It’s not just in El Poblado rent is rising the most in Medellin

Tourists, Digital Nomads, and Skyrocketing Rents: Is Medellin Experiencing Gentrification?

The supply for Airbnb in Medellin has grown by 66% since 2020 and generated $62 million last year, which is 78% more than in 2021. This trend has a significant impact on the rising rental prices.

These are the neighborhoods where rent is rising the most in Medellin

An analysis of Medellin’s neighborhoods has indicated that the increase per square meter has been most pronounced in traditionally popular areas such as Aranjuez and Castilla.

Narrow streets filled with parked vehicles on both sides are part of the landscape in these Medellin neighborhoods. With their charming surroundings and, in many cases, steep topography, one would not think that renting a house or an apartment in these areas could be so expensive.

In the outskirts, the term “valorización” was not familiar to residents. For years, it seemed that expensive properties were only found in the southern part of the city.

However, the appetite for real estate seems insatiable and is spreading to all sectors. “Who would have thought four years ago that they could ask for over one and a half million pesos for a small apartment in a middle-class neighborhood?” commented Sebastian Jaramillo, who recently moved in with his girlfriend and struggled to find a suitable and affordable home.

Due to its proximity to their parents’ homes, the couple searched for an apartment in Cristo Rey, one of Guayabal’s oldest neighborhoods. Despite being a community predominantly classified as middle-low socioeconomic status, they were asked for prices starting from 1.5 million pesos for relatively small spaces with cracks and occasional dampness.

“When I asked why it was so expensive, the owners said they were charging for the location, mentioning its proximity to the city center, El Poblado, and Olaya Herrera Airport. However, it still seemed a bit excessive to me,” Jaramillo said.

This feeling of paying as if in a more exclusive residential area can be frustrating for renters like Jaramillo, as it significantly reduces the portion of their income that can be allocated to recreation and enjoyment with their partner. Many still don’t understand that this real estate wave is strong and threatens to engulf all residents.

Nowhere to run

Market data indicates that popular neighborhoods lead the rent increases. For instance, according to a price analysis by the RED Atlas platform in certain areas of the city, the findings can be considered surprising.

When it comes to apartments, this survey revealed that Guayabal was the neighborhood with the highest rent increase: in February 2022, the average price per square meter was 25,924 pesos, while in the same month this year, it had already reached 36,994 pesos (see graph).

Challenging to find accommodation

In October of last year, Sandra Suárez came across a sign outside the building where she lived. It spoke of a renovation project in the infrastructure, marking the beginning of an anxiety-inducing experience that seemed never-ending.

She had been living in that place for seven years, close to Consumo in Laureles, paying 822,000 pesos monthly, a sum justified by its proximity to work and her child’s school.

“On October 20, I received a notice stating that all tenants had to vacate the apartments as soon as their contracts expired, or even earlier, with no penalty fees,” she narrated.

Renovation work on the old five-story building began when the 24 resident families had not yet moved out, creating a truly uncomfortable dusty environment.

With time running out, Suárez embarked on the search for a new apartment, and her child’s allergy due to air pollution made the task more urgent.

Despite being a good tenant, she had to leave, and all she knew was that the building was being converted into an apart-hotel. “They changed doors and even installed card sensors outside because, according to the agency, they said it was for Airbnb.”

The idea was to find an apartment nearby and not disrupt their way of life too much, but the prices exceeded her payment capacity. She searched in the San Joaquín neighborhood, where prices started from 1.5 million pesos and went up to 3 million pesos or more.

She expanded her search to the Los Colores neighborhood. However, she reported that “the prices were the same. There were places for 2.2 million pesos and even 3.2 million pesos. Those were the prices that were previously charged for a large apartment, not a simple one.”

In the end, she couldn’t find what she had envisioned and ended up settling in Belén, between Rosales and the park. Amidst it all, she was grateful that the studio apartment she rented cost 800,000 pesos per month and fit within her budget. The downside was that it only had one bedroom, and the space was not sufficient to accommodate all her belongings.

“The price is appropriate, and it may even be considered cheap because I know that my neighbors are paying at least 1.6 million pesos in neighboring neighborhoods, which is double what was charged in the Laureles building. Do I plan to look for a larger space? Yes, I do want to find something better, but I have no hope left. The prices I’m seeing in the market are very challenging,” she lamented.

An adverse boom

Alberto Rodríguez, CEO of real estate company Century 21, pointed out that there is high demand and limited supply in Medellin. He mentioned that after the pandemic, developers reduced the initiation of new housing projects, resulting in more people looking for accommodation than available properties.

“The same is happening in popular neighborhoods, but we need to add a word we will hear a lot in the future: gentrification, which refers to the displacement of the traditional population by residents with higher purchasing power,” he explained.

It’s as simple as observing the foreigners who come to Medellin and settle here. As they usually have dollars, they can create a price bubble that only suits their own pockets.

In this context, Rodríguez mentioned that “people are forced to move to other areas. That’s why we are seeing demand for places that were not as desirable before.”

When asked if the prices in these popular neighborhoods correspond to the quality of the housing, he acknowledged that in most cases, they do not. However, he insisted that it is ultimately the market forces that determine the rental prices.

“What is happening in Medellin,” Rodríguez said, “is that if there is a shortage of housing, people move to a similar place that meets all the conditions they are looking for.”

In a chain reaction

The real estate bubble continues to expand, and those at the top have to step down, repeating the displacement process until it leads to an increase in peripheral neighborhoods that were not expected to be impacted by foreign tourism.

This is how residents of Medellin must search for a neighborhood that, at least on paper, is more modest. However, their purchasing power also changes the dynamics in the receiving area.

Santiago Martínez has witnessed this situation in Castilla, a neighborhood located in the northwest of the city. Just three years ago, he recalls finding very spacious houses for less than 800,000 pesos. However, that reality now seems distant.

“These same houses have been divided; they have been turned into two or three apartments and are being rented for one million pesos or more. I’m referring to the lower part of the neighborhood, near the Terminal del Norte, Juanes de La Paz Park, and the Acevedo and Tricentenario Metro stations,” he added.

All of this aligns with the metrics presented by RED Atlas, as Castilla is among the top three neighborhoods with the highest rent increases for houses: the increase per square meter was 10.6% annually as of February, surpassed only by Belén (27.8%) and Aranjuez (36.1%).

Trends Renting, a challenge

Juan Camilo Isaza also saw his mother having to leave the Manila neighborhood in El Poblado. He narrated that the noise from commercial establishments at night became unbearable, and after 50 years, it was time to move out.

“We tried to find a house in Medellin, but the rents are extremely expensive, and there is hardly any available housing. So my mother ended up moving to Copacabana. The problem is that it has been a shock for her; it wasn’t easy to leave friends, neighbors, and the sense of belonging,” he commented.

In that municipality, renting an apartment in a gated community costs them 1.3 million pesos, and he stated that there are no plans to move again. “In the future, my mother would like to stay here or find some kind of country-house.”

No relief in sight

Martín Monzón, CEO of Fincaraíz, agreed with the diagnosis: as long as foreign tourists continue to flock to central and tourist neighborhoods, the demand will shift towards peripheral neighborhoods.

Explaining that the city is in vogue, he stated that homeowners have realized that short-term or vacation rentals are much more profitable.

“A traditional lease contract is for one year, which is a very long time, so you can’t make many changes. On the other hand, with short-term rentals, you can rent for one or two months, and the prices can be increased as demand rises,” he detailed.

When asked if there could be a correction in the market, he responded, “As long as foreigners keep looking for El Poblado, Laureles, and Calazans, the prices will rise rapidly. This means that people cannot afford to live in those neighborhoods anymore and will move to other neighborhoods that were not previously in such demand, and that’s when prices increase.”

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