Many countries see digital nomads as an opportunity for an economic boost! An increasing number of countries have introduced digital nomad visas to attract remote workers to spend the relatively high incomes that they earn from overseas companies in their local economy.
But is the influx of digital nomads in some areas destroying local economies?
The pandemic has seen a major increase in those pursuing the digital nomad lifestyle. It is estimated that there are currently around 35 million digital nomads globally, around 17 million from the United States.
This dramatic increase is why a beneficial economic injection is now becoming a major problem. Whereas pre-pandemic, a small gentrified digital nomad enclave brought opportunities to a city, in the most popular digital nomad destinations, digital nomads are now pushing locals out of the market.
Chiang Mai, Thailand
Chiang Mai in northern Thailand has long been called the digital nomad capital of the world. This initially meant a strong tourist market, this has now seen the central Nimmanhaemin area, also known as Nimman or Coffee Street.
Now the area has transformed from a neighborhood with a mix of local stores and higher-end coffee shops and bars for tourists into an exclusive district of co-working spaces and Airbnbs. Everything in this area, from accommodation to coffee, is now affordable for Westerners, but beyond the reach of most locals.
Digital nomads looking for accommodation on Airbnb will get the impression that they will be renting from a local family. But when you arrive in Chiang Mai, you may well discover that this is just a marketing ploy and that many homes have been bought up by foreign companies to take advantage of the strong short-term rental industry.
Lisbon is another city that has become a digital nomad hotspot thanks to its Mediterranean weather and culture and relatively affordable cost of living for Western Europe. But it is also a city where the growing foreign population is having a major impact.
Central areas of the city such as Bairro Alto and Principe Real are losing their local identity as rising house prices push locals out and coworking spaces and creative hubs replace local shops and working-class bars.
Digital nomads need to earn at least four times the local minimum wage in Portugal to qualify for a digital nomad visa. But to rent a one-bedroom apartment in an area like Santa Maria Maior, they would need to spend 63% of the average local wage of around US$20,000. It is estimated that more than half of the residential properties in this area are short-term leases for foreigners.
Mexico City, Mexico
Mexico City is becoming an increasingly popular destination for digital nomads as more American workers have more professional flexibility. This has led to rents skyrocketing in popular areas of the city such as Condesa, Centro, and Juarez as foreigners and companies catering to them snatch up properties.
Of the 10,000 apartments listed on Airbnb in Mexico City, the average price is 1,450 pesos per day, while 95% of Mexicans only earn 518 pesos per day. But landlords prefer to rent to Americans who are willing to pay 30,000 to 50,000 pesos in rent, which is 10 times the monthly minimum wage.
Local shops are facilities are also being replaced with juice bars and yoga studios for new American residents. Many restaurants now publish their menus in English first rather than Spanish. Recently, locals were in uproar as a Torta shop was evicted after 54 years in business to make room for expensive apartments.
Canggu is Bali has always been a popular surf destination for foreigners. It then became a Mecca for yoga and fitness retreats, and now it is being “invaded” by digital nomads, according to many locals.
While 8% of the Indonesian population lives in poverty, digital nomads are not only driving up house prices, but are seeing traditional rice fields replaced with bars, hotels, and nightclubs. Locals complain as much about the impact on their culture as they do about the effect on prices.
Indonesians also complain of how easy it is for foreigners to get visas for Bali and to stay there long-term by crossing over into neighboring countries briefly to renew their visas. Considering how challenging it can be for Indonesians to get visas for countries including the United States, Canada, Australia, New Zealand, the United Kingdom, and the European Union, this hardly feels like a fair exchange.
What About Tourists and Expats?
But why are local communities up in arms about digital nomads? Haven’t tourists been changing international landscapes for decades? Yes, but the type of impact is different.
Tourists that visit for a city break weekend or a two-week vacation tend to pay a premium for the privilege. They stay in hotels and usually eat at local restaurants without haggling over price. They also pour money into tourist attractions. For the most part, this creates jobs and brings wealth into the local economy.
While locals may be pushed into tourist-facing professions, they aren’t being pushed out of their homes by wealthy foreigners looking for long-term accommodation. Moreover, digital nomads are responsible for driving additional tourism to many locations as they post travel tips and must-visit locations on their websites and social media feeds.
Over-tourism can certainly be a problem. I recently wrote about the Amsterdam Stay Away Campaign, which is trying to reduce excessive tourism in the city, especially disruptive tourists that come for the redlight district and smoking cafes. Many locations, such as Bali and Thailand, have similar problems with overcrowded beaches and ruckus partying.
The impact on the local housing market and gentrification are the main reasons that digital nomads represent a new and different threat.
But what about ex-pats? Have they not been doing that for years? Yes. There are an estimated 50 million ex-pats in the world, and they are certainly a major contributor to gentrification in some cities, especially in neighborhoods with the best schools. But because ex-pats intend to stay long-term, they are generally better at integrating into the local community. They learn the language, have private offices, and shop at local supermarkets.
Often ex-pats and digital nomads are lumped together and treated as single problem. But it is worth remembering that ex-pats pay local taxes and work alongside locals, giving them a different profile.
Are Digital Nomads to Blame?
Of course, how much “blame” should really be directed toward digital nomads for the changes happening in some regions of the world. As the world changes, small businesses need to adapt to new circumstances, and some businesses, like the Mexican tortilla shop, may have closed anyway.
Dramatic inequality in countries such as Indonesia and Mexico may also have a role to play in the gentrification that is pushing working-class families out of some inner-city suburbs. Plus, globalization and the uniformization of international cultures seems to be as much driven by media and soft power as foreign visitors.
But digital nomads should certainly consider their contribution to fueling these living crises. Urban sociologist Maz Holleran points out that many digital nomads head to other countries for a more affordable cost of living due to rising house prices in their own countries, while their presence ironically pushes up prices wherever they go.