Revitalisation or Dispossession? The Price of Latin America's Urban Development

Federico Canas Velasco | Latin America Fellow

Image sourced from Matthew Stephenson via Unsplash.

In Mexico City, locals are becoming increasingly frustrated with taquerias and street food vendors losing their spicy flavours to appeal to a foreign palate. The once fiery flavours commonplace in local neighbourhoods are being toned down, a change locals attribute to a new wave of tourists and "digital nomads" who prefer a much milder taste. This growing cultural tension with foreigners was central to the recent July protests that took place in the neighbourhoods of Roma and Condensa, where residents expressed frustration over rising rents and the growing unaffordability of their city. The presence of these new arrivals reveals a deeper and more systemic problem rooted in decades of urban inequality, challenges to the city’s cultural identity, and the pressures of a rapidly changing global economy.

The Rise of "Touristification"

Although appearing as classic gentrification, Mexico City’s urban transformation can be better understood as touristification. This process is a targeted form of urban ‘extractivism,’ whereby a city's urban heritage and culture are exploited for economic value. While being deeply intertwined with gentrification, touristification is a specific type of gentrification that is a deliberate, state-driven project fuelled by the demands of tourism. Governments across Latin America have actively branded cities for a global audience, pursuing foreign investment at the expense of social and cultural equity. This process systematically benefits foreign investors and wealthy newcomers, redirecting gains towards visitors and turning residential neighbourhoods into tourist accommodations.

For the 2016 Olympics, Rio de Janeiro's extensive urban redevelopment and gentrification projects were used to create a globally marketable city brand, a pursuit that displaced longtime residents in favour of attracting international tourists and capital. In this process, approximately 77 000 residents were evicted from their homes and communities, largely to make way for new roads and infrastructure.

While new projects were advertised as a way to integrate favelas into the city, such as the Complexo do Alemão cable car, they mostly served the city's marketing goals over the needs of its residents. Instead of serving as vital transportation for residents, the cable car functioned more as a tourist pipeline - offering a scenic overlook for visitors - with only 8 per cent of the local population using it a year after its construction.

The promotion of a revitalised Rio obscured the city’s reality, where small communities like Babilonia faced intense pressure and threats of eviction to clear the way for tourist-friendly real estate and investments. While tourists were encouraged to visit favelas, the economic benefits rarely trickled down to the locals. Instead, these new market forces often exacerbated the housing crisis and drove up the cost of living, pushing out the very people whose culture was being commodified. The city's global brand was thus built on a foundation of exclusion, undermining the well-being of its own citizens for the sake of international appeal.

The Digital Nomad Effect

The frustration over gentrification in places like Rio de Janeiro has been accelerated by the rise of digital nomads and platforms like Airbnb. This trend shows the evolution of how cities market themselves globally, with governments in places like Medellín and Mexico City actively creating favourable conditions for these new, high-value visitors. In 2022, Mexico City's government entered a partnership with UNESCO and Airbnb to attract remote workers and tourists to the city. While successful in boosting tourism, this deal is linked to Mexico City's housing crisis. The deal has fuelled a surge in short-term rental properties, incentivising landlords to list on platforms like Airbnb at inflated prices rather than offering long-term leases to local residents. This influx of foreign renters and tourists who earn in higher-value currencies has created an economic disconnect, making housing in long-standing neighbourhoods unaffordable for locals on comparatively reduced wages.

Medellín’s embrace of the digital nomad trend has fuelled a similar struggle with rising property prices and displacement. In 2022, in a clear move to attract this new demographic, the city government launched a digital nomad visa program to streamline the process for foreign remote workers to live and work there. This initiative, coupled with a 66 per cent increase in Airbnb properties from 2020, contributed to the increase of rental prices by 60-70 per cent in 2023 across Medellín neighbourhoods where these touristification efforts were concentrated. Although both cities have seen an economic boost from tourism, the benefits mostly flow to international visitors and rental platforms at the expense of the housing security of local residents.

Rethinking Urban Development

Ultimately, the government policies that privilege the financial interests of international visitors and rental platforms over local housing availability are a part of a much larger, systemic problem of touristification. This extractive model of urban development is an ongoing regional issue but is now again being witnessed within new transnational economic forces.

To address this deepening crisis, Latin American cities must move beyond policies that simply advantage foreign capital and tourism. Instead, governments have the responsibility to balance economic growth with urban well-being, and to prioritise the long-term housing security of their residents. This requires a fundamental shift away from market-driven extraction and toward a model of development that reinvests in local communities and preserves their cultural and social fabric.

The frustration voiced in the streets of Mexico City in July serves as a powerful reminder that if a city's growth comes at the expense of its people, the tension between its culture and economy will only intensify. The fight to preserve local culture is not merely about spicier food and rent, but a demand that the city stop commodifying its soul and start serving its residents.

Federico Canas Velasco is the Latin American Fellow for Young Australians in International Affairs. He is completing his final year of a Bachelor of Arts and Advanced Studies in International and Global Studies at the University of Sydney, majoring in Spanish and Latin American Studies.

Born in Australia to Venezuelan parents, Federico's interest in Latin America stems from his proud heritage as well as his academic exploration of the region's cultural, political, and historical complexities. This interest was further enriched when he studied abroad at la Universidad Carlos III de Madrid. Federico looks forward to this Fellowship as an opportunity to combine his research interests with his personal experience to contribute meaningful analysis on Latin America's future amid shifting global dynamics.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Young Australians in International Affairs. All content is original, and no plagiarism has been used in the preparation of this article.