Digital Nomads: Community Disruptors? - 3/6

Gentrification in the Era of Remote Work

Jun 25, 2023

In 1898 Ebenezer introduced the Garden City Plan, where people were relocated to the suburbs and started commuting to work. This dominated urban development.

Fast forward to 2023, where remote work is being democratized, we can work from anywhere and we do not have to commute as often.

This opens up a whole new perspective on how our cities are being shaped and how this trend is changing local communities.

One of the main themes that emerge in the literature and media about the negative impact of digital nomads (DNs) on the destinations they visit seems to be gentrification or, to put it simply, the disruption of local communities. For this reason, in the following post, we will focus on explaining what gentrification is and why it's relevant to DNs.

When DNs choose to temporarily reside in various places around the world, their presence can often unknowingly contribute to the gentrification of those places. This effect, albeit unintentional, can transform communities in ways that potentially disrupt the lives of local residents.

Let's dive into the complexity of this issue and try to develop an understanding of the gentrification process.

What is it?

Gentrification signifies a transformation of neighborhoods. It’s a complex and multifaceted process that has been observed in many urban areas around the world. It usually refers to the change of a neighborhood from a predominantly low-income, working-class area into a more affluent and upscale community.

The transformation is set in motion when capital investment funnels into the local housing market, leading to established residents being forced out of their communities. Consequently, it also brings in newcomers who typically have a higher socio-economic status.

Gentrification is driven by a combination of economic, social, and cultural factors, which interact in complex ways to shape the evolution of urban neighborhoods.

Atkinson notes the complexity of the effects of gentrification, indicating that while it can bring new investment and economic opportunities to a neighborhood, it can also lead to the displacement of long-time residents and the loss of community identity.

One of the primary drivers of gentrification is the demand for urban housing by young professionals and other affluent residents. These individuals are attracted to urban neighborhoods for a variety of reasons, including proximity to job opportunities, cultural amenities, and nightlife.

As demand for housing in these neighborhoods increases, property values rise, and landlords and developers are incentivized to invest in the area. This, in turn, can lead to the displacement of long-time residents who can no longer afford to live in the area.

Another factor is the desire for urban authenticity and cultural diversity. People are drawn to neighborhoods with a rich history and a strong sense of community, and they seek out local businesses and cultural institutions that reflect these values. As a result, neighborhoods with a unique identity and cultural heritage are often targeted for gentrification, as developers seek to capitalize on the area's perceived authenticity. Ironically, this process often displaces authenticity.

Gentrification is not solely driven by economic and cultural factors. Government policies and urban planning decisions can play a significant role in shaping the trajectory of urban neighborhoods. For example, the construction of new transportation infrastructure or the establishment of tax incentives for developers can dramatically alter the economic landscape of a neighborhood, potentially leading to gentrification.

However, Cameron concluded that urban housing policies in Tyneside didn't bring about significant improvements in housing conditions or opportunities for low-income inhabitants, stating that they were essentially ’’irrelevant’’.

Another factor, a company that is in a way contributing to these problems and influencing tourism flows and community design is Airbnb. Let us look at why.

Impacts of Airbnb on local communities

In the early beginnings of the sharing economy, Airbnb, a back then small startup from San Francisco, revolutionized the way people travel and find accommodation.

At first glance and to the common eye a handy solution and a problem solver for many who want a simple overnight stay. Airbnb offers people the opportunity to capitalize on their empty apartments. To the travelers, it offers an easy way to book an apartment, which is usually (not always) cheaper than hotels and like their About us page says: ‘’Hosts offer one-of-a-kind stays and unique Experiences that make it possible for guests to experience the world in a more authentic, connected way.’’

As powerful of a brand as it is, it certainly has a lot of effects not just on the way we travel but also on the way communities are shaped.

While there are benefits to it, as most travelers know, in recent years, Airbnb and other similar short-term rental platforms have become a controversial topic among urban researchers, policymakers and activists mainly due to regarding the increasing fear of gentrification in urban areas and cities.

Short-term renting seems like a good solution for filling empty apartments, but if it is used to permanently shift from long-term to short-term renting, it generates a lack of housing and consequently higher housing prices and rents for residents who wish to find a long-term housing solution.

In order to mitigate the negative effects, some cities are already regulating or almost forbidding the short-term rental market and platforms like Airbnb. Findings revealed that the most common negative effects of P2P platforms, in general, are related to socioeconomic and the natural environment.

This is relevant to us because Airbnb is now tapping into not only the short-term rental market but also the long-term rental market, which is primarily used by DNs and remote workers who are settling temporarily.

In 2021, about 20% of guests from around the world said they use Airbnb as a platform to work remotely. This trend has continued into Q1 2022, with long-term stays peaking. The increase in these longer bookings has been significant, doubling compared to Q1 2019.

Today, more than 6 million active listings on Airbnb offer monthly stays, with the majority of them offering discounts for extended stays. Airbnb is constantly striving to simplify the process for DNs looking for the perfect place to stay. Airbnb is now emphasizing features that make its listings feel more like a home than a vacation spot. Essentially, Airbnb is pushing the concept of ‘‘working from home’’ to ‘‘working from any home.’’

I could not find data on how many DNs use Airbnb as their preferred platform, but from my conversations, research, and reading posts on DN Facebook communities, we can estimate that the majority use the platform regularly. The prediction is correct because there are not many alternatives on the market today either.

In my research, 60% of the respondents indicated that they use private apartments while traveling.

A better understanding of gentrification processes and contextualizing the impact of the sharing economy on urban landscapes allow us to explore how DNs may contribute to these phenomena. This interplay is particularly relevant in cases where DNs' preference for ‘‘authentic’’ cultural experiences and their use of platforms such as Airbnb may further fuel gentrification and cultural commodification.

The Context of Digital Nomads

In the context of DNs, gentrification in one city is caused by gentrification in another. 50% of DNs come from the US, where rents have skyrocketed.

Since 2020, the 40 largest U.S. cities have lost 1,000,000 young people who have moved to warmer, more affordable, less populated areas. San Francisco tops the list of cities with the steepest population decline.

Add remote work to that equation and we have many people seeking better conditions for living around the world, typically in less-developed countries.

In the context of digital nomadism, these processes can have a significant impact on destination communities, as most DNs come from countries with strong passports and potentially earn higher incomes than in host communities. As Ayling mentioned, DNs represent inequality on the one hand and create it in the places they visit on the other.

The difference between DNs and regular tourists, who as we have seen have had an impact on neighborhoods long before nomads, is that the former tap not only the market for short-term rentals, but also that for long-term rentals.

Despite all the differences and problems, the goal should not be to eliminate the DN lifestyle and tell them to ''go home'' but to find ways to ensure that it coexists with local communities that can benefit from it, as we saw in the previous post.

Meanwhile, I’m asking myself the following questions and leaving you to ponder them as well:

How can we encourage economic growth without sacrificing the character and inclusiveness of our neighborhoods? How can we attract DNs and other forms of tourism without destabilizing the local housing market or erasing local culture?

Rudi's Travel Journal

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