Mexico City’s government on July 16 announced a plan to address rising housing prices that protesters have recently linked to tourism and an increased number of foreigners in the city, the Associated Press reported. The plan includes rules barring landlords from raising the price of rent above the rate of inflation, Mayor Clara Brugada said. Why are living costs escalating in Mexico City? How are the city’s economic challenges different from those facing Mexicans elsewhere in the country? How legitimate are fears of rising gentrification in Mexico City?
Amanda Mattingly, former U.S. diplomat and founder of ACM Global Intelligence: “Since the pandemic, Mexico City has seen an influx of digital nomads who have driven up housing prices in neighborhoods like Roma and Condesa. It’s true that American Airbnb-ers are looking for charming barrios such as these, and Mexico’s attractive residency options and tax-friendly regimes for foreign nationals make it a top destination. Issues of affordability and a backlash to the Airbnb economy are not unique to Mexico City. Affordability is a central issue in the New York mayoral race this year, while protests against tourists and gentrification have been seen across European cities since last year. But ‘gringo-go-home’ protests in Mexico City seem to ignore other truths about the city. Poor urban planning and the lack of new housing since 2010 have led to a surge in prices and an outflow of legacy, lower-income residents. Mexico’s national statistics agency indicates that Mexico City’s rate of new housing built between 2010 and 2020 was the lowest in the country. National data also suggests that the average occupancy in a private dwelling in Mexico dropped from 4.7 inhabitants in 1995 to 3.6 in 2020. Meanwhile, the overall population has increased, making for a housing crunch before the digital nomads arrived. Yes, Mayor Clara Brugada can regulate short-term rentals in Mexico City, particularly as the city anticipates a large influx of visitors for the 2026 World Cup, but this alone will not fix the problem of affordability. To do this, the city will need to incentivize new housing starts, subsidize affordable housing, alter land use policies to allow for more vertical density and improve city planning to increase overall accessibility.”
Rubén Olmos, CEO, and Alejandro Vales, senior director, both at Global Nexus: “Urban challenges in Mexico City have persisted for decades, but the arrival of digital nomads during the pandemic, and fans attending the 2026 World Cup, have made them far more visible. The city’s deep-rooted inequality, more severe than in most parts of the country, combined with a lack of long-term, sustainable urban planning and weak enforcement of existing regulations, has fueled real estate speculation and the displacement of longtime residents across several neighborhoods. Unlike other Mexican cities, rising living costs in Mexico City stem from several converging factors: high demand and limited housing supply, corruption among developers and politicians, and increasing interest from both domestic and international residents attracted by the city’s culture, infrastructure and central location. Moreover, Mexico City offers more and better job opportunities than elsewhere in the central region of the country. However, wages have not kept pace with inflation or housing costs, making it increasingly difficult for locals to afford to live near their workplaces. Gentrification is becoming a growing, measurable problem. According to the General Urban Planning Program (2020-2035), more than 20,000 low-income households are forced out of the city annually due to the lack of affordable housing. Yet many continue to work in the capital, creating more than 1.5 million daily commutes from peripheral municipalities to the city center. While the city’s government has proposed measures to address the crisis, some could worsen it. A long-term, inclusive urban policy and strong regulatory enforcement are essential to create a more balanced and equitable city.”
Roberta Lajous, former Mexican ambassador to Cuba, Bolivia and Spain: “Unfortunately, for Mexico City residents, a power struggle is unfolding between Mexico City Mayor Clara Brugada and elected City Manager Alessandra Rojo de la Vega, for the borough of Cuauhtémoc, where gentrification is prevalent. Brugada belongs to the radical wing of the ruling Morena Party and is said to be behind the protests, which have taken a violent turn against small businesses and landlords catering to foreigners, mostly U.S. expats taking advantage of home offices since the pandemic started in 2020, creating many jobs in the service industry. Rojo de la Vega runs one of the five boroughs held by the opposition, whereas the remaining 11 are under Morena’s control. Beyond this power struggle, there is a clear ideological confrontation between these two women, who have potential ambitions for the next federal elections in 2030. Brugada aspires to follow Claudia Sheinbaum, the previous mayor, to the presidency. Rojo de la Vega is the only opposition leader who could become the next mayor. However, they stand on opposite ends of the ideological spectrum: Rojo de la Vega had the statues of Fidel Castro and Che Guevara removed from a park, in a neighborhood where they first met, before they left for Cuba to start a revolution that changed the political landscape of Latin America. Brugada has taken a stand against gentrification, proposing policies that would worsen housing shortages, and supports the presence of Cuban doctors, an issue that is currently sparking controversy in Mexico.”
José Carlos Rodríguez Pueblita, professor of business economics at the IPADE Business School in Mexico City: “Living costs in Mexico City are rising because it is a dynamic urban center that faces growing demand for well-located housing, but also limited supply from zoning and permitting constraints, and rising land values driven by economic concentration. While foreigners and digital nomads are often blamed, their impact is very focalized and marginal. The city’s rent control proposal of capping increases to inflation is good politics but very bad economics. It discourages investment in rental housing, benefiting middle-class tenants rather than those most in need. The real issue lies in insufficient housing supply and poorly targeted social support. Gentrification fears, though legitimate in some central neighborhoods, are focalized rather than widespread. Importantly, gentrification also brings positive spillovers such as safer streets and more vibrant local economies. The right response is not to freeze rents, but rather to promote construction of new housing units, expand affordable housing, improve mobility, invest in basic infrastructure and reform land use policies. Rather than suppress market dynamics, policymakers should focus on enabling broader access to the benefits generated in a dynamic urban spot.”
Tapen Sinha, professor of risk management at the Instituto Tecnológico Autónomo de México and professor at the University of Nottingham Business School: “Mexico City’s gentrification is real. But, so far, the rise has been in pockets around the principal six- or eight-lane roads like Insurgentes, Reforma, Constituyentes and Periférico. The future gentrification is likely to follow the path of New York City, where the rise of Manhattan diffused through Brooklyn and the Bronx. The price of per square meter of apartments has recently increased in Mexico City by a factor of four (in nominal pesos) whereas the average family income has not gone up. Affordability has gone down by a factor of four. Naturally, the rents have gone up too. But, because in Mexico (at least a part of) the rent is paid under the table, it does not go up by as much. The question is: why are housing prices rising? Are foreigners living in Mexico City to blame? It is difficult to come by hard numbers. Some estimates put the number of foreigners at 20,000. Others put the number more than 100,000. In a city of eight million, could these numbers raise the prices of apartments in the gentrified parts of the city? It could, if these foreigners are part of the digital global nomads whose income is much higher than the average Mexico City resident. Anecdotal evidence suggests that there is a high concentration of the digital nomads around the barrios mentioned earlier. A study by INEGI shows that new houses built per 1,000 grew by over 100 in the state of Querétaro whereas in nearby Mexico City, it grew by less than 30 from 2010 and 2020. Thus, the root cause seems more as a result of approval of new housing than gentrification.”
Rodrigo Abud, managing director at Panorama: “Mexico City is becoming increasingly unaffordable for many residents, a trend that recent anti-gentrification protests have exposed with new urgency. On July 16, Mayor Clara Brugada announced a 14-point plan capping rent increases at inflation rates, responding to demonstrators who blame tourism and foreign residents for rising costs. But the causes run deeper. Short-term pressures include speculative investment and the expansion of housing platforms. Airbnb lists 26,000 units in Mexico City, according to Inside Airbnb, a data project that tracks short-term rental activity globally. Despite different income levels, this figure is comparable to short-term rental inventories in cities like Barcelona or New York. Foreigners with dollar incomes routinely outbid locals, accelerating displacement in neighborhoods like Roma and Condesa. The city also attracts internal migrants, concentrating 15.8 percent of national GDP (according to INEGI) and offering Mexico’s highest wages. However, between 2010 and 2020, it had the lowest housing construction rate per 1,000 residents. This mismatch is worsened by spatial inequality, as demand concentrates in neighborhoods with better infrastructure, safety and services, pushing out lower-income families. Building more housing seems like a logical fix, but bureaucratic barriers, legal complexity, and weak transit access slow development. Much of the new supply favors high-income buyers or remote areas with limited services, rather than central, affordable options for working families. Rent control offers symbolic relief, but it cannot fix institutional fragmentation without coordinated, long-term investment across government levels. Addressing gentrification will require deeper reforms that make the city more livable, inclusive and equitable for all.”
The Latin America Advisor features Q&A from leaders in politics, economics, and finance every business day. It is available to members of the Dialogue’s Corporate Program and others by subscription.
