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Medellín has become a hotspot for digital nomads, expats and foreign companies seeking a blend of lifestyle and work opportunities. This influx has contributed to a surge in property prices, which have reached their highest levels in eight years.
According to recent reports, the average price of middle-class residential properties has increased over 17% in the city, and in some neighborhoods the rental prices have risen up to 80%, driven by demand from both local and foreign buyers looking to capitalize on the city’s appeal as a digital nomad destination. As more individuals relocate to Medellín, the demand for short-term rentals and co-working spaces has also risen.
This process is not exclusive to Medellín; in Latin America the same phenomenon is being experienced in cities such as Mexico City, Monterrey or Buenos Aires and responds to a global trend that has generated both a favorable market for the real estate business and for short term rentals -like Airbnb.
Medellin’s growth is driven by the growing tourism in the country, but also by the consolidation of the city as a tech hub in Latin America. The Latin American Private Equity Investment Association -Lavca- conducted a review of the secondary cities that are emerging as tech hubs in the region, according to the number of new startups since 2022 and until the first half of 2024. Medellín is in eighth place, and is the only Colombian city in the ranking.
One study claims that around 8,300 digital nomads arrive in Medellín each month, significantly impacting local commerce. For example, fruit sellers and Uber drivers have reported that digital nomads make up a substantial portion of their clientele, leading to improved sales and increased business opportunities for locals.
This is evident as neighborhoods that were once affordable for middle-class families are now attracting wealthier individuals. This shift not only raises property prices but also alters the character of these communities. Long-term residents may find themselves priced out of their neighborhoods as landlords capitalize on the demand from digital nomads willing to pay higher rents for modern amenities and prime locations.
Medellín, A Business Hub
Medellín is the second largest city in Colombia after Bogota, but its history makes it a key place for business development. Many of the country’s major companies were born in this city and the entrepreneurial and business spirit of its inhabitants is well known.
In addition, Medellín is considered a multimodal city, it is the only city in the country with subway service, with first level public and interconnection services, and it is the cradle of contact center services in the country.
According to Medellín como vamos, a national program that develops technical documents on the different cities of Colombia, the number of companies per thousand inhabitants has had a positive trend in the last decade and stood at 44.1 in 2023, which brings it closer and closer to the average of industrialized countries which is 50.
“Because of all this Medellín ends up being a ‘melting pot’, a city where everyone wants to be, whether on vacation, to invest or to live,” explains Mauricio Velásquez, Managing Director at Bogota-based consultancy Velasquez & Company.
Mauricio Velásquez, Velasquez & Company
Rising real estate prices for nearshore business are not a big problem yet, Velasquez maintains. “In the BPO business 65-70% of the investment corresponds to labor, and about 30% to direct infrastructure costs,” he says. “That is why, even if prices increase, the city is still competitive.”
However, he also points out that there would be an indirect effect, because with rising housing prices, finding qualified labor or bringing experts from other countries to live in the city becomes increasingly expensive.
The “Dark Side”
The real estate guild insists that they stifle investment and growth in the sector. The tension between maintaining affordable housing for locals and accommodating the demands of digital nomads highlights a broader debate about urban development priorities in rapidly changing cities like Medellín.
Although for some experts such as Luis Fernando González, professor at the School of Habitat of the Faculty of Architecture of the UNAL Medellín, what explains the phenomenon of cities like Medellín is not gentrification but “urban renewal, since they are generally demolished to build high rises; there is little housing preservation.”
Medellín has a “dark side” that has also been exploited. The drug trafficking and violence of the 80s and 90s have been overcome and are now one of the city’s attractions. Tours to Comuna 13, a peripheral neighborhood where the narcos’ young hit men came from, or visits to Pablo Escobar’s tomb are a must for any tourist visiting the city.
González refers to this as “islands of globalization,” a phenomenon from the 1980s that includes not only tourism but also issues like sex tourism and drug sales.
He also refers to the rise of short-term vacation rentals, or “Airbnb-ization,” which has become a big issue in areas like El Poblado, Provenza, and Laureles, fueling the gentrification debate, where traditional homes are being replaced by luxury apartments and boutique hotels.
Experts argue that better housing policies are needed to avoid worsening social inequality. In fact, Colombian President Gustavo Petro proposed a few weeks ago a possible intervention in the real estate market to curb price speculation in rents.
In any case, like all phenomena that become a trend, the increase in housing prices for short or luxury rentals will have a limit, it will be regulated, and even experts like Velasquez consider that “the system is reaching a moment when it will explode”.
In contrast, the trend of “neoworkers”, digital nomads and the resignification of urban spaces is here to stay. That’s why as Medellín continues to attract digital nomads and foreign investment from around the world, it is crucial for stakeholders to find ways to integrate these newcomers into the existing community while addressing the challenges posed by gentrification.
By fostering an inclusive environment that values both economic growth and cultural preservation, Medellín can ensure that it remains a welcoming destination for digital nomads while supporting its long-term residents.
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