Why are rents so expensive in Medellín?

Currently, changes are taking place in the traditional dynamics of rentals in the Aburrá Valley and, consequently, in the prices of houses, apartments, and commercial properties. It is even believed that residential properties could be up to 65% above their original value. The most worrying aspect of this situation is the high demand and reduction in supply of these spaces. Here's why rents are so expensive in Medellín.

Why has the rent for residential properties increased?

The arrival of various visitors to the city has generated a significant source of income, but it has also created a latent fear among residents due to the obvious gentrification we are currently experiencing.

Medellín is a city that generates more income for people who come from other places to live, especially if they are digital nomads or remote workers who earn dollars. Nomad List, a platform that studies the favorite places of digital nomads, even presented Medellín as the third favorite destination in Latin America and the Caribbean.

Similarly, as Samuel Cepeda, professor at the Faculty of International Business at the Pontificia Bolivariana University, points out, these people have a different impact on the local economy than traditional visitors. In fact, these new dynamics increase the cost of living for the city's original inhabitants, raising the prices of goods and services available in the city, especially with regard to permanent or temporary rentals of apartments in Medellín.

Samuel Cepeda also states that it is not only digital nomads who are arriving with their dollars to occupy properties in the city, but also foreign pensioners or those with income from properties they own abroad, who have a clear economic advantage over local people.

Federico Estrada, Manager of La Lonja de Medellín y Antioquia, also provided other reasons for this situation.

He mentions that fewer projects are being developed in Medellín and those that are being carried out are progressing slowly, causing delays in delivery. For this reason, only 18% of what is sold enters the rental market.

Another reason is the growth of families in Colombia, resulting from population increase, which means that the high level of residential construction activity must be maintained to avoid a deficit. Finally, many of the apartments for rent in Medellín that were previously on the traditional rental market are now being converted to the short-term rental market (tourist/Airbnb).

“All these causes result in supply falling far short of demand. With far fewer units available for rent, rents are rising to very high levels. In fact, the supply of rentals in the Aburrá Valley between January and October 2022 fell by 58%,” said Federico Estrada.