units off the market and driving up prices has played out around the world: San Francisco, New York, Amsterdam, Barcelona—the list goes on. But unlike those cities, which have sought to restrict Airbnb, Mexico City is embracing the platform, much to the consternation of many locals.
In October, Mexico City’s government signed an agreement with Airbnb that aims to attract digital nomads to the city by, in part, encouraging hosts to offer lower rates for longer stays. Mayor Claudia Sheinbaum said the agreement—the details of which haven’t been released to the public—will also promote neighborhoods that haven’t experienced the influx of tourists through guided Airbnb tours, and help bring in an extra $1.4 billion a year that will benefit locals.
But the deal triggered a wave of backlash, especially among residents who’ve been priced out of neighborhoods they’ve long considered home. Earlier this month, dozens of people gathered in front of Mexico’s Ministry of Urban Development and Housing to protest the agreement, holding signs like “Gentrification = colonization” and “My city isn’t a piece of merchandise.”
On average, Mexicans living in Mexico City earn the equivalent of $3,800 a year, according to Mexico’s National Institute of Statistics and Geography. Many professionals, from accountants to reporters, earn between $20,000 and $25,000.
Those incomes are a fraction of the kind of money made by Americans moving to Mexico City, most of whom earn in dollars while working remotely, a practice that became normal during the pandemic. Data from the Interior Ministry shows that 8,412 U.S. citizens received temporary resident visas in the first nine months of 2022—an 84 percent increase over the same period in 2019, the year before the pandemic. The statistics don’t account for the large numbers of Americans who live in Mexico for prolonged periods using tourist permits they can extend by leaving and reentering the country.
While Americans and other foreigners have long resided in many of Mexico City’s most upscale enclaves, their presence over the last two years has become especially pronounced. Residents are as likely to hear English in the streets as Spanish in zones such as Roma and Condesa, and their streets are awash with huge signs in English advertising homes for sale and rent.
Housing prices have spiked in areas favored by Americans. Rents increased eight percent across Mexico City in the two years since the pandemic, according to Homie, a real estate platform in Mexico City. But in Condesa, the upscale bohemian neighborhood where Dunnet lives that’s a big draw for foreigners, prices skyrocketed 40 percent during the first six months of 2022, Homie reported.
And it’s not just housing. For everything from coffee to boxing classes in the park, prices in many establishments and areas popular with Americans are cheap by their standards, but unaffordable for the majority of Mexicans.
Experts disagree on how much of a role Airbnb plays in driving up prices.
As of September, there were nearly 19,000 available Airbnb rentals in Mexico City, a 10 percent increase from 2019, according to AirDNA, which analyzes vacation rental data. Airbnb units comprise roughly two percent of Mexico City’s rental housing stock, said Rosalba Loyde, a professor at the National Autonomous University of Mexico who studies sociology.
“In hard numbers, it doesn’t seem like a lot. But the growth in the last few years has been exponential,” Loyde said. “When it’s at 10 percent, are we going to say it’s not a lot?”
Loyde wants Mexico City to regulate Airbnb similar to the way Barcelona did, by forbidding short-term private room rentals and requiring those who rent entire apartments to have the appropriate licenses.
Instead, Mexico has prioritized collecting taxes on Airbnb units—the various taxes can add up to 30 percent of the rental price. While hosts generally pass those costs on to their guests, some have decided renting on Airbnb doesn’t pay off and pulled their properties from the platform.
Many housing experts said it’s over simplistic to blame Airbnb.
“Except for a very few specific properties in prime, prime, prime locations, the economics don’t pay to take apartments off the market and put them on Airbnb,” said Francisco Andragnes, chief executive officer at Homie. He and other real estate investors say a bigger factor is the bureaucracy that has stalled construction of new apartment buildings in the city.
After taking office in December 2018, Sheinbaum, Mexico City’s mayor, paused construction on major urban development projects, including housing units, to avoid excessive growth in the capital. It also came on the heels of the devastating 2017 earthquake in which several new apartment buildings collapsed, in part because of corruption in the permitting process.
“They stopped much of the development in the city and big projects for several months, and when they decided you can keep building, that was when Covid hit and the projects never took off,” Andragnes said.
“Airbnb pulls inventory off the market and definitely exacerbates the situation. But the fact that we can’t build—that’s a bigger problem than these units getting pulled off the market,” said Rodrigo Suarez, co-founder at HASTA Capital, a development and investment real estate platform. “A huge wave of demand is hitting an environment of really low supply so of course the rents are going to go up.”
Ari Goot, a real estate developer, moved to Mexico City in January, keen to take advantage of the booming housing market. He bought an apartment in Condesa and is in the process of remodeling it. He also rented a luxury apartment, which he is trying to sublet on Airbnb for double the price he pays.
Goot said he is sensitive to the issue of gentrification, but also thinks the complaints are overblown. “You can’t take the good without the bad. If there were zero foreigners coming, would that be better for Mexico City? They bring a lot of money and support all these Mexican businesses and employment and hire people.”
If the business goes well, Goot said, he plans to buy more properties and rent them on Airbnb. He thinks more Americans will continue to move to Mexico City, drawn by the same factors that he appreciates—the culture, cost of living, and the diversity of people.
“It’s the era for Mexico City!” he said.
